Obtaining value in purchasing goods and services becomes extremely important when the economy slows. However, the reality of value can be illusive.
“Value” in today’s economy is among the most used and abused words in marketing, followed by the popular brochure cliché “partnering relationship.”
In retail, buying a $1,400 men’s suit and getting a second one free may sound like a great value, but only if the quality of the fabric and tailoring of the first suit was really worth $1,400. If the real value of the first garment was $600, the value proposition of getting a second suit free moves from really good to really bad.
The rules for value determination are essentially the same, whether we are talking about men’s suits or a professional services company like a search firm. In this new economy, characterized by slow growth and prolonged high unemployment, it is critically important to identify and recruit leaders who deliver exceptional results while enhancing the organization’s cultural DNA and building a best-in-class customer experience, in other words, producing value.
In healthcare, significant cutbacks in Medicare payments driven by painfully necessary deficit reduction measures will pose enormous challenges for leaders and the concept of value purchasing will be especially important.
The old paradigm of simply claiming a certain value proposition without increasing accountability, sharing risks or using innovation to improve the delivery, will not work. In the boom days, repeating a marketing slogan over and over was usually good enough to make it stick. Having the most expensive fees, with flashy offices scattered around the country or the globe, and a decades-old national reputation, is hardly the stuff that defines true value.
Saying that a $600 suit of clothes is worth $1,400 doesn’t make it so. Adding a second suit free doesn’t make it better.
© 2012 John Gregory Self