As we have already discussed in the 5 parts of every business article. The first step in running any enterprise is to create something people find valuable.
As an entrepreneur, you are looking at creating products or services that would solve a challenge or problem for a customer. Wondering how to create value for your customers? Great thought.
How value creation in marketing works?
Let us loosen the knots of value creation using my business story. My business is based on the idea of giving valuable information to entrepreneurs to create, grow and maintain businesses. Why this concept? In the digital product business, there are 3 areas where the market size is huge. These are
- Health
- Wealth
- Relationships
If you have an expert in any of these areas, you should strongly consider sharing your unique opinions on your area of choice. Downplaying your potential and looking down on yourself would not make you shine.
Until you make a move, you will never know your expertise. As Tim Ferriss suggests in the 4-hour workweek, you can simply google “ the 3 best books on…your area of interest ”. Read and summarize each on a page. Congratulations, you have become an expert in your interest area.
The trick to making your writing unique is your personal experiences. How you intertwine who you are with what you are reading. Finally, you have to start to write. Your audience will tell you what they want to read.
Effective value creation: Investing in You
I know and I agree with what you are saying, Ben. But I am not interested in
writing and giving value through sharing information. I have no idea how to create a valuable service or product. What do I do then?
The answer is simple: invest in YOU. You are a huge asset. You have immense value. And there is a simple activity you can do to change your life – educate yourself. There is no complicated maths or equations. Educate yourself. Make yourself valuable by building skillsets through reading. I have elaborated on this in a post – How to get a job in this Covid Pandemic?
How to assess effective value creation in marketing?
I know the BackBenchers are still in disagreement with me. But I would strongly suggest. There is no excuse not to find a valuable product or service. Alternatively, you are an asset. Invest in yourself. Educate yourself.
How to Evaluate Your Business Idea
There are millions of other avenues online selling physical products and other services. So how does one come up with an idea? One of my favorite ways of evaluating a business idea includes just 10 simple steps. This is purely a Back Napkin Approach to evaluating your business idea.
Value creation asessment method:Back Napkin Approach
This is a really quick approach to evaluate your business before you waste your time and money on your ideas. To remember, I have developed an acronym. The word is CUPIDS. I know the word is 7 letters but I said 10 simple steps. The final acronym is CUUUPIDDSS. That is cupids with 3 u, 2 d, and 2 s.
- C – Get customers
- U – Uniqueness of Offer
- U – Upselling
- U – Urgency
- P – Price Potential
- I – Up front Investment
- D – Cost of Delivery
- D – Speed of Delivery
- S – Market Size
- S – Scale
You rate each idea between 0-100. If your business idea scores above 75 you have a great idea. If it is below 50. Don’t waste your time. If it is between 50-75, the idea can pay your bills nothing more.
Selling Iced Water
Let’s use the above criteria to evaluate whether we should engage in selling ice water
Getting Customers
Getting customers for drinking water is not easy. It includes standing in the sun and hoping that a person thirsty in his vehicle will ask for drinks.
Value – 4
Uniqueness of Offer
It is not unique to sell iced water. Most people carry their bottles with water in them. Compare buying a Rose Royce with buying iced water.
Value – 0
Urgency
This business gets a point here because when you are thirsty and you need water. You need it.
Value – 9
Upselling
I don’t know how you can Upsell a person on iced water. And most of the time the sellers are also not trying to Upsell you.
Value – 0
Price Potential
The price potential is just not there. Because of easy entry into the business. The market sets the price
Value – 0
Investment
The upfront investment is very little. This increases the competition and affects the margins on the business
Value – 2
Delivery cost
The cost of delivery is very small. The person easily hands it over to you. But there is a problem.
Value – 10
Delivery Speed
The business scores a good point here. But sometimes either the seller or the buyer loses money. The traffic lights come on and the cars have to move.
Value – 5
Size of Market
The size of the market is huge. Everyone needs water.
Value – 10
Scale
The business idea cannot scale. This is because humans do not scale. If the seller falls sick. There will be no sale.
Value – 0
Sum is 4+ 0+ 9 +0 + 0 + 2+ 5+10 + 10 +0 = 40
The answer is obvious. Stay away!
Selling Digital Products
Let’s use the above criteria to evaluate whether we should engage in selling digital products.
Getting Customers
Getting customers is an automated process using social media marketing.
The cost per customer acquisition is in cents.
Value – 9
Uniqueness of Offer
You are as unique as what you offer for your customer. There is no person like you.
Value – 10
Urgency
Information is key in building the Wealth You Want. There is an urgency about money and people wanting to change their lives.
Value – 9
Upselling
The potential to Upsell is huge. People can start consuming your content for free. Move on to buying ebooks, courses, and eventually coaching and mentorship programs
Value – 9
Price Potential
The price potential is huge. Why you really cannot put a price on the value of life-changing information.
Value – 9
Investment
The upfront investment is moderate to high. This is because you need to invest a lot of time in learning and distilling your ideas into something valuable for people This increases the competition and affects the margins on the business.
Value – 8
Delivery cost
The cost of delivery is minimal. Once the digital product is finished. It can be easily replicated.
Value – 8
Delivery Speed
Delivery is an instant download or access to the information
Value – 9
Size of Market
The size of the market is huge. Information makes a difference.
Value – 10
Scale
The business idea does have the ability to scale. Once a digital product is uploaded, it can be downloaded many times.
Value – 9
Sum is 9+10+ 9 +9 +9 +8 + 8 +9 + 10 + 9 = 80
The answer is obvious. Start it.
My thoughts on value creation in marketing
Creating a value to solve challenges is a creative process and involves quite a bit of trial and error. By using the Back Napkins Approach you can quickly evaluate your idea without wasting too much time and money. Please note technical evaluations are important before you start any business. Getting the finances down on an excel sheet matters.
Hope these were beneficial to help you start your entrepreneurial journey.
Watch on Youtube: What is value creation in marketing?
Until next time wealth builders, let’s build wealth.
