The term “value” is subjective. It’s not easy to pin down. Different buyers value different things at different times along their customer journey. Devising ways to deliver more value, whether functional (saving time, reducing cost) or emotional (reducing anxiety, providing entertainment), is hard.
This article will provide an overview of the four kinds of value customers receive, and how you can observe user behavior to understand the unique value your buyers get from you. Here’s a short summary of what you’ll learn:
- There are different levels of value that customers can receive from your product or service. These four kinds of value are functional, emotional, life-changing, and social impact.
- It’s your job to understand the unique value that your buyers get from you. This can be done by talking with customers, but you may need to dig deeper and observe behavior. Research methods like click tests and journey mapping are two examples of how you can observe customer behavior online.
- Research doesn’t need to be a big, daunting project. Instead, research can be woven into weekly workflows. Small tests can surface data signals that help you build in the right direction.
Four Kinds of Value
Below is an illustration of “The Elements of Value” from Bain’s Eric Almquist and Jamie Cleghorn. They contend products and services deliver fundamental elements of value that address four kinds of needs: functional, emotional, life-changing, and social impact.
Functional value is the core utility or usefulness that a product or service provides to its users. It addresses the practical needs and requirements of customers. For example, a smartphone’s functional value lies in its ability to make calls, send messages, access the internet, and run various applications.
Meeting functional needs is fundamental. Without a strong foundation of functional value, other forms of value become less relevant.
Emotional value refers to the feelings, experiences, and perceptions that a product or service elicits in users. It’s about how the product makes the customer feel. For instance, a luxury car might provide a sense of prestige, status, and excitement, which goes beyond its basic transportation function.
Emotional value can drive customer loyalty and brand attachment. It’s often the key to differentiating products in competitive markets. In fact, according to Wunderman Thompson’s Inspire research studies, emotional connections influenced 66% of the factors that went into buying decisions—right in line with B2C data.
Life-changing value goes beyond addressing immediate needs and has a profound, transformative impact on a customer’s life. It can bring about significant improvements or lifestyle changes. For example, a fitness app that helps users lose weight and improve their health can provide life-changing value by positively impacting their overall well-being.
Products or services that offer life-changing value often have strong customer retention and can command premium prices.
Social Impact Value
Social impact value is associated with a product or service’s contribution to society, the environment, or a specific cause. It highlights the positive influence it has on broader social issues. For example, a company that produces eco-friendly products or donates a portion of its profits to charitable causes may create social impact value.
Today’s consumers are increasingly conscious of social and environmental issues. Products with social impact value can attract a socially conscious customer base and enhance brand reputation.
What elements of value are most important?
Your product may add value in one or more of these areas. But be careful. You might think your product adds value in a specific way, but your customers or users might disagree. In this case, some of the features you build won’t matter to users—a waste of time and resources.
Humans also exhibit irrational behavior. We rarely make decisions purely based on logic and reason, as evidenced by the research study cited above. For product and marketing folks, that means it’s your job to understand the unique functional and emotional desires of your buyers.
Listening to buyers and what they say is important. However, observing behavior is arguably more important.
Observing human behavior can be done in the field, but it can also be done online. Click tests, heat mapping, and customer journey flows are a few research methods that can be used to observe user behavior.
How do you improve the perceived value of your product?
Creative professionals—design, product, marketing— are in the best position to act on data collected at different stages of the customer journey. However, working with a research team to collect and analyze this kind of data can burn calendar time and slow down progress. What if you wanted to quickly test a new idea?
Instead, these “makers” and “doers” should be empowered to reach out to an audience when they have a quick question that will help them make creative decisions. We call this “continuous research,” which is baked into the weekly workflows and creates a continuous feedback loop between customers and your company. Give your perceived value a boost. But what does that look like?
Some organizations have built research panels from existing customers, but this represents only a fraction of the customer base. Usually, these are power users who are already familiar with your product. It does not give you unbiased feedback from target users who represent ideal customers.
Other teams have the luxury of a founder or CEO with a strong social media following. They can send quick polls to their followers and get instant feedback. Sadly, this isn’t an option for most teams. Also, the results from these polls may be skewed as not all followers represent ideal customers.
Test your value proposition with a ready-made audience
If you don’t have access to an audience, Helio makes it easy. With nearly 1 million active respondents, you can test your value proposition in minutes. Yes, minutes. Choose from over 1,000 different ready-made audiences, or request a custom audience. Whether you’re a B2B product looking to target accounting professionals, or a beauty brand looking to target women in the US with at least a bachelor’s degree, Helio has an audience for you.