Value is comprised of four key elements: price, quality, service and convenience. Getting value from a product or service has traditionally meant some level of compromise. If I want the lowest price, I sacrifice quality. If I want the most convenient option, I need to pay a bit more. However, the modern consumer—equipped with more options, tools and resources than any consumer before—has grown accustomed to a marketplace that assures them they don’t have to compromise. They can have it all, and should expect it all, too. For businesses to win and grow in the future, we must find ways to both differentiate from the competition while meeting modern consumers’ great expectations. To do so, businesses need to focus on service and convenience for differentiation.
When Price And Quality Ruled
Traditionally, price and quality were the two levers businesses could pull to improve their value proposition. Larger businesses had the scale to offer quality at a low price and maintain significant market share. But the modern economy has allowed for smaller competitors to disrupt that reality. Innovation in digital and manufacturing technology has lowered the barriers to entry for smaller competitors, who can now scale audiences and production faster than ever, challenging incumbents. The result is a decrease in the potential for price and quality to be used as a means of differentiating from the competition. While price and quality are still certainly important, there is abundant potential in leveraging the other two elements of value—service and convenience—to help businesses separate from competitors and meet consumers’ expectations.
Service and convenience are the softer elements of value. They address intangible consumer needs like the desire for experiences and the quest for headspace which, while not as concrete as price and quality, are increasingly important to consumers today. 58% of Americans, including 70% of Millennials, agree that no matter how hard they try, they never seem to have enough time to do all of the things they need to do. Hence, the desire for convenience and service in every interaction with the marketplace. Simply put, businesses that address this need will find growth.
Service And Convenience = The Future Of Differentiation
Take Best Buy, for example, which found financial success amid the spate of retail bankruptcies and store closings of the past few years. The electronics retailer began by meeting consumer expectations of price and quality. It matched Amazon prices and prioritized high-quality vendors in-store. With that playing field leveled, Best Buy doubled down on service and convenience, improving its website and app experiences, revamping employee training, and expanding its Geek Squad and in-home consultation services. These are all efforts in the spirit of service and convenience, and helped Best Buy flourish while its competition struggle to stay afloat.
In short, service and convenience are the key differentiators in the future value proposition. Businesses which focus on innovation in these areas will have an easier time meeting—and profiting from—the great expectations of the modern consumer.
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