Creating your value proposition
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The customer knowledge that your organization has should allow you to describe the value you are providing through your products or services. In my experience, developing a customer-centric value proposition is a challenge that is more often than not poorly developed.
Why should your organization have a value proposition? There are already mission and vision statements, and values that describe what your organization holds as important characteristics. These items are all internally focused and talk about what is important to the company. A strong value proposition helps focus your organization on your customer to ensure that what is delivered is what your customer values. A strong value proposition also helps identify why a customer should select your product or service over a competitor.
Over the years, I have collected a wide variety of value proposition insights, options, and descriptions on how to write one. I have learned that an effective value proposition can only be built if you have a foundation of understanding what the customer might need, and why it’s important to them.
This statement captures the value you are providing to them by satisfying that need. If you do not know, or understand, why your customer chooses your product or service, you will likely be hard-pressed to create a compelling value proposition.
One of the simplest and most complete value proposition templates was created by Dr. Flint McGlaughlin, CEO of MECLABS. According to McGlaughlin, a value proposition is the answer to the question, “if I am your ideal customer why should I buy from you rather than your competitors?” An effective answer to this requires an objective view and a customer-centric mindset. McGlaughlin adds, “Refine your value prop until it becomes a reason…the summation of a rational/emotional argument.” Walking in your customer’s shoes and seeing your company from their perspective will enable you to achieve this necessary objectivity.
When we dissect this approach further, we see that you should go beyond simply knowing your customer, but focus on knowing what your IDEAL customer values. The ideal customer definition that I prefer includes an understanding of why and how someone chooses and uses your product or service. The ideal customer definition should extend beyond simple demographic analysis and include the practical and emotional appeal and value that your product or service provides “as defined by your customer.” This equation can also be applied to individual marketing communications messages to determine if what you are saying is resonating with your customers.
The next component requires additional objectivity to answer, “why does someone buy from you.” If you answer this question solely within your company, you will likely be blinded to the real reasons your customer chooses you over your competitors. Conducting primary research, collecting insights from sales and frontline customer service reps, and executive insights must also be combined to provide a comprehensive and clear answer to the question.
Finally, you will need to be able to compare your total product or service offering against your competitors in a head-to-head assessment. This analysis will uncover insights about whether your competitors are offering something (product, service, feature, incentive, etc.) that you are not. You may shop for competitor products for that first hand look and feel, conduct primary or secondary desk research, and even talk to suppliers (ethically, of course). There is a lot of perspective that can be gained that can help you with your assessment and ensure an objective comparison.
Thinking about your customer and competitor, from their viewpoint, will increase the overall strength of your objectivity. Bringing back the analysis to your company will help you identify the value that your customers receive or want from a supplier and how you compare to others in your industry.
The value proposition should then be shared within your organization as a way to increase focus and understanding of what your customer sees as valuable. Ideally, sharing this information creates clarity for every employee, as they can see how their everyday role impacts this proposition. The outcome is always ensuring value for your customer.
When you follow a structured approach such as Dr. McGlaughlin’s model, you are developing an important component of your winning game plan. This is not a haphazard approach. It is investigative and uncovers data to help you deliver with confidence on what your customers value most.
Tim’s bits: Any time an organization embarks on a thorough assessment of how their customers receive value from the products or services sold, there are insights that can be obtained. Having a structure to collect and assess these insights to guide your operations is the real value to your company. Leading companies have a strong value proposition as a cornerstone of their winning game plan. This is because leading companies know their customer intimately and understand the competitive forces impacting their industry. Next month, I will discuss the linkage to your customer and how you connect your unique value proposition with them.
Tim Kist is a Certified Management Consultant, authorized by law, and a Fellow of the Institute of Certified Management Consultants of Manitoba.
Tim is a certified management consultant with more than two decades of experience in various marketing and sales leadership positions.