10 Ways of Adding Value to Products in SaaS to Drive High-Margin Sales and Increase Profitability
How does adding value to products contribute to faster product growth? Because it’s the key to a better pricing strategy, competitive advantage, and customer experience.
In this article, we cover:
- How to define product value and a value-added product.
- How to measure product value.
- 10 ways to add value to products in SaaS.
Let’s get started.
- Product value describes how much your product helps customers achieve a goal or fix an issue.
- A value-added product is enhanced with additional features or characteristics to make it more convenient or helpful to customers. It increases the product’s economic value, meaning the company can charge a premium price that’s higher than the production cost.
- When you add value to your products, it gives you a competitive advantage, enables you to charge a higher price, drives high-margin sales, and increases profits.
- Measure product value with two surveys – product-market fit surveys and net promoter score (NPS) surveys.
- Adjust your marketing strategy and positioning to ensure you’re promoting the true value of your product. Address customer pain points and show how your product can help alleviate them.
- Add features that customers crave (and that solve actual problems they face). To prioritize features, do market research, encourage feature requests, and use prototyping and fake door tests to validate your ideas. Don’t fall into the feature fallacy trap – focus on features that align not only with customer needs but also your company’s objectives.
- If all of the products in your vertical have similar features and capabilities, stand out with customization. Let your customers adapt your product to fit their preferences and needs. For example, ClickUp lets users customize the product UI to show/hide features that are relevant to them.
- Improve customer service to boost overall product value. Customers expect a timely, personalized customer service experience. Meet them where they want with multiple support options, including a self-serve knowledge base. Offer white glove service for customers in higher purchasing levels.
- Invest in customer education throughout the entire user journey. If customers are taught how to use your product to its fullest potential, they’ll experience more value from it. Give them product training in the form of webinars, video tutorials, and help articles to guide them through the learning process.
- Position yourselves as industry experts by offering additional resources and advice related to your niche, outside of product education. For example, start a weekly newsletter discussing the latest news or trends in your industry.
- Keep striving to improve customer satisfaction by running in-app CSAT surveys and then acting on customer feedback with product improvements.
- To add value, remove friction from the product experience. Eliminate unnecessary steps along the way and track user behavior to find moments of friction in the journey.
- Reward customer loyalty by offering a small gift as a token of appreciation. You can tell them about their gift by triggering an in-app modal.
- Social proof is a powerful selling tool. People trust a company more when they can see others achieving success with the product. Leverage this social proof by asking for reviews and testimonials from loyal customers and then display them across your site, social accounts, and more.
What is product value?
Product value refers to the benefits a product offers its target customers. It’s based on how well it solves their problem or helps them achieve their goals.
What is a value-added product?
When you enhance a product, such as by adding new features, it now has added value to the customer.
With more value and added benefits, customers are now willing to pay a higher price to reap the rewards.
Companies can charge a premium price that’s higher than the production cost because of the value-added components that customers crave.
“Value added” is calculated by finding the difference between the selling price and how much it cost to produce.
How can adding value to products benefit your business?
Adding value to your products and services gives you a competitive advantage since you have better quality. Customers expect the best experience, and they’ll turn to your company if you can provide it over competitors.
It also enables you to charge higher prices, drive high-margin sales, and increase your profits since the economic value of your product is higher.
How to measure product value?
There are different ways to measure product value. Let’s discuss 2 of them.
Product-market fit surveys
Product-market fit surveys measure how valuable your product is by asking customers how much they’d miss your product if it was gone.
They score their feelings on a three-point scale from “Very disappointed” to “Not disappointed”.
If at least 40% of customers say they would be disappointed if they could no longer use your product, you officially have product-market fit.
If most customers are saying they wouldn’t be disappointed, think of new features or product improvements that will make your company indispensable to customers.
Net promoter score surveys (NPS)
Net promoter score (NPS) surveys measure product value by asking customers how likely they are to recommend it to their friends.
Customers score this likelihood on a scale from 1 to 10.
If a high percentage of customers score 8+, it’s an indication that your product has a high value.
If you have too many low or mid-range scores, you know it’s time to prioritize a value-added approach to your product development.
10 ways of adding value to products in SaaS
To add value to your SaaS product, follow these ten best practices:
Adjust your marketing strategy
To boost sales, better position your marketing strategy to show off your product quality and product value.
New customers want to feel confident that your product is the right choice to help them either fix an issue or achieve a goal.
Nail down product positioning and find your unique selling point, as well as the value-add that your product delivers. Then, use that positioning in your marketing copy across your social media, website landing pages, ad campaigns, and more.
Add features that benefit your customers and solve actual problems
Functionality is the key to a higher-quality SaaS. Build a product that helps customers address their pain points.
Do some market research to identify killer feature ideas for your target market. Learn where there’s an opportunity for you to provide something unique.
That being said, don’t fall into the feature fallacy trap. The trick is to give your users only the features that they genuinely need to meet their objectives. They should also align with your company objectives. Not every feature they ask for will fit these criteria.
Focus on features that allow them to get their jobs done faster and easier. Remember, convenience equals value. People are more willing to pay a higher price for convenience.
Differentiate your product through customization
When your SaaS is going head to head with similar tools in the market, customization can be your key differentiator.
For example, ClickUp lets you customize not only the pricing plan based on the features you’ll be using but also the product UI.
ClickUp may have the same suite of features and capabilities as other popular project management tools, but their customization capabilities set them apart. It gives additional value.
Improve your customer service
Many companies are using customer service as their main competitive advantage in a fast-changing marketplace.
If you deliver more valuable service, you’ll increase the overall perceived value of your product or service.
Train your customer service representatives to be friendly, customer-centric, and knowledgeable. And offer multiple service channels, such as email, social media, and chatbots, to meet customers where they prefer.
Don’t forget about self-service – many customers prefer turning to a knowledge base of helpful content instead of the direct contact of talking to your support team.
Invest in customer education
Close the consumption gap and help your customers use your product to its fullest potential. Maximize the value they’re getting by continuously educating them on your product – offer webinars, video tutorials, and interesting case studies.
By investing in customer education, you’re investing in the long-term growth of your product’s value to customers.
Offer additional expert advice
Position yourself as an industry expert to go beyond simple product education. Be a primary source of industry news, helping customers up-skill their knowledge in your industry overall.
For example, send regular newsletters to customers to help them keep up with the latest updates or trends in your industry.
This serves two benefits – customers view your company as a leader in the industry, while also keeping your brand top of mind. They’ll turn to you when they have needs related to your product or service.
Consistently work to increase customer satisfaction
Once you’ve collected the survey responses, analyze the data to find areas where you can make product improvements and exceed customer expectations.
Are there spots along the customer journey where you can add value to the experience?
Create frictionless and memorable customer experiences
Continuously analyze and optimize your digital customer experiences to add more value.
Meanwhile, focus on making every interaction with your product a positive and memorable experience.
For example, you can add fun elements to delight customers and celebrate successes. This motivates users and entices them to keep coming back. Take inspiration from one of our favorite tools, Asana, which celebrates a completed task with some lively and fun UI elements.
Recognize your outstanding customers and reward them
To boost the customer experience, reward loyal customers with a small gift that shows your appreciation.
For example, you could give them a gift card or a free lunch as thanks for being a long-time customer. Notify them of their gift with an in-app modal that celebrates their reward.
Leverage social proof to increase the customer’s perceived value
People trust a company more when they see other people who have similar goals as them achieve success with your product. It makes your product more valuable in their eyes.
To leverage this social proof, ask for testimonials from loyal customers and use them in your marketing materials, product sign-up page, pricing page, and wherever else appropriate.
When you add more value to your products or services, you can better face competitors, charge a higher price, and make more profits.
Added value is one of the keys to long-term growth in SaaS, and it all starts with creating better product experiences.
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