10 Ways to Check If You Need a New Value Proposition

10 Ways to Check If You Need a New Value PropositionGuest blogger Cindy Barnes explains what your value proposition is. She explains why it is so important and asks 10 questions to test the strength of yours.

These days, companies often talk about putting the customer into the heart of their business mix. To that end, they will typically do ‘customer listening’, use Voice of the Customer programmes or collate data via different measurement tools. While all of these practices are valid, they have a fundamental flaw: they only treat the customer as an asset to the company, rather than a collaborative partner.

In my work as a corporate advisor, I help companies make the shift from seeing their customers as assets to seeing them as partners by working with them to create a value proposition.

What Is a Value Proposition?

Many companies have a mistaken notion that a value proposition describes something you do to your customers. For example, they might believe a value proposition is:

  • a new name for a marketing story or statement
  • a unique selling point
  • another word for ‘product’, ‘service’ or ‘offering’
  • a corporate positioning statement
  • an elevator pitch
  • a set of communication messages
  • a list of benefits
  • some sort of magic sales ‘silver bullet’

But the truth is, while some of these things surely can come from your value proposition, a true value proposition is none of these things in isolation. A value proposition isn’t a written document, a statement or a set of policies. It’s not even your message or mission statement. Rather, your value proposition is a framework. It’s the entire structure within which your customers experience and interact with your company. As I define it:

“A value proposition is the sum of the offerings and experiences delivered to your customers during all their interactions with your organisation.”

By ‘offerings’, I mean anything you sell and deliver to your customer, whether services, products or solutions.

By ‘experiences’, I mean how you sell and deliver to customers and how they feel about the experience they’ve received from interacting with your organisation.

In other words, the offerings are WHAT you sell and deliver, and the experience is HOW you do it. Your value proposition is the mechanism for capturing and harnessing your ‘customer truth’. It is not a business strategy you invent internally, but something you create with your customers’ assistance.

Why Your Company Needs a Strong Value Proposition

Whether you run a large company or an independent one-person operation, there are many symptoms that indicate your company may have a weak value proposition. You might not have enough sales leads, or the leads you have might be poor in quality. You might have weak conversion rates, or find that you are always having to discount your products or services. You might find it difficult to stand out in the market, or your marketing might seem to have no impact on sales. Lastly, you might have poor customer retention and loyalty, because your customers simply do not really connect to your brand.

If you experience any of these symptoms, it’s time to take a new look at your value proposition. Doing so can bring directness, clarity and simplicity into what you do, how you think about your company and how you portray this to customers, through both your offerings and your communications.

CHECKLIST: How Strong Is Your Value Proposition?

Below is a checklist of questions to help you discover whether your total value proposition is in good shape or needs some attention. If you can’t answer these questions in detail, it probably means your value proposition needs updating.

Q1) Are your sales faltering? If so, do you KNOW why?

Because sales is where the rubber hits the road in most organisations, sales performance is one of the leading indicators of whether there is a problem with the total value proposition.

There could be many reasons for poor sales. It could be due to lack of skills in your sales team, poor sales leadership, inadequate products and services, weak marketing or limited exposure. Put any of these reasons (and many others) against the backdrop of a weak economy, and your sales will falter. However, I have seen businesses buck the economic trend and turn themselves completely around in recessionary times simply by focussing on creating and building new total value propositions.

Q2) Are you always chasing new business?

If you’re always chasing new business and find it difficult to extract more repeat business from existing customers, then you need to find out why your customers are not totally happy. It could be that the solutions you offer are badly constructed. Or it could be that your company offers greater financial rewards to salespeople who land new customers (rather than making sales to returning customers).

For most businesses, it’s too costly to continually chase new business. Revamping your value proposition can help you examine the customer experience and build greater retention and repeat business.

Q3) Do you know what your customers value/do not value about working with you?

Again, looking at customer retention, it’s vitally important to know what makes customers come back to you repeatedly. Usually, what makes a customer come back (or not) can be boiled down to three or four simple things. These things might be aspects of your products or services, but they are also likely to be emotional things such as trust, reliability or valuable insights.

Customers have an implicit hierarchy of why they do business with any company. Finding out what that hierarchy is and making it explicit is at the heart of developing your total value proposition.

Q4) Are you crystal clear about your target market?

A good value proposition means you are absolutely clear and detailed about your target markets and the target buyers and influencers within each company, plus how your solutions will fit each. For example, larger B2B companies need to be very precise about things like:

  • Which countries they are selling in or want to enter
  • Which market sectors and subsectors they’re going to focus on in each
  • The different types of buyers and influencers they’re going to target in each sector
  • The job titles of the various buyers and influencers
  • What the stakeholder map looks like
  • Who holds that power at each stage of the map

Smaller, independent companies who typically deal directly with end customers need to be clear about similar things, but on a much more personal level, and with more focus on the consumer rather than the stakeholder.

Q5) Do you know how customers view your company in terms of risks?

Before a customer decides to work with a company, they always weigh up the risks against the benefits. For example, if you run a smaller company, your customers might perceive you as not having enough financial or human resources to deliver what they need. If you’re a larger company, your customers might feel your focus is too broad and that you lack evidence of proven ability within a particular sector.

How well do you know how customers perceive your company? What kinds of things would make them NOT choose to work with you? Understanding your customers’ list of perceived risks means you can attempt to mitigate those risks before they become issues. Of course, building this into your value proposition requires honesty, insight and research.

Q6) Can you define the pain are you relieving for your customers?

Being able to explain what pain your solutions will take away from customers is your most fundamental selling point. No matter what size your company is, if you can’t answer this question with ease, then you need to do more customer research.

Q7) Can you define your offerings and how they relieve this pain AND add measurable value?

Can you describe your offerings in detail? Can you define clearly how all your offerings fit together to create a complete solution for your customers?

If you can’t, then you need to spend more time with your customers understanding how your offerings make a difference to their lives. You need to be able to specify in detail what each offering does, e.g., how it saves time, reduces costs, increases revenue, increases productivity, makes their lives better, etc.

Q8) Do you know how are you different from your competition?

Do you know who your competition is and also what substitutes and alternatives there are for your offerings? Where do your offerings have parity, and where and how do they differ? How do those differences translate into benefits and real value for customers?

If you don’t know these things, you need more research; you must be able to demonstrate and differentiate your value against your competitors’ or alternatives’.

Q9) Are you able to provide evidence to support your claims of value?

Are you providing enough proof to your prospects and customers? A lack of evidence could result in prolonging your sales cycle as customers look for reassurance. Providing evidence acts as a de-risking of the purchase and will often help to speed up the sales cycle. Such evidence could include:

  • case studies (ideally with customers named, but generic if not)
  • customer testimonials (ideally with customers named, but generic if not)
  • total cost of ownership (TCO) or return on investment (ROI) tools and models
  • articles or papers written together with customers
  • independent or proprietary research that can be made public that supports your claims about your results

10) Have you clearly constructed your marketing communication messages?

Communicating your message to your audience (or external messaging) is about layering; using a mix of marketing messages to build confidence in your potential customers that you can deliver their expectations of value. You and your staff need to understand how your behaviour impacts the customers’ experience – the way you act or speak with customers either supports or taints customer value.

These days, most buyers will do a lot of research before they approach you or your company or start to talk sales with you. They’ve drawn their conclusions that working with you is going to be positive. This means that customers now expect to have a positive experience every single time they contact you.

Closing Thoughts

These ten questions need to be addressed equally, because they are all interconnected. If your answers to these questions indicate a one-dimensional value proposition, it is time to reassess your core value and how you’re delivering it to your customers.

I’d love to hear from you about your experiences. Have you designed your value proposition? What do your customers value about working with you? What do you value about working with your favourite suppliers? Please share your thoughts in the Comments section below.

Cindy Barnes
1st August 2014

Cindy-Barnes-TwitterCINDY BARNES (MBA) is a business and psychology consultant with a background in engineering, product and service innovation, marketing, business development and leadership. She is qualified as a counsellor in Transactional Analysis and is the co-author of the bestselling book, Creating and Delivering Your Value Proposition. As an engineer, Cindy has created, developed and sold many leading edge products and services. She ran large-scale, unionised automotive component factories for Smiths Industries, and led research and development for Panavision, developing a leading-edge product which is still their most profitable to date. Later, she led marketing and business development for Capgemini and co-created a new business unit that had sales of 83m and a pipeline of 309m in 12 months from a zero start. In 2003 she founded the consultancy ‘Futurecurve’, which helps companies navigate from a product ‘push’ focus to a true, sustainable customer ‘pull’ focus, enabling them to out-perform their peers by delivering genuine value to customers. Customers include global corporations, governmental organisations and not-for-profits. She is passionate about nature and sustainability and supports local environmental groups and social enterprises. She is also a graduate of the 7 Graces Foundations of Ethical Marketing Course and active member of the 7 Graces Community.

Read all posts by Cindy Barnes
Cindy on Twitter: @cindy_barnes
Cindy on the Web: http://www.futurecurve.com

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