Value Proposition
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This is a PPT from a presentation I gave at a small business conference to 30 small business owners
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Value Proposition
- 1. What is the Value of a Value Proposition? By: Jeremi Bauer
- 2. Agenda Intro What is a value proposition? Why do I need one? A 10 step discovery process How do I test it?
- 3. Intro One of the most misunderstood topics in marketing Most would say they have a general idea of what a VP is Most would say they have a VP
- 4. What is a Value Proposition? A value proposition is generally a clear and succinct statement (e.g., 2-4 sentences) that outlines to potential clients and stakeholders a company's (or individual's or group's) unique value-creating features. A value proposition is a clear statement of the tangible results a customer gets from using your products or services. A value proposition is an offer to some entity or target in which they (the possessor) get more than they give up (merit or utility), as perceived by them. A value proposition is the basic reasoning for why people should consider your product or service. Describes what you do in terms of tangible business results. It draws interest and shares a success story within a few words.
- 5. Examples: It’s the most technologically advanced and robust system on the market We improve communication and morale We offer training classes in a wide variety of areas My product was rated the best-in-class by leading authorities
- 6. Our clients grow their business, large or small, typically by a minimum of 30-50% over the previous year. They accomplish this without working 80 hour weeks and sacrificing their personal lives.
- 7. Why do you need a Value Proposition? A strong VP will help you break through the clutter and get the prospect’s attention Many are trying to use heavy force of marketing to overcome the weak force of their VP
- 8. A Value Prop statement must contain Describe "What" we provide Answer "So what?" Quantify "How much" Provide Proof
- 9. Success Formula S = 2V + C + P S = prob of success V = VP C = marketing channel (amount of cost effective traffic) P = Presentation of your offer (funnel)
- 10. Value Proposition A 10 Step Discovery Process
- 11. 10 Step Process 1. Start with core competencies 2. Study your customers 3. Turn core competencies into values 4. Study the competition 5. Look at trends in your industry 6. Articulate or define the company vision 7. Identify one core value 8. Build a value chain 9. Articulate the value proposition 10. Test the value
- 12. 1. Start with core competencies What are you really good at? A value proposition has to be what you do and who you are. It can’t just be what you want to be and what you say you are.
- 13. 2. Study your customers Who are your top customers? What problems do you solve for them? What problems do they want solved? Is there a new trend in any of your key customer segments?
- 14. 3. Turn core competencies into values Ask yourself why someone should buy from you instead of a competitor. Using the language of your customers, refine your core competencies as values. If your answer is “best selection”, “best customer service” or “fast shipping” your potential success may be limited. These qualities do not make a business unique.
- 15. 4. Study the competition Choose 3 or 4 competitors and study how they market their company and products What is their value proposition? Can they defend it? Map their core competencies versus yours
- 16. 5. Look at trends in the industry Are things changing? Can you take advantage of a trend and grab an exciting position in the market? Process fieldbus Process safety Wireless Industrial security
- 17. 6. Articulate or define the company vision Product Leadership Unique products & services State-of-the-art features Innovative solutions Customer Intimacy Quality relationships with customers Offer “complete” solutions Operational Excellence Excel at attributes such as price, quality, delivery, selection, availability, etc. Reference: "The Discipline of Market Leaders", Michael Treacy and Fred Wiersema
- 18. 7. Identify one core value A hiker cannot simultaneously go North, South and West at the same time… It’s impossible. Be decisive about which of the three you choose Sends a clear message to potential customers as to why they should buy from you and to employees as to what they should be doing. Choosing makes a statement as to what your structure, core competencies, business process, and culture will look like, and provides the customer profile upon which you can build a well-constructed business strategy!
- 19. 8. Build a value chain Determine whether you can support your top value across every part of the company, from product design to your channels for delivery to your process for support. Make sure to identify areas in your company where you are weak, where you may break the value chain. Commit to beef up that area to support the value.
- 20. 9. Articulate the value proposition Refine your value proposition until you can articulate it in one sentence. You should be able to communicate who your customers are, what you provide to them and why they buy from you. You should develop a value proposition statement that everyone in marketing will use as the starting point for developing positioning or messaging for products or services. If you can, back up your assertion by documenting what the customer saves or earns by choosing you.
- 21. 10. Test the value Test the final value proposition with customers to see whether it resonates. As you go through this process, continually ask yourself these questions: Are you and your executives being honest, or are your using wishful thinking when you list your core values? Can you defend the value? What are the proof points? Can you quantify the value to your customers?
- 22. References: Jill Konrath, The Sideroad, www.sideroad.com In search of a value proposition, www.marketingexperiments.com
Notas del editor
- METHODOLOGY: 1. Start with core competencies Develop a list of the internal capabilities your company has in developing your services or products. Make a list of the following: what you brought to market first, what you offer as the only provider to the market, and what makes your offering clearly superior to any alternative. You are looking for what makes your company unique. These are good differentiators and will help the process. 2. Study your customers. What problem do you solve for your customer? What problem do they want solved (which no one has fixed yet)? Is there a new trend in any of your key customer segments? 3. Turn core competencies into values. Using the language of your customers, redefine your core competencies as values. In other words, translate a technological advantage into a customer stated advantage. List proof points for each. 4. Study the competition. Choose only the top three or four competitors in your industry and look at the language they use to market their company and products. Determine what their value proposition is and whether you believe they can defend it (with proprietary technology, patents, monopoly market share, etc.). On a chart, map out their core competencies versus yours so that differentiation or sameness becomes apparent. 5. Look at trends in your industry. Is your industry old or new? Are things changing? Can you take advantage of a trend to get out in front and grab an exciting position in the market? 6. Articulate or define the company vision. Where will the company be in 3 years, 5 years, 10 years? The value proposition must align with the long-term strategy. 7. Identify one core value. Prioritize your core values. Determine which one of the top 3 values differentiates you from the competition. What is the one thing about you the customer should remember when he is ready to buy? List the proof points and how you can defend this position in the market. Decide whether you're willing to put the lion share of marketing dollars behind it to build your reputation in the market for that value. Remember, you can't be everything to everybody. Focus on one core value (or two at the most). 8. Build a value chain. Determine whether you can support your top value across every part of the company, from product design to your channels for delivery to your process for support. Make sure to identify areas in your company where you are weak, where you may break the value chain. Commit to beef up that area to support the value. 9. Articulate the value proposition. You should develop a value proposition statement that everyone in marketing will use as the starting point for developing positioning or messaging for products or services. If you can, back up your assertion by documenting what the customer saves or earns by choosing you. 10. Test the value. Test the final value proposition with customers to see whether it resonates. As you go through this process, continually ask yourself these questions: Are you and your executives being honest, or are your using wishful thinking when you list your core values? Can you defend the value? What are the proof points? Can you quantify the value to your customers? Don't be afraid to segment your audience.
- Develop a list of the internal capabilities your company has in developing your services or products. Make a list of the following: what you brought to market first, what you offer as the only provider to the market, and what makes your offering clearly superior to any alternative. You are looking for what makes your company unique. These are good differentiators and will help the process.
- What problem do you solve for your customer? What problem do they want solved (which no one has fixed yet)? Is there a new trend in any of your key customer segments?
- Using the language of your customers, redefine your core competencies as values. In other words, translate a technological advantage into a customer stated advantage. List proof points for each.
- Choose only the top three or four competitors in your industry and look at the language they use to market their company and products. Determine what their value proposition is and whether you believe they can defend it (with proprietary technology, patents, monopoly market share, etc.). On a chart, map out their core competencies versus yours so that differentiation or sameness becomes apparent.
- Is your industry old or new? Are things changing? Can you take advantage of a trend to get out in front and grab an exciting position in the market?
- Where will the company be in 3 years, 5 years, 10 years? The value proposition must align with the long-term strategy. Product Leadership: Ex. Microsoft, Intel, Harley, etc. Customer Intimacy: Customers that value intimate relationships tend to buy from them Don ’t try to be low price or most innovative Ex. Home depot, Nordstroms, IBM Operational Excellence Not big innovators or great customer service Ex. Hertz, FedEx, Wal-mart
- Prioritize your core values. Determine which one of the top 3 values differentiates you from the competition. What is the one thing about you the customer should remember when he is ready to buy? List the proof points and how you can defend this position in the market. Decide whether you're willing to put the lion share of marketing dollars behind it to build your reputation in the market for that value. Remember, you can't be everything to everybody. Focus on one core value (or two at the most).
- Determine whether you can support your top value across every part of the company, from product design to your channels for delivery to your process for support. Make sure to identify areas in your company where you are weak, where you may break the value chain. Commit to beef up that area to support the value.
- You should develop a value proposition statement that everyone in marketing will use as the starting point for developing positioning or messaging for products or services. If you can, back up your assertion by documenting what the customer saves or earns by choosing you.
- Test the final value proposition with customers to see whether it resonates. As you go through this process, continually ask yourself these questions: Are you and your executives being honest, or are your using wishful thinking when you list your core values? Can you defend the value? What are the proof points? Can you quantify the value to your customers?