Have you noticed that some products take off like wildfire and others fail no matter the marketing budget? It all comes down to product value. Whatever the industry, product value always wins. Slack provided a faster, more organized way to communicate with colleagues virtually, Spanx offered the tummy control without having to wear out-of-fashion nylons, and Verizon has continuously brought wireless cell coverage to rural America.
Entrepreneurs talk frequently about product-market fit and product validation. Product value is central to both of these essential strategies. Without great product value, you can’t achieve product-market fit or validate your product.
In this ultimate guide to product value, we define this slippery concept, show you how to uncover it yourself, and offer plenty of examples to inspire you.
The real definition of product value
Product value refers to the reason a customer wants to purchase and use a product. The value it holds for the customer might be convenience, ease of use, effectiveness, speed, performance, reliability, or style. Consumers and businesses weigh product value relative to cost in order to make balanced purchasing decisions.
Product value quotes
These smart quotes about product value remind us that successful products not only satisfy some need for the customer, but also hold value that the customer recognizes and desires.
The product has to work. It has to be a good product. An enormous number of them are all hype with no value at all. People get into them because they want to make a lot of quick, easy money.– Brian Tracy
What a customer buys and considers value is never a product. It is always utility, that is, what a product or service does for the customer.– Peter Drucker
It doesn’t matter how much ‘real’ (objective) value you have baked into your product if your customers don’t perceive that value.– Dharmesh Shah
How do you determine product value? (Our 5-step process)
Determining product value should be a collaborative, reiterative process. It involves your target customers, current customers, colleagues, executives, and other stakeholders.
Follow these steps:
Step 1. Do your research
First, you’ll need to research your market and competitive landscape.
- Customer research – Talk with your current customers and/or your target customers. Use a combination of surveys, focus groups, and 1:1 interviews. If your business is brand new and you’re in the process of developing your first products, you’ll want to ask questions that get at the target audience’s current pain points. For example, you might ask “How do you currently achieve X?” and “What are the pros and cons of that method?” But if you already have a product and want to better understand its value so that you can scale your customer base, you might ask questions like, “Why did you decide to purchase X?” and “How does it impact your life?”
- Competitor research – You should also research your direct and indirect competitors so you can find out how your product compare. Document your competitors’ products, product prices, product descriptions, marketing messages (on product pages and advertisements), and customer reviews. Hunt for ways that your products are better than competitors, so that you can use these for marketing inspiration, and ways that your products are worse, so you can make improvements. To make the task easier, use competitor analysis tools like Sprout Social, SEMRush, SpyFu, AdSpyder, Owletter, and BuiltWish.
- Gather insider industry knowledge and visualize the future – While research is important, you don’t want to ignore your strategic vision. Maybe you know what customers want before they know that they want it. This is true for many of the best B2B SaaS companies. Oftentimes, their users can’t imagine a better way of doing things until a founding team creates it. Of course, these strategic visions are grounded in research, but it’s worth mentioning that you can’t just follow what customers ask for. You need to chart the path.
Step 2. Narrow down your research to the biggest values
When talking to customers and researching competitors, you’re going to gather a ton of data. Sometimes, it’ll be easy to spot trends and competitive advantages. But you might encounter conflicting product values, or so many different values that you aren’t sure which are the most important.
Spend some time whittling down to the core 1-4 values that your product offers.
Here are some tips to help you choose the top values:
- Turn qualitative research into quantitative data by distilling responses into categories and counting similar responses so you can find the most frequently mentioned values.
- Place a higher importance on product values mentioned by your ideal target customers or current customers who match your new ideal customer profile (ICP).
- Consider which product values put you in the best position against your competitors and provide clear differentiation.
- Brainstorm which product values will have the most relevance and importance in the next 5 years. Which will be the most relevant?
- Which values raise your overall perceived value and the amount that you can charge for your products?
Step 3. Use a template for communicating product value
After you’ve narrowed down your top product values, it’s time to communicate them.
The Jobs to Be Done framework serves as a smart template for communicating product value, and that’s because for most companies, the product value comes down to the product’s utility.
Use this template, which we’ve filled out using travel management company TravelPerk as an example:
- Customer avatar description (job executor): Office manager at a company with less than 100 employees.
- Core functional job: Book travel for executives and other business travelers.
- Emotional job (how the executor wants to feel when doing the core job): On top of it, relaxed and capable when responding to changes and issues quickly, pleasing others on the team.
- Related jobs: Provide support when trips are canceled, submit invoices to finance team, answer questions about travel budget usage
- Product values (your value proposition): Reliability (24/7 trip support so office manager doesn’t have to always be available); Efficiency (monthly invoices instead of one invoice for every travel transaction), Accuracy (travel data for tracking budgets in real-time).
As you can see from the above example, it’s much easier to determine your product values when you start with what customers want to achieve and what matters to them. This way, you’re not choosing values arbitrarily but are grounding them in customer needs
Step 4. Validate your understanding of your product value
The next step is to validate your product values.
Share your documentation on your product values with the following people:
- Executive leaders – See if executive leaders agree on the current product values. Ask if their strategic vision for the future will add or remove any values soon and what those changes are predicted to be. This will help you stay on top of your marketing strategies.
- Current customers – Share your product values with a selection of top customers. 80% or more should agree that the values you’ve listed are the top ones.
- Active leads – You can also have sales reps share the product values with some active leads and ask if these values matter to them or if there are other values that matter more. This can help you tweak your product strategy to what target leads really want.
Pay attention to the feedback you receive and consider updating your product values document or even building additional features.
Step 5. Weigh product updates and additions against your top values
Now that you know what your customers truly care about, you should use this as a guiding light for all product development.
Whenever you’re considering adding new features or products to your product roadmap, you need to consider how these will uphold your product values.
Anything you build should be in line with what your customers care about. For example, if they’ve told you that they care about accuracy above all else, then you shouldn’t build something that prioritizes affordability over accuracy.
What are the types of product value?
- Better performance
- Affordability and value
- Helps to save money
- Excellent customer service
- Ease of use
- Effectiveness in achieving desired results
- Efficiency and speed
- Convenience and ease of access
- Reliability, longevity, resiliency, and/or durability
- Sustainability, lower energy use, lower carbon footprint
- Attractive, novel, or useful packaging
- Luxury branding
Examples of product value in software
As a software development company, we’d like to kick off the examples with some B2B SaaS platforms:
Loom is a freemium tool for recording and sending screenshare videos. Before Loom came out and grew like wildfire, digital workers had to record a video with their webcam and upload it to an email. The recipient would then have to download the video to view it. Loom drastically improved convenience and efficiency by offering a no-download way to send videos. People can share the links to the videos and only download if needed.
- Ease of use
Terzo brands itself as a CRM for the buyer. This vendor management software helps large corporations track the third-party solutions they use and include purchaser and renew information all in one place. This way, IT staff can ensure that solutions are actually being used and catch unnecessary contracts before they renew. They can see who in the company approved the purchase and reach out to them to see if it’s still needed.
- Helps to save money
Airtable offers spreadsheets on steroids. Many people love working in spreadsheets. Airtable provides this format but with advanced features like resource planning, task designation and tracking, work visualization, integrations, workflow automations and more. You can view the same data in different formats and easily report on project progress and results.
- Better performance
Examples of product value in consumer products
And here are some product value examples from physical products created for consumers:
Released over 10 years after the first Toyota Prius, Tesla offered sustainability with style. While the brand isn’t exclusive per se (anyone can buy it), it does have an air of exclusivity due to the price. Plus, the round shape and style of a Tesla is easily recognizable and very different from every other car on the market. All in all, Teslas offer sustainability, performance, and style, while the Prius doesn’t pack the same punch.
- Luxury branding
A $600 hair styling tool? In the world of hairstyling, Dyson is an unlikely luxury winner, but is highly popular. The Dyson Airwrap is a pricey piece of bathroom equipment that works as a blow dryer, curling iron, and straightener all in one. Touted by influencers, it has a gotta-have-it sort of appeal. The product is unique from other items on the market and is backed by Dyson’s unique technology (the company has been making powerful and expensive vacuums for decades).
- Luxury branding
McCafe by McDonald’s
McDonald’s made a smart move when coming out with their McCafe line. Coffee houses like Starbucks typically charge $4 to $6 for one of their fancy coffees. McCafe offers very similar items at half the price, plus their drive-through lines tend to move a lot faster and their stores are easier to find. With this product, convenience and affordability are top of mind with customers.
Ulitmately, your product value isn’t what you think it is. It’s what your customers care about: the money they want to save, the things they want to experience, and the emotions they want to feel.
Ready to build a beautiful SaaS product your customers will love? Learn more about our SaaS development services.