004: Decoding Customer Value: Strategies to Enhance Appeal and Outshine Competitors in E-commerce

Speaker 1: 0:00

All right, welcome to episode four of our Amazon Tactics, Tuesday and today. What we're going to be talking about is the value of, well, the value perception formula and kind of perceived value and how to put that into perspective when we're talking about not only the perceived value of product, which I think a lot of people are familiar with, but also how much time it takes in order to enjoy that product, or how much effort it takes. And so with that introduction, Mike, I know this is a concept that you really brought up and have put a lot of thought into for your business. So can you kind of walk through the overall concept and what, maybe a couple of different things that you've done in order to implement this concept in your business?

Speaker 2: 0:53

Sure, yeah, I think, first of all, it's important to point out that this kind of value proposition formula actually it's not my own idea. You know, alex from Mozi actually presented this and I just it really resonated with me based on some of the things that we were already doing in our business, and so it made sense to have a conversation about it. But essentially, like you said, I think we all have a recognition as entrepreneurs that we're always trying to increase the perceived value of our product and there's, you know, various ways to do that. You know, and we're always looking for that. You know way to present the product in a better light and you know the marketing of it and whatnot. And obviously, hopefully, we're also taking a look at how to improve the product itself. But then also, you know, reducing. So I think part of the issue here is there's in this formula, there's a numerator and a denominator. So essentially, the end result in terms of the perceived value that a customer has for your product is not just what will they get from it, like how will they benefit from your product or your service or whatever it is, but also how much money is it going to cost, how much time is it going to take them to invest, to get to the point where they're getting the full benefit of whatever it is that you're offering, and how much effort are they going to have to put in? You know so, like, you know, hermosi, you know, one of the things that he was talking about was like, okay, if you were, if you were, a, you know, a fitness club, you know like, and you're promoting, you know, like, this, you know, hey, we're going to get you fit. You know well, okay, how long? You know, like, how long, till I get to six pack? You know how much money is it going to cost me per month? How much effort am I going to have to put in to? You know, can, can I just come in and work out for 15 minutes a week? You know, and you know you can't get me to work out for 15 minutes a week and three weeks later I'm going to have, you know, abs of steel. You know, or is it going to be this extended? You know process, whatever you can do to reduce what would be the denominator, which is the amount of time and effort and money required to get the benefit, versus the numerator, which is the actual benefit. You know what are they going to get. The better off you're going to be, the more the customer is going to going to be inclined, let's say, to order the product. So from our standpoint, for our product, one of the things that's interesting is in the pool category for tools, which is what we sell pool cleaning tools there is, to some extent, it makes it a little bit easier on us because everything else in the category is crap. I mean, listen, you know, it's just everybody is selling a really really low quality product in our category. So standing out in the category is a little bit easier, say, than in some other category where maybe the baseline quality tends to be a little bit higher. So if we can just produce, you know, a higher quality, more durable product, already we stand above. But you also have to visually present it that way, right, like it's. Like you know, when you're selling online, all they have is what they see, and so you have to present a visual to them that represents that quality differential. So that means your image quality on the on the platform, like if you're going to say we're actually a better, more durable product, you better have images on your listing that actually seem to indicate that you know like, and sometimes it's just about the quality of the image. It's not even necessarily what you're taking a picture of, but the quality of the image itself, because people are looking at your company and they're not just looking at the product, they're looking at what's the company behind the product. Right, If you couldn't actually take the time and put in the effort to take a really good quality image of whatever the feature is that you're trying to present, how can they trust that you actually put the time and effort into making that feature what you say it is right. So make sure that the images that you're taking of those features and of your products are really high-level. You know images. You know really good quality, high resolution. You know the whole nine yards. But then what kind of services can you package with it? So we're like for our product it's not just the product but it's the warranty. You know like we're offering a warranty that is head and shoulders above everything else in our category. Well, that's going to make our customers lives easier and it's going to save them money in the long run. So, yeah, they're going to pay more on the front end, but they don't ever pay any more money down the line because it's an unlimited free replacement warranty. You know we make the process super easy, so warranty Registrations and claims is completely automated. It's almost always approved. So they don't have to jump through hoops, they don't have to send us evidence, they don't have to prove that they, you know, are, are, you know, entitled to the replacement. They're going to get it regardless and our review profile on Amazon reflects that. You know, we make sure that when people actually receive their, their claim item that we're asking them, say, hey, you know what was that process like? If you really, you know, thought it was a, it was a good process and an easy process, go give us a review and so we've got, you know, massive numbers of glowing five-star reviews that are, you know, paragraphs long because people are so impressed with the process. And again, it's all about that perceived value. Obviously you want to add Real value in terms of the product and whatever service you're offering with that. But also it's what do they perceive that value as? What's the amount of effort? They have very little effort involved in receiving the benefit right. The benefit is the product and the warranty. Those are the two things that we're basically bringing together a really high quality product and a good warranty, but the warranty is only as strong as the provision. Right, how easy is it to actually get the replacements? Do I have to jump through hoops so I have to be on the phone for an hour with a customer service rep? Improve my case, right. We make that process really easy and we make sure the reviews on Amazon Express that, so that people looking at it are like, okay, I see what the benefits are, but I also see that denominator. You know how much effort do I have to invest to get that benefit of all of those? You know potential replacements is very low and so that full fraction, you know Very high numerator in terms of value, very low denominator in terms of what their effort and cost investment is, and I think you can apply that to pretty much any product.

Speaker 1: 7:14

Yeah, and I think it's so. The first thing that comes to my mind with this, too, is just the Essence of selling on Amazon itself is, you know, really proves this concept, which is, you know. The reason why a lot of Customers buy an Amazon and why your conversion rate on Amazon is 3, 4, 5 times what it is off of a typical website Is because Amazon already takes advantage of this concept by you know. Anything that you order if you're an Amazon Prime member is going to arrive in your door, usually within a day or two, and then on top of it, so you get to that benefit right away of not only you know being a member, but also of getting that product right away. I think a lot of customers now expect that whatever they order to show up in a you know in in two to three days, whether be on Amazon or not, because of the expectation that they've built in getting that product a lot faster, so you get the benefits of it a lot faster. And then also you know backing that up with the return policy and other things that they have as much as as sellers. Sometimes it drives us nuts when we see certain things and why they're returned. The reality of it is. It also allows us to sell a lot more product. So I think you know what's important for people to take away here is you know whether you're selling on Amazon or another platform of. Yes, there's that perceived value, but then also you can increase that by Thinking about how you can make it easier either easier or faster for customers To use your product or get the benefit from your product, and there's a lot of different ways to do that. It doesn't have to be super complicated. One of the most obvious ones that I see a lot of companies as an area of improvement Is just how to use their product. So having you know an educational video that goes along with it and maybe, as part of you know, the after purchase funnel, which is something that you know we offer a free course on on our website Because we see how powerful it is of just showing customers hey, here's how you get the the maximum benefit out of this product. Here's a number of different ways it can be used. Here's the right way to use it. Here are common problems that people have and how you can solve those problems. Um, there's a lot of different ways that you can add value, kind of through this formula that Alex Hermose put forward. Well, that way that you just described is basically Both of those things are Increasing the denominator.

Speaker 3: 9:42

I mean, first of all, you're making it easier for them to use the product. You're increasing the Value of the product because if you're giving them a video that's easy for them to consume on how much You're giving them a video that's easy for them to consume on how to use the product before you even start. I mean that already increases the value of it, of the product and of the brand to the consumer. But then also, at the same time, you're getting, you're building your email list. So that's like a triple whammy where you're increasing the value, you're decreasing the amount of time it's going to take for them to enjoy the product and as a bonus, you get the email address to continue to market to them afterwards.

Speaker 1: 10:18

Yeah, yeah, for sure, and this is kind of a more strategic, abstract way of identifying this concept. But yeah, there's a ton of benefits that we could go through. I mean, the one that pops to my mind is, you know, preventing negative reviews. I think probably half of the negative reviews that I see on products and brands as a whole are because, for whatever reason, customers don't know how to use the product right. And now at the end of the day, we can say, hey, yeah, I mean, you're always going to have those customers that, no matter how clear you make the directions or what you do, aren't going to have problems. But really, what it boils down to is, as the brand owner, it's your responsibility even if it's not your fault, it's still your responsibility to make that those instructions and everything around your product and your brand is as simple and straightforward as possible so they can get the benefit as quickly as possible.

Speaker 2: 11:21

And yeah, I think you know there's another piece of that comes to mind, and that is that a lot of times we look at this as only a, let's say, a front end issue to address, and what I mean by that is, say, the first purchase of the customer. So this is a new to brand customer and we're trying to convince them to buy from our company, right, and so we're trying to increase the value perception of the product, and part of that process is decreasing the amount of perceived effort or time or money that's going to be required to get the benefit. So you know getting that, you know fast shipment, you know making sure that they understand how to use the products, they can get the most out of it and the least amount of time. You know all of those things add to that. But there's a secondary component to that that we don't think about often, and that is the ongoing relationship that you have with that customer after the fact, to continue to build that perceived value of working with your company, not just the perceived value of the product that they purchased, but the perceived value of maintaining a relationship with you as a brand. What is that? What is the perceived value of maintaining that relationship, which means continuing to open your emails, which means continuing to respond to, you know, offers that you bring their way, responding to additional products that you might have for sale, like, are you building that level of perceived value that says I want to continue to associate myself closely with this brand because I like what they're doing, because I like the products that they offer, because I like how they treat me, and so, again, you know, one of the things that we actually recently discovered and we kind of had a talk about this was the was Amazon's their after purchase what do they call it product life cycle support program, which offers you the opportunity and it's interesting, there's at least one maybe there's more companies out there now, but there's at least one company out there that's basically offering to Amazon sellers to help them participate in this product life cycle support program through Amazon, and they charge you for doing it. But you don't have to pay a company to do it. You can connect with Amazon's product life cycle support and you can participate without paying a dime. It's free and actually it's the best department we're dealt with at Amazon. They were amazing, but the point of the program is Amazon is giving you a way to head off customer returns by providing additional support through Amazon's platform. So on your product listings and if somebody goes in to file a return on your product or try to get a refund, they are presented with materials that you give to Amazon. So it could be troubleshooting videos, it can be troubleshooting information you know, like they click through like this is my problem. This is the thing you know. And then there's a little blurb that says how to fix that. Or it provides contact information for your company your email address to your customer service department, your phone number to your customer service department. You know all of those things Amazon actually allows you to directly connect. You can actually link them directly to the customer service page on your website, where you know like Amazon never lets you link to your website ever. Give your email address, give a phone number, and yet through this product life cycle support system, you're able to give all of that information to the customer so that you can better support them. And so in that process again, you're building that relationship, even with those customers who have a negative experience with your product. You then get to turn that relationship into positive direction by giving them those support options directly through Amazon and hopefully reconnect with them in a way that maintains that relationship, which then increases the lifetime value of that customer because they value that relationship with you. So you know it's kind of a tangent to some degree. But you know, if you don't know about product life cycle support, it's. You know P the P S program, look into that because there is a way to set that up with Amazon and it's really valuable to be able to head off some of those returns and rebuild maybe a potentially broken customer relationship.

Speaker 3: 15:35

And then increase the value of your brand in the minds of the consumer, which then allows you to charge a higher price point. So it's just this never ending cycle, yep.

Speaker 1: 15:45

That's becoming even more important. We have a lot of, I think, no matter what category you're in, almost every category at this point has very strong competition from overseas sellers, and so you know that question, especially in the last couple of years, comes up a lot of how do I compete with these? You know overseas sellers that may have, you know, some other advantages, some of them fair and some of them unfair. Quite frankly, and this is, you know, one of the ways that you can compete with them, because the vast majority of them Either can't or won't put in the effort in order to actually take a long term approach to take care of customers.

Speaker 2: 16:25

So that's absolutely true, and if somebody doesn't realize that, it's like I mean in most categories on Amazon, and this is especially true in Amazon US and Amazon Canada, but Over 50% of the sellers in any given category are overseas, mostly Chinese sellers. Although there are Chinese sellers that do offer good support to their customers, the percentage is very low. There are a gazillion Chinese sellers that are in your category who are not offering any sort of you know, decent level of support to their customers at all, and so you can easily compete against those sellers by making sure that you increase that perceived value of the relationship with your brand, because you're going to actually support them after the sale.

Speaker 3: 17:07

One of the other things that you talked about initially, mike, was Having high quality images, and so for me, in my categories the categories that I sell in there inundated with Chinese sellers and, unlike you, in most of my categories I haven't differentiated in terms of quality of my product. Like it's, I sell the same thing as 20 other people and a lot of them are Chinese manufacturers that are selling it for a lot cheaper. But Because my main image is better, because my title actually makes sense and isn't a keyword salad and once you click into it you actually see pictures of people using our product. Like we put a lot more effort into the branding side of things, which most Chinese sellers don't do, so that allows me to be at the higher. Just that alone allows me to be at the higher price point, just because of the perceived value of how my brand looks. But then you add on all of these additional layers and then that you know you mitigate negative reviews, you promote better review. Like that just gets that flywheel spinning a whole lot faster. So there are ways to beat Chinese sellers, and a lot of them. We touched on in this in this tip.

Speaker 1: 18:10

Yeah, I think that's you know the strategy overall. There's all you know, probably 10 different ways that you can take this concept and you can implement it tactically, whether you're selling on Amazon or off Amazon. And I would say the other thing is that the more premium your brand is, the farther that this you know concept in general is going to take you in serving your customers and ultimately, you know, fortifying your brand For a long term success.

Speaker 2: 18:41

You know, I think what's also important you know to think about and this is A larger concept, that that really supersedes what we're talking about, but I think it's it's a valuable piece of this and that is, I think sometimes we lose. We lose the force for the trees in the sense that you know sellers like we were always looking for the next hack. You know the especially is Amazon sellers right, what is the new hack that I can use that's going to boost me to the top of the listing? Or it's going to do this or do that, and there's nothing wrong with that, like I don't have a problem with that. Some of some of those hacks are actually pretty useful and valuable, but I think, mostly, what we really should spend a lot more time thinking through is what are those high level Strategies like just business, good business strategies. What are those high level strategies that you can implement that will have a broad scale of fact on everything else that you do, right, like there's certain things that you can do in your business that multiply the value Of every other thing that you do in your business and there are other things that you can do which, yes, they will improve things, but they're very granular, like they help in this area, but they don't necessarily multiply to all of the other things that you're doing. So you get An incremental increase as opposed to an exponential increase, you know. So, for instance, a better product like let's just start there, right, if you have a a truly better product than everybody else in your category and you're able to actually make that case right Through good images and things like that, you know, but let's just take better product First of all. If you don't have a better product, then you don't. Like, you don't have anything to highlight in your images in terms of where are you better than everybody else, right? So your images are now less effective than they could be because you don't have any better features or any improvements over the competition that you can highlight in your images. Right, your reviews aren't gonna be better than anybody else in your category and because it reviews are taken into account for ranking, now you can't rank better because your reviews aren't better. You know like there's this cascading effect that snowballs in either direction. So the worse your product is, the more snowballs in a negative direction, but, by contrast, the better your product is, the more every single thing cascades in a positive direction. You know your reviews are better, your images are better, you can highlight better features, you can put those into your titles, you can, you know, like. So there's all of these things that you can do that I think you need to think through. If I do this, how many other aspects of my business, how many other you know, will it increase CTR, will it increase CVR, both of which affect my ranking, which also affects my sales volume, which affects my BSR, which then affects my ranking? Right? So there's this exponential curve in terms of its benefit. What are those things you can do in your business that are gonna have the exponential benefit because they affect everything else, versus the things that you can do that, tactically, might be something you could address, but they don't affect anything else, you know. So you're only gonna get this incremental increase. Where do you wanna place your effort?

Speaker 1: 22:05

Yeah, I think that's a great point and well said that it really comes down to having a good product and leveraging in the right places, cause, yeah, I love you know the hacks as much as anybody else, but do they have that that domino effect of you know building momentum for your business? And it's okay to test those out and spend some time on them. Just understand that you know you may only see incremental increases instead of kind of the exponential increases that you talked about, mike, yeah, yeah. So, with all this said what you know about perceived value, what are maybe two or three takeaways or tips that we can give people in order to implement perceived value and you know kind of this formula for their brands or even their individual products?

Speaker 3: 23:06

I think for me, the biggest tip was starting with conversion rate, click through rate I mean Mike talked about how important that is for your ranking and that's really how you start your listing anyways is making sure that you're starting out with high quality images. You're calling out your unique selling proposition. I think paying attention to high quality images and text copy that actually makes sense on your listing. I think that's number one place to start. So if you didn't invest in high quality images and competitors have better images than you, that's probably where I would start my efforts, because that's going to have the highest level of change in all aspects of your business, I think.

Speaker 2: 23:45

And I would say, as a precursor to that, really this is said often, but I think, unfortunately, I think there's still a lot of sellers that either they understand it but they don't really know how to do it well, and so they just ignore it because they're not sure really how to address it, or they don't even know that. This is critical, but knowing your audience. High quality images are great, but if those images are showing aspects of your product that your target market could care less about, then you're not helping yourself. You're not selling to the right person. So you need to know who is that individual. That is your best customer. You're going to sell to other people In our category we, of course, sell to a wide range of pool owners, but I know that my best customer is this guy. He's the middle-aged married guy, he's got kids, he's got a management position, he's making 100K a year plus, he's very patriotic and he's loyalty and integrity and all of those things are the things that he's really focused on. I know this guy inside and out. So when I have images done of our products, I know the things that he cares about, and so, therefore, I'm going to make sure that the images that I'm having done focus on those areas and the wording is, when there's graphic elements there, that it targets the way that he thinks and not some other customer. So a high-quality image is valuable, but make sure that what you're taking pictures of is something that's actually important to your target audience, and the only way you know that is if you know who it is.

Speaker 1: 25:38

Yeah, I think that's a great point. One of the things I love about Amazon as a vehicle for building your brand is the amount of data that it gives you. If you look into your search query report, if you look into your PPC reports even different A-B testing now you can get, I think, much more granular than almost anywhere else on who is buying your product, based on what benefits and features, and really paying attention to that in order to leverage that as much as possible, not only on Amazon, but even beyond Amazon. When you're thinking about building again building a relationship and I think this is where what really fortifying your brand is about is building that relationship with that customer, as opposed to a one-time transaction, because there's so much more. 90% of your value is in that relationship, not in that initial transaction. That's just the first stop, the first play in the game of building your brand.

Speaker 2: 26:41

Yeah, yeah, it's the first date. I mean, that's all it is. It's a first date. Do you want to continue dating? Do you want to maybe get married? Down the road, you better go a little further, right? The first date's not really enough.

Speaker 1: 26:55

Absolutely All right. Well, I think that's a great place to wrap for this episode. I think there's a number of takeaways, both from a strategic perspective and then also a couple of specific tactics that I would really encourage anybody who's listening to this to think about how to implement those into your brand, because you're going to see a lot of those benefits over the long term in building a successful brand, whether it be using Amazon as that platform to do it, or even off Amazon.