Sell to Win

How to use a value hierarchy to generate more sales

Jacob Thomas
Contributor, Sell to Win
Jacob Thomas
Contributor, Sell to Win

If you've been in sales and marketing for a while, you might have heard of the “value hierarchy” concept.

But do you actually know how to use one?

Value hierarchies are used to describe the needs and wants of a customer in order of importance. Think Maslow's Hierarchy of Needs but for sales.

What is a value hierarchy?

A value hierarchy is an ordered list of values arranged by importance. In most cases, value hierarchies are structured as pyramids. The higher up the pyramid you go, the more important the values become.

This isn't a hard and fast rule, though. For example, in the Consumer Value Pyramid (which we'll discuss in the next section), the values at the top of the pyramid aren't necessarily more important, they're just less tangible and/or achievable than the ones below.

Types of value hierarchies

There are many different types of value hierarchies, but as a sales or marketing professional, the three listed below will be the most helpful to you. When you understand the different levels of value you can provide to customers, as well as the values they prioritize, you'll sell more.

#1: Product and service-oriented value hierarchy

Source: Impossible HQ

This value hierarchy analyzes the value your company provides to its customers. It can be broken down into five distinct tiers: information, resources, frameworks, tools, and services.

  • Information: The lowest level of this value hierarchy is information. It's the lowest because information is so common these days. Just about anyone can access Google and be inundated with facts, stats, and opinions. Because of this, unstructured information provided by businesses isn't seen as highly valuable by consumers.
  • Resources: Next up, is resources, which can be defined as information that's been organized to help consumers solve a specific problem. These are much more valuable because they don't just tell consumers what they need to know, but also how to use what they know to accomplish their goals.
  • Frameworks: A framework is a resource on steroids. It tells consumers how to solve a problem and/or accomplish a goal. But it also tells them how to think about a topic or concept in a systematic way that's proven to get results. When businesses provide frameworks they ascend from content creators to thought leaders.
  • Tools: Information, resources, and frameworks give consumers the knowledge they need to do things. Tools help them do these things better and more productively. This, plus the fact that tools are generally harder to create, allow companies to charge more for them. This is why they hold the second-highest spot of this value hierarchy.
  • Services: Lastly, we have services, which are generally the highest value a company can provide to a consumer. Why? Because the convenience of having something done for you is often worth top dollar. It's why you can buy a filet mignon at Costco for about $12, but pay $50 for it at Ruth's Chris Steak House.

Sellers and marketers usually don’t have much control over pricing. But understanding the level of value your company provides to customers can help you attract more leads and close more deals.

#2: Customer expectation-oriented value hierarchy

The next value hierarchy we'll cover has to do with customer expectations. This hierarchy consists of four different levels, starting from the bottom: basic, expected, desired, and unanticipated.

  • Basic: This tier encompasses the things that every business should have in place before engaging with potential customers—a clean and easily navigable website, sufficient product inventory in stock, etc. Without these things, consumers’ first encounter with your brand might be their last.
  • Expected: The Expected tier goes a little beyond the basics and includes things like competitive pricing and convenient hours of operation. Consumer expectations will vary by industry so make sure you study your target market to understand the values that your potential customers will expect.
  • Desired: The third tier of this value hierarchy focuses on the desires your customers have when purchasing from your company. For example, modern consumers want to work with friendly and knowledgeable sales teams and not get locked into long-term contracts.
  • Unanticipated: The final tier is about WOWing consumers. How can you provide your buyers with amazing, unexpected experiences? Once again, what's unexpected will vary by industry. But a 60-day money-back guarantee is a strong example.

Related: Watch the BOUNDLESS 2020 full replay for lots of tips on how to go “above and beyond” for your customers.

By providing your customers with unanticipated benefits, you'll increase loyalty, advocacy, and future sales.

#3: The consumer value pyramid

Source: Cleverism

A group of researchers recently identified 30 elements of value that modern consumers look for in the products and services they buy. They then fashioned these values into a pyramid, known as the Consumer Value Pyramid. It consists of four categories:

  • Functional: The bottom of this value hierarchy includes foundational customer needs like "saves time," "makes money," and offers "quality." There are a total of 14 consumer needs in this first level of the Consumer Value Pyramid.
  • Emotional: The next level of the pyramid deals with the customer’s emotional needs and includes "reduces anxiety," "is fun/entertaining," and has "therapeutic value." There are a total of 10 consumer needs in this tier of the pyramid.
  • Life Changing: The Life Changing tier only includes five consumer needs, which are "provides hope," "self actualization," "motivation," "heirloom," and "belonging."
  • Social Impact: The final tier in the Consumer Value Pyramid only has one consumer need, which is "self-transcendence."

In order for a product or service to be successful, it needs to meet at least one of the needs in the Consumer Value Pyramid. If it can meet more than one, there's a good chance that the product or service will have large market appeal.

The Consumer Value Pyramid is based on Maslow's hierarchy of needs, which was developed by psychologist Abraham Maslow in 1843. The researchers who created the pyramid simply adapted Maslow's theory to better suit the needs of businesses.

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Bringing it all together

So how do these value hierarchies actually help marketing and sales people? This is where we bring everything together and turn theory into practical application.

Step 1:

First, you need to understand the value that your company provides. Do you sell educational courses that teach your audience how to do specific tasks? Do you sell software tools that help them complete tasks more efficiently? Or do you sell services so that your customers don't have to do the tasks at all?

The product and service-oriented hierarchy will help you determine how valuable your offerings are, and (if it falls in your wheelhouse) what to charge for them.

Step 2:

The next value hierarchy we discussed had to do with customer expectations. You can use this hierarchy to ensure every interaction between you and your customers is exemplary.

Going back to our car salesman example, you know your customers expect your dealership to be tidy, offer free coffee and donuts, and be open at least six days a week. You also know that without competitive pricing, you won't sell many cars.

But what can you do to go above and beyond these basic expectations? If you can give your customers unanticipated positive experiences, your sales will skyrocket. We encourage you to brainstorm ways you can WOW your customers throughout your sales process.

Step 3:

Finally, take the time to discover what your target audience truly wants and needs when they purchase products and/or services from your company. The Consumer Value Pyramid will help you identify the values that your customers look for in products and services like yours.

If you sell cars, for example, your customers might desire to meet functional needs like "saves time" and "reduces risk." In other words, they want a commuter car so they can avoid the subway, as well as a vehicle that will keep them safe on the road.

Your customers will likely have emotional needs, too, such as "design/aesthetics" and "badge value." Translation: they want a car that looks great and is made by a respected brand.

If you know these things about your customers before you try to sell to them, you'll be able to craft marketing materials and sales pitches that truly resonate. The result will be more sales in less time, greater customer loyalty, and increased customer advocacy.

Sell more with value hierarchies

There are many different value hierarchies, but the three outlined in this article are the most helpful for marketers and salespeople. Do your best to incorporate all three in your efforts. Doing so will give you a deep understanding of the value your company brings, the needs your customers have, and the expectations they hold when purchasing from your company.

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