10 ways to check if you need a new value proposition
Value like beauty is contextual; it’s in the eye of the beholder. It depends not only on functional, rational factors such as price, security and speed but also on emotional factors such as, ‘what’s in this for me?’, and ‘how will this make me look?’. People are often unaware that they are making buying decisions based on unconscious, emotional factors. That’s why just asking people what they want, doesn’t work.
A renewed value proposition can bring directness, clarity and simplicity into what you do, how you think about your company and how you portray this to customers, both through your offerings and communications.
From the customer’s perspective value works at many levels. There’s the overall brand value perception of the company, belief in the marketing messages and trust in the sales and operational staff. Also the ‘jobs-to-be-done’ value of the actual offering as well as the communication and relationship value of customer service and account management teams. Codifying and harnessing this for all your customers and prospects is the total value proposition.
Here is a list of things we often see as symptoms that point to a weak value solution or value proposition:
• Not enough sales leads
• Poor quality sales leads
• Weak conversion rates
• High cost of sale
• Selling on price and always discounting
• Struggling to enter new target markets
• Offerings the same as everyone else with poor differentiation
• Lack of customer retention and loyalty
• Marketing that has no impact, often highlighted by a website that only talks about the
company rather than its value to customers
• Brand perceptions and expectations that are not experienced by the customer
Here are more detailed questions to check whether your total value proposition is in good shape or whether it needs attending to. These questions address the company level, offering level and marketing and sales levels – all are important. If you can’t answer these questions in detail then your value proposition needs updating.
1) Are sales faltering? Do you know precisely why?
Because sales is where the rubber hits the road in most organisations, it is sales performance that’s one of the leading indicators if there is a problem with the total value proposition.
Can you honestly answer the question in detail looking at all the structural, people and market factors; the soft factors and the hard factors?
There could be many reasons for poor sales. It could be due to sales people, their skills, poor sales leadership, inadequate products and services, weak marketing and little exposure, any of these reasons and many more against a backdrop of a weak economy. However, we have seen businesses buck the economic trend and turn themselves completely around in recessionary times by focussing on creating and building a new total value proposition.
2) 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 solutions are badly constructed or that sales compensation structures may be largely geared towards new wins only. For most businesses it’s too costly to continually go chasing new business.
3) What do your customers value and not value about working with you?
It’s equally important to know and be very clear about those 3 or 4 things that make customers come back to you repeatedly and also those few things that customers could do without. These might be aspects of your solutions but they are also likely to be more emotional things such as trust, reliable relationships and 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.
4) Who are you targeting? (Geography/sector/sub-sector/job title/stakeholders)
Can you be precise about all of these:
a. what countries you are selling in or want to enter
b. what market sectors and sub-sectors you’re going to focus on targeting in each
c. within each market sector/sub-sector who are the different types of buyers and
influencers you’re going to target
d. what are the job titles of the various buyers and influencers
e. what does the whole stakeholder map look like and can you map it out by who holds the power
You need to be very clear and detailed about targeting plans including target markets, target buyers and influencers, power maps and how your solutions will fit each.
5) For each of the above target groups, what risk do your customers perceive if they choose to work with you?
Understanding risk means that you can attempt to mitigate that risk. This requires honesty, insight and research. Typical risks for smaller companies include size, they’re perceived as too small both financially and in number of staff, for larger companies it can be lack of evidence or proven ability in a particular sector.
6) What pain are you relieving for your customers?
A basic selling point – you need to be able to explain what pain your solutions will take away from customers. If you can’t answer that then more customer research is needed.
7) What are your offerings that will both relieve this pain and add measurable value?
Can you describe your offerings in detail and how all your offerings fit together e.g. what products and services might go together to make up a solution?
Can you describe what the ‘job-to-be-done’ is by each offerings and what the outcome of each ‘job-to-be-done’ will be for their customer?
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 know and be able to quantify in detail what each offering does, how it saves time, reduces costs, increases revenue, increases productivity etc.
8) 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 / how do they differ? How do those differences translate into benefits and real value for customers?
If not, you need more research and to be able to demonstrate and differentiate your value against your competitors’ or alternatives’ value.
9) How do you provide evidence to support your claims of value?
Do you have:
a. case studies (ideally with customers named but generic if not)
b. customer testimonials (ideally with customers named but generic if not)
c. total cost of ownership or ROI tools / models
d. articles or papers written together with customers
e. independent or proprietary research that supports your claims about your results that
can be made public
Are you providing enough proof to your prospects and customers and is a lack of evidence prolonging your sales cycle. Providing evidence acts as a de-risking of the purchase and will often help to speed up the sales cycle.
10) Have you clearly constructed your value stories and messages across all internal and external communications?
External messaging is about layering, using a mix of channels and mediums to build confidence in your potential buyers that you can deliver their expectations of value.
Buyers do more research than ever before they begin any discussion with sales and the brand can no longer be just corporate promotional activity that has no relevance to the sales process – customers expect a positive brand experience at every touch point with the organisation.
Internally all staff need to understand how their behaviour impacts on customer experience – the way they act or speak with customers either supports or taints customer value.
Value is defined by your customers and their experiences and not by you. We are all aware of functional needs but how many sales and customers are lost because emotional needs are not understood or even considered? Customer’s buying decisions are rarely one dimensional.
All the questions above need to be addressed equally because all the points are interconnected. If your answers to the 10 questions above indicate a one dimensional value proposition then it is time to reassess your core value and how you’re delivering it to your customers.
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Cindy Barnes is a business and psychology consultant. Her background is in product and service innovation, business development and leadership. She is founder and Chief Innovation Officer at Futurecurve who are value solution architects and builders. Futurecurve helps companies navigate from a product ‘push’ focus to a true customer ‘pull’ focus, enabling them to out-perform their peers by delivering genuine value to customers. Customers include global corporations, governmental organisations, start-ups and not-for-profits.
Her career has spanned engineering, heading R&D for part of Panavision, running automotive component factories for Smith Industries and leading marketing and business development for Capgemini. She has created, developed and sold many leading edge products and solutions.