Advantages and disadvantages of Perceived Value and Measurable Value

Perceived Value

Customers use subjective evaluations like emotions, prejudices, preferences, and experiences to assign value to benefits. Benefits with perceived value are hard to prove or disprove.

Does the Rocky Mountain flavor of Coors Light taste better than the Missouri Valley flavor of Budweiser? It depends on your individual preference. Therefore, taste is perceived value.

Measurable Value

Customers use objective data to assign value to benefits. When benefits have measurable value, they require more efforts to calculate their worth. Yet, once calculated, the benefits of measurable value are easy to prove—and to sell.

Does a bottle of Coors Light have fewer calories than a bottle of Budweiser? Absolutely. You can look up the calories on the labels and calculate that Coors Light has forty fewer calories.

The tables below illustrate how benefits and value type apply to the cellular phone and the bottle of hickory-flavored barbecue sauce.

Advantages of Selling Perceived Value

When you sell benefits with perceived value, you do not need to prove the logical connection between the features and the benefits. The benefits might be what you say they are; you just cannot prove them. Conversely, customers and competitors cannot disprove them. It is your word against theirs.

Due to a high trust level, your long-term customers are more receptive to accept benefits with perceived value on face value than are new prospects and competitors. Therefore, use as many benefits with measurable value as possible when you sell to new prospects who cannot fully appreciate your trustworthiness yet.

Does pouring hickory-flavored sauce on fried chicken produce as tasty a meal as does barbecuing the chicken with wood chips? Kentucky Fried Chicken claims it does and taste tests prove it (according to KFC).

Disadvantages of Selling Perceived Value

1. You damage your credibility if independent documentation casts doubts on your perceived value claims. In addition, when one claim gets disproved, all your claims come under scrutiny.

   Example

   A salesperson supplies an industry report proving his company's digital reception is 10 percent clearer than competitors who claimed their analog signal was just as good. Now, the competitors' other claims, such as extended battery life, are suspect as well.

2. Customers who eventually buy on perceived value change their minds often. You never know how their latest emotional attachments or personal preferences affect their purchasing decisions. Perceived value has no concrete proof, so conflicting claims create confusion. When enough confusion exists, customers use the certainty of lowest price or fastest delivery dates to clear it up. A take-them-to-lunch-and-lower-your-price strategy often surfaces in these situations as products become commodities.

   Example

   Another salesperson claims (without proof) that his new type of cellular phone offers the best reception but costs less. Customers try to figure out how companies can all offer the so-called best service. Price wars—and lunches—are right around the corner.

3. While you can (and do) win sales on perceived value, it is difficult to be compensated for providing more value than competitors—even if you do. You end up as being forced to match the lower price of a competitor who you know provides less value. Unfortunately, if you can't measure the difference, your customers can't either.

Advantages of Selling Measurable Value

The value of measurable benefits is difficult to dispute or discount by customers and competitors alike.

A salesperson explains how a digital signal (feature) requires 20 percent less power than an analog signal for processing. Therefore, its battery lasts 20 percent longer than the one in an analog phone. How this feature produces benefits is not only logical but also measurable to the customers. Grateful for the facts, they take the salesperson out to lunch.

You use industry standards or reports by independent experts to support the validity of your measurable benefits. You also use them to refute competitors' benefits that depend on perceived value. You demonstrate to customers your knowledge of the industry.

A salesperson furnishes a Federal Trade Commission (FTC) report that highlights how a digital signal uses 20 percent less power than an analog signal. This report supports his battery life benefit. It also refutes counterclaims by analog telephone competitors that there is no difference between the battery life of analog and digital telephones.

Disadvantages of Selling Measurable Value

You must prove that your standards of measurement are valid. An erroneous "fact" jeopardizes your valid claims. When you sell on measurable value, ensure that your information is infallible. You should have two independent and measurable verifications in case one becomes suspect.

The salesperson uses an outdated FTC report. He now needs another recognized authority (not counting his marketing manager) to substantiate the "20 percent less power" benefit.

You contend with conflicting claims that have their own proof. You constantly test your technical expertise when you sell measurable value. You must be sufficiently knowledgeable to prove your benefits while disproving competitors' counterclaims.

Example A salesperson hands out an industry report that shows average customers do not recharge their analog telephones more than digital telephone users. The digital telephone salesperson must now offer proof to refute this report's claims.