Every business person knows that you have to give your customer value for their dollar. In most cases that takes the form of giving extra services or products for the same price. It can also include frequent buyer programs where customers get something free for a specified number of purchases. It can also take the form of a higher quality product or service for the same price as a competitor. These all provide value to the customer, although they are my no means the only ways to provide value.
The question remains, can you add too much value? Yes, you can. There are two major effects that adding too much value can have on your business, and neither is good.
You devalue your product/service. As counter intuitive as that sounds, adding too much value can devalue your offering. This happens because customers come to expect the added value and cease to view it as extra value. As the extra value becomes expected, it ceases to be perceived as extra and customers begin to expect an even higher level of value. This leads you into a spiral where customer expectations become impossible to meet.
Your margins shrink. The more value you add, the more it costs you. Those costs add up and eat into a company’s margins. If your margins shrink too much, you will no longer be able to cover your overhead.
Giving your customer value is important, but if you give them too much, eventually you won’t be able to give them anything.
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