What is the Value of a Value Proposition?

John Cusimano Siemens

Agenda
Intro What is a value proposition? Why do I need one? A 10 step discovery process How do I test it?

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

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.

Examples:
Its 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

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.

Why do you need a Value Proposition?

A strong VP will help you break through the clutter and get the prospects attention Many are trying to use heavy force of marketing to overcome the weak force of their VP

A Value Prop statement must contain

Describe "What" we provide Answer "So what?" Quantify "How much" Provide Proof

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)

Value Proposition
A 10 Step Discovery Process

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

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 cant just be what you want to be and what you say you are.

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?

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.

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

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

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

7. Identify one core value

A hiker cannot simultaneously go North, South and West at the same time Its 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!

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

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.

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?

References:
Jill Konrath, The Sideroad, www.sideroad.com In search of a value proposition, www.marketingexperiments.com