Value Positioning the Knowledge Entrepreneur

Recently, I wrote an article for Calibrated Leadership Magazine on “Why any business needs positioning.”

Any business needs solid positioning to stand out from the crowd and a strong internal compass to guide its choices and decisions.

Positioning for the knowledge entrepreneur can be especially challenging, as there are many ideas and suggestions for running a knowledge commerce business. But a knowledge commerce business is, in effect, still a business just like any other, and business laws and axioms still apply.

A universe of their own

Having worked for large corporations in the past and with smaller businesses since 2011, it sometimes seems like smaller businesses, especially in the online realm, seem to live in a world of their own. A world with its own governing laws and principles that deviate from the world where larger businesses and corporations live.

In the smaller online business world, we are bombarded daily by all these gurus and experts who all seem to work from the same template. They were once in a dreadful situation. They then read all the books and followed all the courses by gurus they could get their hands on, which cost them in the 5-figure range. Then, when they thought they had to give up, they discovered the secret that made them incredibly successful and wealthy, and they will now share it with you.

I am happy that these people had their success, but what worked for them will not automatically work for you. Simply because they may sell different types of products or services, their market situation may be totally different, their budget may differ from yours, and your audience may not be the same. Many variables could be different.

It is like wondering if there are other planets like Earth out in the universe. There could be if the circumstances are identical, but with so many variables, the chances are small. At least, that is what an astronomy professor once told me.

These people selling or sharing their experiences as universal governing business laws are wrong. Not wrong in the sense that it didn’t work for them, but wrong that it will work for everyone else as well.

It is like conducting a scientific experiment on one person and then claiming it will always work. That is not proof; that is an anecdote.

So, as a small-business knowledge entrepreneur, it is crucial to have a grasp of proven business principles that work for businesses.

The job of every business owner is to create value for their customers, so I will discuss two models of so-called “value disciplines.” Then I will discuss the practical implications for knowledge entrepreneurs.

Creating value for your customers

While creating value for your customers, you are trying to create a situation for your business that gives you a competitive advantage. This means you are trying to set your business apart from the competition.

Value is the perceived worth of the benefit of your product or service that the customer paid a specific price for, taking into consideration the available competitive offerings and prices.

So what kind of benefits are we talking about here?

According to extensive, in-depth field research, customers compare the perceived value of products or services across three dimensions.

Economic value
Technical/Functional value
Psychological value

Economic value occurs when customers compare the perceived quality of products or services with the price they pay. If the quality of the products or services in a market is perceived as being the same, customers will want to pay the lowest price.

Makes sense, doesn’t it?

When you look at Learning Management Software, there are alternatives for mainstream brands like Kajabi and Teachable, but at a price up to 10 times higher. When looking at the technological features, I could not find an obvious difference or reason why some software was so much more expensive. And when there is no perceived difference in quality, people will pick the cheaper alternative.

Technical/functional value is determined by evaluating products based on the set of features or applications they offer. A customer driven by functional value would prefer a product or service with the most sophisticated features.

When using the example of course website software again, an online course creator driven by technical/functional value would probably evaluate the software on bells and whistles, not on price and not on brand.

The last value is psychological value, driven mainly by intangibles such as service, brand name, trust, relationship, and reputation. Customers seeking these benefits care about total satisfaction with the product and desire peace of mind.

To apply this to the example of course software, online course creators driven by psychological value will, for instance, select Kajabi because it is a reputable brand used by well-known experts and gurus and offers 24/7 chat support.

Customers adopt one of these perspectives when shopping for a product or service. However, this may vary across product categories. When shopping for safety pins, you can imagine that psychological or technical/functional value is not a consideration. All safety pins are of the same quality, so price becomes the deciding factor. When shopping for a luxury car or life insurance, other values do become important.

Alternative values

An alternative approach is the value discipline formulated from an organizational perspective. These value disciplines are:

Operational excellence: Providing customers with reliable products or services at competitive prices and delivering them with minimum difficulty or inconvenience.
Customer intimacy: Segmenting and targeting markets precisely and then delivering products or services that completely meet their needs.
Product leadership: Offering customers leading-edge products and services that consistently enhance their use or application of the product, thereby making rivals’ goods obsolete.

This model is similar to the first one, in which operational excellence parallels economic value, product leadership corresponds to technical/functional value, and customer intimacy aligns most closely with psychological value.

The difference is that this model examines value creation from the organization’s perspective. The organization has to have a cost advantage to deliver operational excellence and a price advantage. This means that the business must set up its processes so that producing a product or delivering a service can be done at the lowest possible cost.

The organization that pursues Customer Intimacy must be highly customer-focused. And Product Leadership requires a focus on innovation.

You can imagine that each of these disciplines requires different competencies and values from the organization. This, in turn, results in different types of organizations and different company cultures.

To compare, think of a store that offers low-priced goods and another store that sells high-end brands. These organizations and cultures are different. The stores’ setups are different. The staff is dressed and behaves differently. The atmosphere is different. It may even smell different.

The rule of thumb is that an organization can excel at one value discipline and has to deliver at a threshold level in the other disciplines.

To explain, focusing on low prices and convenience will not work if you deliver technically and functionally flawed products. Because a product that doesn’t work as expected is still too expensive even when it is cheap.

So what kind of value is your customer looking for? What kind of value can you provide? Who do you want to be?

Value positioning for online course creators

Course creators often already work as knowledge entrepreneurs. They have considerable knowledge, which they share commercially through coaching or consulting.

Coaching and consulting are often done on a 1-on-1 basis and, as such, require a considerable time investment from the knowledge entrepreneur. The time spent with one client cannot be spent on anything else.

As a result, the cost for the client will be substantial. The knowledge entrepreneur’s undivided attention comes at a price.

From a value-creation perspective, this would be considered Psychological Value or Customer Intimacy.

Influenced by gurus in the online space or by a desire to take a more hands-off approach with clients, many knowledge entrepreneurs want to shift from a 1-on-1 business model to a 1-to-many model. In this model, they share their knowledge with many more people at a lower cost. They want to do this through info products, courses, or a membership.

But a 1-on-1 business model is quite a different value positioning than a 1-to-many model. That doesn’t mean you can’t switch between the two or offer both. But you have to be mindful of the different demands it has on your organization and its implications for your brand.

First, don’t be tempted by the term “passive income.” There is nothing passive about trying to earn a living by creating 1-to-many products in any shape or form. Before you have reached the “set and forget” passive mode, you have to have developed these info or course products, and you have to have put a marketing system into place that works. It will take some time to get there, and audiences, markets, insights into your topic, and advertising platforms and social media all change their rules and algorithms. Everything is constantly in flux. Passivity, in my opinion, is a contradiction in terms when it comes to an entrepreneur in general and a knowledge entrepreneur in particular. Someone who works in and with knowledge will always want to expand their knowledge. That, too, is constantly in flux, never passive.

Practical implications

We know that customers can be of 3 different value mindsets: economic, technical/functional, and psychological.

The audience purchasing the info or course product variant of 1-on-1 consulting or coaching differs from the audience paying for the 1-on-1 treatment. It means that you have to attract a totally different audience.

A different audience means you must set up a separate business ecosystem to deliver your course to them. Think about a course site, another marketing system, and perhaps even additional support staff to help you deliver everything this new process demands.

As with all resource decisions, it is a question of time, money, and knowledge. Does your business have these resources to offer a 1-on-1 AND a 1-to-many model? Or do you have to choose one or the other?

If the latter is the case and you are a starting knowledge entrepreneur still having to choose one way or the other, start with the one you have the skills and knowledge for.