We regularly help our clients develop value propositions for their brands and products. Simply stated, a value proposition is a promise that articulates why a customer should buy from you. But, as any seasoned marketer will tell you, there’s nothing simple about it.
When businesses take an “if we build it, they will come” approach, products fail. We believe three core concepts must be carefully considered to develop any effective value proposition—regardless of the product or service, the B2B or B2C context, or the type of organization.
1. It must be Relevant.
Do you really know your customer? Management teams at our top clients often believe they do, until we realize together that they treat many (or all) of their customers the same. The offer is the same, the pricing structure is the same, and the support is the same.
Developing a clear customer target requires:
1) Understanding how and why your customer makes decisions (either to make more money, to save money, or for some other reason)
2) Understanding how different customers make decisions differently (whether it be based on customer segment, size, geography, or some other factor)
Once you are clear on who the customer target is, you can ask the relevance question: Does this offer help this specific customer make more money, save money, or experience some other benefit? If it does not help them in any capacity, you need to reconsider either your offer or your customer. You might be selling ice to an Eskimo.
2. It must be Credible.
Relevance is about the customer, but credibility is about you in the customer’s eyes. Credibility asks: What are the specifics of your offer, and do they make sense? How can you prove to your customer that you can deliver on your claims?
Determining credibility for a new offer typically requires research. You need to determine whether you have your customer’s “permission” to bring them a solution to their problem:
- Are there technical aspects to your product offering that directly increase revenue or reduce costs—and can they be verified?
- Do you have an outside party validation?
- Have you “done it before?” Will another customer be a reference?
What if one of our top clients, General Electric, came out with a pair of running shoes? GE is known as a great infrastructure company, but would they be credible in the footwear market? Probably not, unless their innovation was tied somehow to a customer need that GE could deliver.
3. It must be Unique.
In our hyper-competitive world, we often talk about “me too” product offerings, and that’s because uniqueness is extremely important. However, uniqueness can have multiple elements as it relates to your customer’s need.
First, consider your competition. Keeping track of traditional competitors will always be essential. Apple and Samsung monitor each other’s moves regularly—as do Pepsi and Coke, Hertz and Enterprise, and so on. But how much time do you spend on non-traditional competitors? Are you watching out for the scrappy startup that’s competing for your business? What about substitutes for your product category?
We recently helped a major financial services client build a strategy for a specific software solution in an emerging market. Their discovery found that most of their end users were currently using a basic spreadsheet to compile information and complete analysis. The “competition” in this case was not an expected, existing player that the client was used to dealing with, so we helped them adjust their approach accordingly.
Now that you’ve explored your competition, consider how your offer is different (and better) in the eyes of your customer target and in an area that is very important to their needs. Is your offering:
- Technically superior?
- More readily available?
- Easier to use?
- Cheaper?
- Faster?
In the process of exploring your uniqueness, you may have uncovered areas where you can create a plan to close gaps in some deficient area. Uniqueness is the mirror that asks: why me and not the other company?
In our experience, these are the most important elements of a strong value proposition. Without them, you risk failure. Are these consistent with your experience? What elements are we missing that should be considered?
