Building the value in value
I often hear the catch cry "Let's give our customers value for money", with the emphasis on the VALUE piece. What do we mean exactly by giving value and what is deemed to be of value? There are probably a few definitions out there but for this blog I'm going to use my definition, which is "Value for money - we get more (or something extra) for the spend that will be remembered or noticed after having paid. The value piece has something enduring about it after having made the purchase". Examples of value
- My German friends tell me that buying an S-Class Mercedes provides great value, as over the time of owning it you can drive hundreds of 000's of Kms with low maintenance and it sounds and feels like it did from the first day.
- A Patek Phillipe watch, that the precision, rarity, design and after service ensures it retains value with its worth in future generations.
- Harvard Business School Education - gives value as it is respected globally and has level of expectation that comes with it helping to open doors in the business world.
- Personal daily trainer - the value of not only improving one's health, but the prolonged value of feeling better that would have a compound effect in other areas of one's life.
Ok, so many of us are not going to buy an S-Class Merc in our life time, or go to Harvard or buy a Patek Phillipe watch, or have a daily personal trainer, however many of us and many of our children will buy or look to invest in a home or property to live in. Now I would argue that buying a house is a bigger investment than any of these items. At present if you look around the country, property value is on the rise particularly along the eastern seaboard, so get prepared for our children staying home longer than first anticipated as very few 21 year olds will be able to afford a property in the next 10 years.
At present around major capitals, you won’t get much change out of $500k for a home/apartment that is say 15-20km out of the CBD. Spare me the giggles from the eastern seaboard reading this at present, I know there are probably cubby houses with a tree house near the city that would get close to this value. $500k or half a million dollars is still a big number in the scheme of things, as besides a home very few people will part with that sort of money for anything else in their lives. So this begs the question, what value do we expect from buying a home at this level of investment? Like all assets, the one thing you can be guaranteed is that there will be ongoing costs of maintaining the property, they don't remain new forever, hence work will be needed both inside and outside which comes at a cost. And when the average couple or individual signs up for those mortgage docs to buy their home, the marvel of interest in the math proves that the total sum of what you end up paying for that property is far greater than the number on the bottom of the signed contract. And all this up and all of a sudden, getting that S-Class Merc or the Patek Phillippe watch seems a little more affordable.
Coming back to the value in the purchase of a home, other than the fact that most property value increases over time for the sake of what time itself provides, is there any other value we're getting from our purchase? If I buy a home off the plans today, am I getting anything enduring for my spend, something that I feel gets me a bit extra or that I'll notice over time that will make me feel all warm and fuzzy inside to counter that discomfort every time I see those mortgage payments coming out of my bank account? Depending on who is building the home, there can be a notable difference on the quality and the value I may get. If you listen to the noise from many of those that are currently living the home building experience now or have had a home built in recent times, it is amazing how very few believe they got value from what they purchased. What is worse are some of the horror stories that exist, like this one below from Ben Millane in Melbourne who is currently building.
Now Ben looks like being stuck with this piece of workmanship (if you can call it that) and I don't think that is the enduring reminder Ben had in mind when he signed up for this property! Sadly, this level of quality is prevalent around the country.
Now I can guarantee if that was the S-Class Merc that I had intended to buy and the window buttons weren't aligned on the side panel as the brochure showed I wouldn't accept the product. But for some reason we invest in hundreds of thousands of dollars in a home, and for many Aussies this hits the 7 figures or gets very close, and allow this type of building quality to happen and accept it.
Truth is if a local grocer helps my mother carry her groceries to the car, she sees value in the service and products they offer; if my kids get offered lunch time or after school support in their subjects, there is value in the school fees I pay where I don't need to spend on tutors; if my local petrol station provides cleaning wipes to enable me to wipe off the diesel residue from my hands after I fill up, then I see some value there. So when I spend $500k on a property and find in 3 year’s time I need to re-grout the kitchen splash back or re-paint the bathroom ceilings as no mould resistant ceiling paint was used, am I expected to accept that? Where is the value for money on the significant spend I made?
This is not a builder's bash, in fact there are many that go hard at providing value to clients, but they are surrounded by numbers of those that can't make out what the letters v.a.l.u.e. stand for. Worse still is what we end up accepting. If we value that the investment to be made in a home is significant, then we should be expecting and asking where the value is going to be before signing along the dotted line.
For those of us that look to give our customers value for money, the value piece is going to be the enduring extension of our brands. While everyone is out there competing for business, we should not forget the value in trying to provide value.