Value Proposition

What is the Value of a What is the Value of a Value Proposition?Value Proposition?

By:By:Jeremi BauerJeremi Bauer

AgendaAgenda

IntroIntro

What is a value proposition?What is a value proposition?

Why do I need one?Why do I need one?

A 10 step discovery processA 10 step discovery process

How do I test it?How do I test it?

IntroIntro

One of the most misunderstood topics in marketingOne of the most misunderstood topics in marketing

Most would say they have a general idea of what a Most would say they have a general idea of what a VP isVP is

Most would say they have a VPMost would say they have a VP

What is a Value Proposition? What is a Value Proposition?

A value proposition is generally a clear and succinct statement A value proposition is generally a clear and succinct statement (e.g., 2-4 sentences) that outlines to potential clients and (e.g., 2-4 sentences) that outlines to potential clients and stakeholders a company's (or individual's or group's) unique stakeholders a company's (or individual's or group's) unique value-creating features. value-creating features.

A value proposition is a clear statement of the tangible results A value proposition is a clear statement of the tangible results a customer gets from using your products or services.a customer gets from using your products or services.

A value proposition is an offer to some entity or target in which A value proposition is an offer to some entity or target in which they (the possessor) get more than they give up (merit or they (the possessor) get more than they give up (merit or utility), as perceived by them.utility), as perceived by them.

A value proposition is the basic reasoning for why people A value proposition is the basic reasoning for why people should consider your product or service.should consider your product or service.

Describes what you do in terms of tangible business results. It Describes what you do in terms of tangible business results. It draws interest and shares a success story within a few words. draws interest and shares a success story within a few words.

Examples:Examples:

It’s the most technologically advanced and robust It’s the most technologically advanced and robust system on the marketsystem on the market

We improve communication and moraleWe improve communication and morale

We offer training classes in a wide variety of areasWe offer training classes in a wide variety of areas

My product was rated the best-in-class by leading My product was rated the best-in-class by leading authoritiesauthorities

Our clients grow their business, large or small, Our clients grow their business, large or small, typically by a minimum of 30-50% over the previous typically by a minimum of 30-50% over the previous year. They accomplish this without working 80 hour year. They accomplish this without working 80 hour weeks and sacrificing their personal lives.weeks and sacrificing their personal lives.

Why do you need a Value Why do you need a Value Proposition?Proposition?

A strong VP will help you break through the clutter A strong VP will help you break through the clutter and get the prospectand get the prospect’’s attentions attention

Many are trying to use heavy force of marketing to Many are trying to use heavy force of marketing to overcome the weak force of their VPovercome the weak force of their VP

A Value Prop statement A Value Prop statement must containmust contain Describe "What" we provideDescribe "What" we provide

Answer "So what?"Answer "So what?"

Quantify "How much"Quantify "How much"

Provide ProofProvide Proof

Success FormulaSuccess Formula

S = 2V + C + PS = 2V + C + P

S = prob of successS = prob of success

V = VPV = VP

C = marketing channel (amount of cost effective C = marketing channel (amount of cost effective traffic)traffic)

P = Presentation of your offer (funnel)P = Presentation of your offer (funnel)

Value PropositionValue PropositionA 10 Step Discovery ProcessA 10 Step Discovery Process

10 Step Process10 Step Process 1. Start with core competencies1. Start with core competencies

2. Study your customers2. Study your customers

3. Turn core competencies into values3. Turn core competencies into values

4. Study the competition4. Study the competition

5. Look at trends in your industry5. Look at trends in your industry

6. Articulate or define the company vision6. Articulate or define the company vision

7. Identify one core value7. Identify one core value

8. Build a value chain8. Build a value chain

9. Articulate the value proposition9. Articulate the value proposition

10. Test the value10. Test the value

1. Start with core 1. Start with core competenciescompetencies

What are you really good at? What are you really good at?

A value proposition has to be what you A value proposition has to be what you dodo and who you and who you areare. It can. It can’’t just be what you t just be what you wantwant to be and what you to be and what you saysay you are. you are.

2. Study your customers2. Study your customers

Who are your top customers? Who are your top customers?

What problems do you solve for them?What problems do you solve for them?

What problems do they want solved?What problems do they want solved?

Is there a new trend in any of your key customer Is there a new trend in any of your key customer segments?segments?

3. Turn core competencies into 3. Turn core competencies into valuesvalues

Ask yourself why someone should buy from you Ask yourself why someone should buy from you instead of a competitor. instead of a competitor.

Using the language of your customers, refine your Using the language of your customers, refine your core competencies as values.core competencies as values.

If your answer is If your answer is ““best selectionbest selection””, , ““best customer best customer serviceservice”” or or ““fast shippingfast shipping”” your potential success your potential success may be limited. These qualities do not make a may be limited. These qualities do not make a business unique. business unique.

4. Study the competition4. Study the competition

Choose 3 or 4 competitors and study how they Choose 3 or 4 competitors and study how they market their company and productsmarket their company and products

What is their value proposition?What is their value proposition?

Can they defend it? Can they defend it?

Map their core competencies versus yoursMap their core competencies versus yours

5. Look at trends in the 5. Look at trends in the industryindustry

Are things changing? Are things changing?

Can you take advantage of a trend and grab an Can you take advantage of a trend and grab an exciting position in the market? exciting position in the market? Process fieldbusProcess fieldbus Process safetyProcess safety WirelessWireless Industrial securityIndustrial security

6. Articulate or define the company 6. Articulate or define the company visionvision

Product LeadershipProduct Leadership Unique products & servicesUnique products & services State-of-the-art featuresState-of-the-art features Innovative solutionsInnovative solutions

Customer IntimacyCustomer Intimacy Quality relationships with customersQuality relationships with customers Offer Offer ““completecomplete”” solutions solutions

Operational ExcellenceOperational Excellence Excel at attributes such as price, quality, delivery, Excel at attributes such as price, quality, delivery,

selection, availability, etc.selection, availability, etc.

Reference: "The Discipline of Market Leaders", Michael Treacy and Fred Wiersema

7. Identify one core value7. Identify one core value

A hiker cannot simultaneously go North, South A hiker cannot simultaneously go North, South and West at the same time… It’s impossible. and West at the same time… It’s impossible.

Be decisive about which of the three you chooseBe decisive about which of the three you choose

Sends a clear message to potential customers Sends a clear message to potential customers as to why they should buy from you and to as to why they should buy from you and to employees as to what they should be doing. employees as to what they should be doing.

Choosing makes a statement as to what your Choosing makes a statement as to what your structure, core competencies, business process, structure, core competencies, business process, and culture will look like, and provides the and culture will look like, and provides the customer profile upon which you can build a customer profile upon which you can build a well-constructed business strategy!well-constructed business strategy!

8. Build a value chain8. Build a value chain

Determine whether you can support your top Determine whether you can support your top value across every part of the company, value across every part of the company, from product design to your channels for from product design to your channels for delivery to your process for support. delivery to your process for support.

Make sure to identify areas in your company Make sure to identify areas in your company where you are weak, where you may break where you are weak, where you may break the value chain. the value chain.

Commit to beef up that area to support the Commit to beef up that area to support the value. value.

9. Articulate the value 9. Articulate the value propositionproposition

Refine your value proposition until you can Refine your value proposition until you can articulate it in one sentence. articulate it in one sentence.

You should be able to communicate who your You should be able to communicate who your customers are, what you provide to them and customers are, what you provide to them and why they buy from you.why they buy from you.

You should develop a value proposition You should develop a value proposition statement that everyone in marketing will use as statement that everyone in marketing will use as the starting point for developing positioning or the starting point for developing positioning or messaging for products or services. messaging for products or services.

If you can, back up your assertion by If you can, back up your assertion by documenting what the customer saves or earns documenting what the customer saves or earns by choosing you. by choosing you.

10. Test the value10. Test the value

Test the final value proposition with customers to Test the final value proposition with customers to see whether it resonates. As you go through this see whether it resonates. As you go through this process, continually ask yourself these questions: process, continually ask yourself these questions: Are you and your executives being honest, or are Are you and your executives being honest, or are

your using wishful thinking when you list your core your using wishful thinking when you list your core values? values?

Can you defend the value? What are the proof Can you defend the value? What are the proof points? points?

Can you quantify the value to your customers? Can you quantify the value to your customers?

References:References:

Jill Konrath, The Sideroad, Jill Konrath, The Sideroad, www.sideroad.com

In search of a value proposition, In search of a value proposition, www.marketingexperiments.com