Small business strategy question: How are you adding value?

In a previous blog post, I asked 100 small business strategy questions. From time to time, I’m taking one of those questions and exploring them in greater detail. In this blog post, I want to look at the question: How are you adding value?

Most sales are made because the buyer perceives value from the seller.


Value perceived by buyers has two components…

  1. The product or service fulfills a want or need that the buyer has.
  2. The product or service cannot be replicated by the buyer.

Let’s use fast food as an example: (1) A buyer needs to eat something good and fast. And, (2) a buyer cannot create a burger and fries at home that are quite as tasty or as fast as what he or she can get at McDonalds.

Most business owners probably think of the first value component as the list of benefits that they typically use to sell with: “Fast!”, “Blue!”, “Smells Great!”, “Less Filling!”, “Your neighbors will be jealous!”, “Lose weight!”, etc.

And the second component is frequently thought of as the value YOU add to the product or service: Maybe you’re a manufacturer and you assemble a bunch of small pieces into larger pieces; maybe you are a movie theater and you have a license to show films, plus the film industry sends you their movies; maybe you are a lawyer and you have in-depth knowledge of some aspect of the law; etc.

See the difference between the two value components? They’re definitely related but the first set of value components are the flashy benefits we tend to sell with. The second set of value components are those aspects of the product or service that allow us to sell instead of just anyone.

Businesses frequently sell with the first value component but they often miss out on using the second value component in their business. And when they forget that there is a second value component, their business slowly erodes as customers discover an alternate or do-it-themselves option.

This is exactly what is happening in the real estate world right now: The first value component still exists — clients still need to buy homes. But the second part of the business (the insider knowledge and access to information that real estate professionals have) is eroding. Clients are finding what they believe is a suitable alternate. (Whether or not it IS a suitable alternate is another question… but potential buyers who choose a do-it-themselves option have found what they THINK is a suitable alternate).

It also happens from time to time in the automotive industry: Buyers have a need for fast, comfortable transportation — that’s the first value component. The second value component is where the automotive industry trips up: Buyers are offered better vehicles (cheaper, faster, smaller, bigger, eco-friendlier, etc.) from competitors.

Now here’s the part that blows my mind whenever I think of it:

The first value component is the part that customers feel constantly. Buyers always have a need for fast, tasty food, and they always have a need to buy homes, and they always have a need for fast, comfortable transportation. Those parts never change.

The second value component ALWAYS changes. New alternates or replacements or do-it-themselves options spring up all the time. This is a key place for businesses to innovate and for upstart companies to gain traction.

So with this in mind…


What kind of basic, ongoing problems or needs to your buyers perceive that you fulfill? (That’s the first part of the value component).

And, what kind of value do YOU bring to the table that cannot be replicated in any other way? (That’s the second part of the value component).

Answering the first question should be easy (after all, it’s probably how you sell day-in and day-out). But answering the second question might be more difficult. And if you find that there are alternates or ways for your client to replicate what you have to sell then it’s time to see if you can add even more value.

Published by Aaron Hoos

Aaron Hoos is a writer, strategist, and investor who builds and optimizes profitable sales funnels. He is the author of The Sales Funnel Bible and other books.

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