Building Your Money Machine TES 020 - The Two Factors That Allow You to Charge More
This episode #1 Bestselling Author and Highly Acclaimed business & Entrepreneur Expert, Mel Abraham continues the discussion on the subject of value creation. We dive into these two frameworks: Value Sectoring Framework and Value Focus Framework.
Value Sectoring Model
Think about where you are in the context of what you provide to your customers and clients. Place it on two axes with one of them being the connection you have with clients and the other one is the distinction that exists for you in the marketplace.
There are four levels or quadrants in this model that we need to understand:
1. Commodity: It is the lowest in terms of connection and distinction so it is easily replaceable. Things like loyalty and relationships do not apply. The only things that have an influence are price and convenience.
2. Connected: There is a high connection with the customers but the distinction is low. There is a sense of loyalty but despite the good connected relationship with the customers, the product or service is easily replaceable.
3. Incrementalist: There is a high distinction but the connection with the customers is low. The product or service is unique but the relationship with clients does not exist. It is able to generate high profits. But once the competition enters, the only way you are going to win is to make sure you have a connected relationship.
4. Valued: The final one is a step higher than the incrementalist perspective in the quadrant. This is a high connection, high distinction level which creates a valued customers and relationship. It far surpasses anything you can do as you create a values based loyalty.