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As entrepreneurs, we talk a lot about adding more value. But honestly, I think people have almost forgotten what that really means. Added value isn’t about adding fancy bells and whistles or throwing in more services people don’t want or need. It isn’t about being the least expensive. It’s about making a meaningful difference in people’s lives. And sometimes, the most important value you add or could add stays hidden because you haven’t paid attention to it.
How Amazon does it
I recently read the last shareholder letter Jeff Bezos sent out in 2020. When it comes to entrepreneurs, I think his story has a lot of lessons we can all learn from. Online shopping hardly existed when he started selling books in his garage. No one believed his idea would take off. The company didn’t make a profit for nine years, and most “experts” were positive that Amazon’s business model could never work. He kept trying new things. Some of his ideas failed big time, but the ones that succeeded helped build Amazon into the massive company it is today, with over $500 billion in sales. So much for the “experts”!
What I liked about his shareholder letter was his emphasis on creating value. He wrote: “If you want to be successful in business (in life, actually), you have to create more than you consume. Your goal should be to create value for everyone you interact with. Any business that doesn’t create value for those it touches, even if it appears successful on the surface, isn’t long for this world. It’s on the way out.”
Related: What Is the Secret of Amazon’s Huge Success? Jeff Bezos Credits Commitment to These 3 Principles.
What’s more valuable than money?
When he talked about creating value, it wasn’t just the obvious benefits Amazon offers, like reasonable prices, extensive selection and fast delivery. He spoke of one of the most valuable but not-so-obvious benefits Amazon customers got: their time. When you think about it, what is more valuable than time? Here’s how Bezos thought it through.
He looked at all the time customers saved by not driving around to stores to hunt for the products they wanted. He compared the time it takes to find and buy something on Amazon (28% of purchases on Amazon happen in 3 minutes or less, and over half take 15 minutes or less) to the hour or so it takes an average shopper to go to a store for the same item. If using Amazon saves a customer just two store trips per week, Bezos calculated that most customers save about 75 hours per year. That’s 75 hours of date night with your spouse, watching your kids play soccer, working toward your goals or catching up with good friends. Who doesn’t value that?
Even though time is a precious commodity, Bezos took it further to see how much that time was worth in dollars and cents. He wanted to be conservative, so he multiplied the 75 hours by $10 per hour (hopefully, you’re making more than that!). Then he deducted the cost of being a Prime member ($139 at today’s rate), meaning that Amazon shoppers got $611 of added value. That’s great, but I would guess that the added value Amazon customers experience and appreciate more is the time they save. They may not have done all the calculations, but they know they don’t have to stop what they’re doing, jump in the car and purchase the new collar they need for their dog.
Saving precious time for people doesn’t just apply to Amazon. For example, I know that it can take agents literally years to discover the strategies that work in today’s real estate world — if they ever discover them! I can teach them those same strategies, and they can see results in less than six months. That’s a real added value to them.
Related: 4 Ways to Make Value Creation Core to Your Business
The value of quality of life
As Bezos wrote, it’s about giving value to everyone you interact with. So, in his letter, he also talked about the value Amazon gave to its shareholders. He wrote about the increase in earnings for that year but didn’t stop there. He also wrote about an added value long-term shareholders had received: quality of life.
Shareholders had told him they could send their kids to college or cover family emergencies from the earnings over the years. They told him their shares helped them start businesses and buy homes. Some of the original shareholders have become quite wealthy and were able to start their own charities. It’s nice to see all those zeros after the balance in your bank account or your portfolio, but how money improves your life is even more important, right?
Related: How to Get More of What You Want
Finding your hidden added value
The idea is to find your hidden added value, then promote it. I’m not saying to make something up. I’m talking about finding the hidden nugget your product delivers — or could. The founder of Spanx knew that women wanted to feel more secure and that their panty lines didn’t show through white slacks, and she showed them how her product gave that security.
Michelin ensured that their tires were safe, then featured the peace of mind you could feel using a baby in their ads and the slogan, “Because so much is riding on your tires.”
Mattress companies don’t just discuss comfy mattresses but highlight the health benefits of a good night’s sleep. Think about your customers and what they really value.
We all have basic desires, like more time, peace of mind, success, mental and physical health and love. It may not be obvious, but could your product or service provide some of those values? If so, congratulations! You’ve found your true added value.
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