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What is the Value Chain and Why It Matters to Your Business

Jun 3, 2019
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Why do people buy a product or a service? Because it add value to their lives! Great companies can charge a premium for their goods and services because they have added value not just in the what they produce, but throughout the entire process. In the video below I will walk you through the importance of the value chain and how you can use this concept to grow your revenue.

 

 

Video Transcript: 

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Let's talk a little bit about value chain. I'm not going to be using any white boards or any slide decks today. I just want to have a honest conversation with you. Value chain is how we add value throughout the entire process. This is both an internal process for our business as well as external process.

When it comes to marketing, there's no better way to market. There's no other channel that has more conversion power than referrals. And referrals come from customers who are raving fans, customers that really love what you do and that love it so much they can't help themselves but to talk about it.

HubSpot talks about this as delighting customers, right? When we talk about the inbound funnel. Well, this really works across every single stage. And if you want your team to add more value, have more ownership, they also need to be raving fans of what you do, and to have a clear idea of what's going on through the entire process. Now, this starts with the initial hand-off, right? When somebody closes a new deal, how you do a hand off, that's up to your internal team. Do you have an internal team meeting? Do you have a discovery process? Or is it a little bit more automated. The reality is your team needs to understand how things work internally and how value is being added all along the way.

Maybe an order comes in through the website and the person who intakes that order in the warehouse and ships that box out, they add value throughout the process. Maybe that's a handwritten note to the client. One really cool way of a company that did that was Piktochart with me. Now, Piktochart does these infographic tools, and you know, I was sitting around one day and the mail came in, and I had bought a subscription to Piktochart, and they sent me a handwritten letter in the mail. Like it was legitimately handwritten. Not one of those letters that you get that kind of look handwritten but that we all know that are fake. They took time to write me a note to thank me for being a customer.

Now, I doubt that the CEO themselves took initiative to do that. Maybe they did early on. Now, but this was somebody on their team that added value in just shipping me a piece of mail. Right? It was a letter. Cost them, you know, a couple cents. But to me, I was like, "Man, that was pretty powerful." Because it was somebody on their team that took time to say, "Hey, you're worth a handwritten note." And in today's world? I mean, that blew me away.

But again, that started with an internal process where somebody was saying, "Hey, once somebody signs up and they've been active on our platform for X amount of days, we're going to slow down and we're going to write them a note and tell them that we're thankful they are a customer of ours." And that leads to me, the customer, going, "Wow, that was a really powerful experience." And you have to continue that through the process, and as you do that, you begin to nurture your customers and to make them raving fans.

So that was one way to add value. But you can also add value by sharing wins with your customer, by working alongside them, and maybe answering a few questions that they have and taking time to explain a process. Value chain is the same thing as we're investing. You invest a dollar and you have X amount of interest on that dollar. Well, if you make an interest of 7% on the first year, the next year, you don't make 7% interest on a dollar. You make 7% interest on $1.07, and it begins to compound.

The same thing happens when we add value to our customers and to our teams. As you begin to add value through each stage of the process, it begins to compound. And as that value compounds, your products and your services become more valuable, and your team begins to invest more and more time and energy into making sure that they do the best job possible. But it starts with the leader. It starts with the person running the department to take that initiative and say, "Here's how we can increase our value. Here's how we can make our customers more excited about what we're doing."

Because then what you can do is leverage those customers for referrals. And then, again, even in that you have to do it the right way. You don't want to say, you know, "Hey, we've had a really bad quarter. By the way, if you know of anybody else that wants to have a bad quarter." I'm just joking. But, you know, we have to make sure that the timing is right, as well. So in making sure that our customers are so excited and so believing in the products and services we provide that they just have to go, "Hey, man, if you need a website, if you need a back massage, if you need coffee, if you need a T-shirt, if you need whatever it is that you're selling, you have to go to this guy, because when they took care of this for me, it went above and beyond."

These are the things that we can do to make our businesses stand out, because most business owners, not most, but some business owners, take the easy road. Maybe they have an installed customer base. They just kind of churn out their widgets and they do their thing, and they don't think about the value add. But if you want to grow and you want to grow a lot and you want to make an impact bigger than only the monetary side of things, value chain is an essential part of your business.

If you've got any questions on value chain or any questions on how you can engage your customers more effectively, please comment below. Let's continue the discussion. And until next time, Happy Marketing. 

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Ryan Shelley, CPBI

By Ryan Shelley, CPBI

Ryan is passionate about helping companies make a more personal connection online with their customers and prospects. He is a regular contributor to Search Engine Land, the largest and most popular SEO news site on the web. His works have also been featured on the HubSpot Blog, Business2Community and by LinkedIn Marketing Solutions.

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