Creating a Compelling Value Proposition

April 2013

Many companies face a fundamental problem: there is a sizeable gap between what they offer and what their customers actually value. This value gap can lead to lost sales, lower profits, commoditisation, failure to innovate and the wrong organisational structure potentially employing the wrong people. Part of the difficulty is that many companies actually misunderstand precisely what a value proposition is. A true Value Proposition is the sum of the offerings and experiences delivered to your customers, during their interactions with your organisation. Getting to the bottom of the implicit hierarchy of why customers do business with you and making it explicit is at the heart of developing your company’s value proposition.

Creating an effective value proposition requires senior sponsorship, a strong business case and the right process. There is a six-step process to help go about this in a structured and rigorous way:

1. Market

The first stage involves analysing your target markets in detail – buyers, influencers, resellers and end customers

2. Value Experience

Detailed qualitative interviews with your customers need to be had to understand their needs

3. Offerings

The third stage maps your product and service offerings against the value they deliver to your customers.

4. Prioritising Benefits

Giving too much choice merely slows purchasing decisions, being clear, direct and succinct wins.

5. Alternatives and Differentiation

This stage is where you compare your value to your competitors value. Other alternatives and substitutes are also compared, including the ‘do nothing’ and ‘we’ll do it ourselves’ customer responses.

6. Proof

The final stage is to design the evidence tools you need, such as case studies, testimonials, fact sheets and genuine total cost of ownership and return on investment models.

Article by Cindy Barnes and Helen Blake featured in The Market Magazine