Build your Value Equation Tools and Resources

...solve thorny business challenges in the time it takes to drink a cup of tea

 
 
 
 
 

Fail to communicate your value and you miss out on profits that could be yours…

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The value of your products and services is fundamental to the success and long-term future of your business.

When you reliably deliver high-quality products and services, you not only meet the needs and expectations of your customers but build customer trust and loyalty as well.

This ensures that your brand stands out, even in a competitive market, allowing you to attract new customers whilst retaining existing ones. It also fosters customer satisfaction and positive word-of-mouth, which are critical for long-term growth and profitability.

 Ultimately, the perceived value of your products and services directly impacts your reputation, your customer relationships, the prices you can charge and your overall business performance.


So, think about your products and services right now and ask yourself this one question

BREAKTHROUGH QUESTION

Am I doing enough to build perceived value so that I can increase pricing – and profits?

STOP leaving the value equation for your products and services to chance.

START working on answering the 4 questions that make up your value equation.

The one ‘BREAKTHROUGH QUESTION’ you must ask to help yourself…

BREAKTHROUGH QUESTION

Am I doing enough to build perceived value so that I can increase pricing – and profits?

Building the perceived value of your products and services allows you to command higher prices, as customers are willing to pay a premium for what you are offering.

This perception is built through a combination of product quality, branding, customer experience and the unique features that make your products and services stand out from those of the competition.

When customers recognise the distinct benefits and added value that you provide, they see the price as justified, associating higher costs with better performance, durability and status.

Building the perceived value of your products and services not only boosts profitability but also enables you to position yourself as a market leader, fostering customer loyalty and attracting customers who prioritise excellence over cost.

This means that you can charge more for the products and service you are selling and, what’s more, your customers are willing to pay the higher price.

Consider the effect a 1% price increase would have on your profitability…

The price you charge for your product or service has the biggest impact on your business profits.

McKinsey and Kearney are both highly respected consulting firms. Turn-of-the-century research by both shows that a 1% price increase in price has a significantly greater impact on net income than a 1% improvement in fixed and variable costs and increasing volumes. This table from McKinsey shows the impact on EBITDA.

Pricing clearly increases profit more than any other aspect of business improvement. Delivering and communicating greater value earns you the right to charge higher prices. Your customers are only willing to pay more if they believe (perceive) they are getting more (value).

Are you doing enough to build your value perception?

The 4 essential elements of the value of your products and services, courtesy of Alex Hormozi

(from his book, $100M Leads: How to Get Strangers to Want to Buy Your Stuff)

You can find many value equations if you type those words into Google, but Alex Hormozi's value equation is a framework that offers a comprehensive and practical approach to understanding and enhancing the perceived value of your products and services. It is particularly well-regarded for its clarity and applicability across various industries. Here are some reasons why Hormozi's value equation is considered effective:

Clarity

Hormozi's value equation breakdowns the complex concept of value into a straightforward and easy-to-understand formula:

This simplicity makes it accessible for business owners and managers, allowing them to quickly grasp and apply the principles to their own products and services.

Customer perspective

The equation focuses on value from the customer's point of view. It considers what the customer wants to achieve (Dream Outcome), how much they believe they can achieve this using your product or service (Perceived Likelihood of Achievement), and the costs in terms of time (Time Delay) and effort (Effort and Sacrifice). This customer-focused approach ensures that you as the business owner never lose sight of who you are selling to.

Benefits

Hormozi's equation balances both the benefits and the costs associated with a product or service. By multiplying the desired outcome by the perceived likelihood of success, and then dividing by the time and effort required, it provides a rounded view of value.

You are in control

The components of the value equation offer clear and actionable insights, allowing you to improve or make obvious the benefits and results your customers can expect. You can build trust and credibility through testimonials and customer feedback, increase delivery times or simplify processes and increase ease of use. The work of doing is in your hands.

Works in any industry

The value equation can be applied across various industries, from startups and service-based businesses to retail and manufacturing, making it a valuable tool whether your run a sandwich shop, a production line or an accountancy practice.

Because Hormozi’s equation focuses on perceived value, it reinforces the importance of branding, marketing, communication and customer perception. It reminds businesses that the way they present their products and services and manage customer expectations is crucial in determining how much customers are willing to pay.

Ask yourself the right questions…

As Alex Hormozi suggests in his book, you can turn this value equation into 4 questions for your own products or services:

  • How could you better deliver and communicate the way you meet your customers’ dream outcome?
  • How could you increase the believability of delivering a dream outcome for your customer?
  • How could you reduce and communicate a reduced time delay in getting their dream outcome?
  • How could you tangibly lessen and better communicate the reduced stress and sacrifice needed to achieve their dream outcome?

Consider the 4 questions at work...

Which of the 4 value questions helped the iPhone when it was launched, compared with other phones available at the time?

Uber’s radical rise to prominence is down to improving which elements of the value equation compared with traditional taxi services?

Which of the 4 questions do fast track airport passes and priority boarding answer?

If you rate your IT provider because they do a great job of helping your team when it matters, in which aspects of the value equation are they brilliant and how do they communicate this?

Below is a table which illustrates how Uber's success can be effectively analysed through the lens of Alex Hormozi's value equation. By breaking down Uber's strategy using the equation, you can see how they maximised value for their customers.

Climb your mountain in your own time...

Twelve questions might seem like a lot to contend with, especially if this is your first time assessing the engagement of your employees.

It can seem overwhelming for your team as well as, if you have a large team, there is a lot of data to assess. It is important not to get too bogged down early on. You want some quick wins so that your team can see the purpose of the survey and the changes that are happening as a result of the answers they have given.

Gallup therefore suggests you divide the survey into 4 sections – camps, if you like. Imagine you are climbing a mountain – start with Base Camp.

Breaking it up like this means you can look at the results of the first 2 questions effectively and then specifically identify the areas for change or improvement before you move onto Camp 1.

Here is a quick breakdown of each section:

1. Base Camp – “What do I get?”

The questions in the Base Camp section typically focus on basic elements of employee engagement, such as clarity of expectations, access to necessary resources and alignment with individual strengths. These questions assess the fundamental conditions necessary for your employees to perform at their best and to feel motivated in their roles.

  • Do you know what is expected of you at work?
  • Do you have the materials and equipment to do your work right?

2. Camp 1 – “What do I give?”

The questions in Camp 1 explore the relationship between employees and their immediate managers. These questions evaluate the quality of leadership and support your team experience, as well as the level of recognition and feedback they receive for their contributions. A positive relationship with one's manager is crucial for fostering trust, motivation and engagement in the workplace.

  • At work, do you have the opportunity to do what you do best every day?
  • In the last seven days, have you received recognition or praise for doing good work?
  • Does your supervisor, or someone at work, seem to care about you as a person?
  • Is there someone at work who encourages your development?

3. Camp 2 – “Do I belong here?” 

These questions explore the dynamics of teamwork and collaboration within your business. These questions assess the degree to which your employees feel supported and valued by the other members of your team, as well as the level of camaraderie and cooperation that exists within the team. Strong relationships with peers can enhance job satisfaction, performance and overall engagement.

  • At work, do your opinions seem to count?
  • Does the mission/purpose of your company make you feel your job is important?
  • Are your associates (fellow employees) committed to doing quality work?
  • Do you have a best friend at work?

4. Camp 3 – “How can we all grow?”

Camp 3 questions focus on broader business factors that impact employee engagement, such as its purpose, vision and values, opportunities for growth and development and the overall health of your workplace, including its culture. These questions examine the extent to which your employees feel connected to your business goals and values, and their perceptions of fairness, autonomy and opportunities for advancement.

  • In the last six months, has someone at work talked to you about your progress?
  • In the last year, have you had opportunities to learn and grow?

By organising the Q12 questions into these four distinct sections, you will gain a comprehensive understanding of the different drivers of employee engagement within your team. This structured approach facilitates targeted interventions and action plans to address specific areas of concern and enhance overall engagement levels, increasing your overall performance and success.

Use the Gallup Q12 questions for better interview questions!

Here are a few example interview questions to help you get started. What else could you ask of interview candidates? And what can you share with them to demonstrate your commitment to high engagement?

As you go through the example interview questions below (in blue), you may well come up with better ones, but you’ll also discover areas where there may be room for improvement and find encouragement where you’re already doing some things well.

Recruiting talented people has a positive impact on every business. Shaping your interview questions effectively will enable you to obtain meaningful data and will create opportunities to share with candidates how you build engagement in your firm, helping you to attract good people.

Base Camp – “What do I get?”

1. Do you know what is expected of you at work?

How do you and your line manager set expectations for your work on a daily, weekly or monthly basis in your current role?

What do you believe works best when agreeing work expectations with the way you like working?

2. Do you have the materials and equipment needed to do your work right?

What materials and equipment do you think are essential to ensure you can do your work to the best of your ability?

Camp 1 – “What do I give?”

3. At work, do you have the opportunity to do what you do best every day?

In your current role, what is that you do best, most enjoy and are most proud of? What do you like least (because it doesn’t suit who you are)?

4. In the last 7 days, have you received recognition or praise for doing good work?

What sort of recognition do you get in your current role that helps you see you’re doing a great job? How often does this show up?

5. Does your supervisor, or someone at work, seem to care about you as a person?

How well-cared-for do you feel in your current role? Think about the best manager you’ve worked for – how did they work with you?

6. Is there someone at work who encourages your development?

What sense of progress and learning have you experienced in your current role? What are you hoping for in your next job role that will help you progress?

Camp 2 – “Do I belong here?”

7. At work, do your opinions seem to count?

Does your current employer encourage you to speak up and share your thoughts and opinions about the work you do? How do they do this?

8. Does the mission or purpose of your company make you feel your job is important?

What gets you excited about the work you do and the work you’d ideally like to do? What grinds your wheels or, on the flip side, gets you excited outside of work?

9. Are your associates or fellow employees committed to doing quality work?

In your current role, is there a strong sense of camaraderie amongst your team? Are you able to share constructive criticism? How is that carried out?

10. Do you have a best friend at work?

In your current job (or previously) have you worked where you felt as though you could build great working relationships? If so, how did your manager encourage these working relationships?

Camp 3 – “How can we all grow?

11. In the last six months, has someone at work talked to you about your progress?

What sort of progress and personal development are you looking for in your 'ideal’ next role? How would you describe the career path you want for yourself?

12. This last year, have you had opportunities at work to learn and grow?

In what environment have you worked where you felt that you learned and progressed in the best possible way? What happened to make this work?

A case in point...

(Taken from Gallup’s book, First Break All The Rules -What the World's Greatest Managers Do Differently)

“What do these discoveries mean for one particular company?” Don Clifton

In 1997, a successful retailer asked Gallup to measure the strength of its work environment.

This business employed 37,000 people across 300 stores, with about 100 staff in each store.

Each store was built and designed to provide the customers with a deliberately consistent shopping experience, i.e., the layout, branding, design, colouring, etc., was the same whether you shopped in Atlanta or Phoenix.

Each of the 37,000 employees were asked to answer the Gallup Q12 questions – 75% said they would, or approximately 28,000.

The table below is what the survey revealed about 2 stores at opposite ends of the scale. Responses were on a 1 to 5 scale, where 1 = strongly disagree and 5 = strongly agree.

The numbers in the table below show the percentage of employees who responded 5 (strongly agree) to each Q12 question:

The differences are striking – particularly when you focus on the Materials and Equipment question. Each store had the same materials and equipment, but in Store B only 11% of people scored this a 5 – which comes down to perception and their feelings about their physical environment.

It was also clear that, although the stores might look the same, their culture was not the same. There were many cultures at play, as each store was a unique creation of the managers and supervisors who worked there. Some cultures were fragile and hampered by mistrust and suspicion; others were strong, meaning that they could attract and retain talented employees.

This business took these results as an overall positive, as they knew exactly which areas needed improvement and could use the stores that performed the highest as the example on which to build. They worked on creating one culture across all stores, with managers being trained by the managers in the stores performing well.

What the Gallup Q12 survey gave them was a place to start and something to build on. They now run the survey 4 times a year.

Is it time for you to make a start?

Other employee engagement surveys

“The smart ones ask when they don’t know. And sometimes when they do.”  Malcolm Forbes

There are several other reputable employee engagement surveys available, each with its own unique features and focus areas. Here are a few:

Culture Amp: Culture Amp offers a comprehensive employee engagement survey platform that includes customisable survey templates, advanced analytics and actionable insights. Their surveys cover a wide range of topics, including leadership, communication, career development and diversity and inclusion. Click here to access the Culture Amp survey.

Qualtrics Employee Experience: Qualtrics provides a versatile employee experience platform that includes employee engagement surveys as well as pulse surveys, 360-degree feedback and exit surveys. Their surveys are highly customisable and can be tailored to specific organisational goals and priorities. Click here to access the Qualtrics website.

Workday/Peakon: Workday offers an employee engagement platform that uses AI-driven insights to measure and improve employee engagement in real-time. Their surveys are designed to gather feedback on key drivers of engagement, such as leadership, culture and career development, and they provide actionable recommendations for improvement. Click here to access Workday.

Leapsome: Leapsome offers a simple and user-friendly employee engagement survey platform that focuses on gathering frequent feedback from employees through short pulse surveys. Their surveys cover a variety of topics, including job satisfaction, recognition and communication, and are designed to help organizations identify areas for improvement and track progress over time. Click here to access Leapsome.

The book and other resources

Built it - The Rebel Playbook for World-Class Employee Engagement

Glenn Elliott and Debra Covey


Build it has found those rebels and the rulebreakers, from small startups to global powerhouses. This book shows that courage, commitment and a people-centric mindset, rather than money and resources, are what you need to turn an average business into a category leader.

Buy the book here.

What people are saying about this book:

"Your all-things-necessary guide to employee engagement. Packed with some terrific case studies, Build it will help you transform your workplace.”

Daniel H. Pink, New York Times bestselling author of DRIVE and WHEN

"Every company in the world is trying to disrupt itself before it is disrupted by newcomers. Everyone knows why but most struggle with how. Here is a book bursting with great examples, concrete actions, real success. It'll give you ideas, debates, great arguments and, most of all, hope."

Margaret Heffernan, CEO and bestselling author of Wilful Blindness

First, Break All The Rules

From Gallup


Gallup presents the remarkable findings of its massive in-depth study of great managers across a wide variety of settings. Some were in leadership positions; others were front-line supervisors. Some were in Fortune 500 companies; others were key players in small entrepreneurial companies.

Whatever their setting, the managers who ultimately became the focus of Gallup’s research were invariably those who excelled at turning each employee’s talent into performance.

There are vital performance and career lessons here for managers at every level and, best of all, the book shows you how to apply them in your own business.

Buy the book here.

What people are saying about this book:

“If you're a great manager, read this book and be affirmed you're doing the right thing. You will still learn something new as well most of the managers who read this book, because managing people effectively is hard and requires immense skill and personal qualities. This incredibly readable fascinating and entertaining book will give you the tools and ideas you need to be a better manager and become more effective in your business.”

– Harvard Business Review

Here is a great 5-minute video on employee engagement called Who's Sinking Your Boat?, by Bob Kelleher.

In 2013, Gallup claimed that approximately 7 out of 10 employees were disengaged. Despite billions being spent on engagement initiatives, there have only been minor gains.

This video will define engagement and make a business case for it, BUT it will also provide a 'call to action' by introducing 8 key focus areas on which organisations need to focus to keep employees 'afloat'.

And here is the follow-up to the video above, Why is Your Boat Still Sinking?, also by Bob Kelleher.

Only 32.5% of employees could be said to be engaged and close to 2 out of 10 are actively disengaged, according to 2016 Gallup research. Since the 2014 YouTube video, Who's Sinking Your Boat?, there simply hasn’t been much improvement in employee engagement in the workplace – in spite of billions of dollars being spent on employee engagement in the workplace, as well as a vastly improved economy. Why?

Watch this latest video, Why is Your Boat Still Sinking?, and you might just find the secrets to engagement.

And finally – here is a very crisp and clear definition of employee engagement, by Kevin Kruse.

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