At the start-up of every business and the creation of every brand it is likely that a Value Proposition will have been carefully considered and clearly defined. However, organisations change. They grow opportunistically as well as strategically. Which is why regular re-evaluation of the Value Proposition ought to be a fundamental discipline for every business. So when was the last time you reviewed your Value Proposition? If you haven’t taken a fresh look at it for a while, then there couldn’t be a more important time to do so than when faced with the worst recession for decades.
A Value Proposition should define the unique essence that a business or brand delivers for its customers. It should explain the competitive advantage – why customers want to buy from that organisation rather than another; and it should be easy to understand and clearly evidenced. Organisations who build brands understand the importance of a strong Value Proposition better than most. Yet it is a constant surprise in my discussions with client companies, from SMEs to the biggest corporate organisations, how rarely Value Propositions are reviewed and reassessed.
We all recognise that the speed of business change is accelerating and that being responsive and dynamic are valued business attributes. So, even assuming that a Value Proposition is strong (and far too many aren’t), it needs to evolve with the business. Ideally it should be reviewed at least every three years but also whenever there is significant change in the business or the market. Even if this appears to be something of a post-rationalising of the Value Proposition, the alternative is to carry on running a business without stopping to consider why customers are buying from you – or more importantly, not!
From my experience, most business leaders (at least when pressed) will acknowledge the importance of understanding their Value Proposition. However, that understanding is rarely as common or as up-to-date as the business leaders might like to think.
The endemic neglect of Value Proposition is even more surprising when you understand the exceptional value of the reassessment process itself. When I run a Value Proposition workshop, it is not uncommon at the outset to find that board members will define their Value Proposition in strikingly and occasionally disconcertingly different ways. However, identifying this invariably stimulates a very valuable debate that results in a much clearer, shared vision of the business and its potential. It is always a valuable and stimulating exercise for a business leadership team.
Value Propositions are not only relevant at business and brand level. Individual products and services, and even specific corporate projects such as HR and change programmes can benefit from a clearly articulated definition of the Value Proposition they deliver – whether it be for customers, staff or shareholders. Propositions can also address both strategic and tactical ways of delivering value. Strategically the core of a Value Proposition should evolve rather than change suddenly and radically. However there are times when a Value Proposition can be modified tactically to respond to short term needs and market changes – and the current economic climate is a perfect example.
One of my clients is a financial services company in the automotive sector. Its Value Proposition has been that it makes buying a car easily affordable because of the competitiveness of their finance products and the ease of the application process at the point of car purchase; and this is supported by a secondary offering of related insurance products. In the current market they are simply changing the emphasis within the Value Proposition from finance to risk protection. Now their message concentrates on making a car easily affordable by reducing the financial risk and uncertainty – protecting a customer’s investment in a significant asset and their extra financial responsibility through asset and credit protection insurance that safeguards against the financial repercussions of redundancy or accident. The result is that while the market for finance is falling, their insurance sales are strengthening.
Taking time to re-evaluate your Value Proposition now might appear an unnecessary distraction and expense at a critical time. However, four key reasons make it essential.
1) Responding to changing customer needs In such extreme economic conditions, customer requirements have undoubtedly changed as they seek to reduce expenditure. Added value becomes less important as buyers become prepared to downgrade or focus on essentials – which can lead them to switch from the comfort zone of higher priced brand leaders to lower priced or challenger brands. Competition becomes keener as price grows in importance and decisions become short-term.
Despite this emphasis on pricing, value will remain important, especially as a differentiator; although customers will have new priorities by which they define value. For example: versatility can become more valued than specialisation; reliably acceptable quality becomes more important than buying the best; function becomes more desirable than fashion. The perceived value of any given proposition can change significantly in such a market.
2) Saving money by ensuring marketing investment is cost effective In recession, even if your advertising and marketing activity is heavily reduced, it is still likely to be a significant business cost and getting the best possible return becomes even more important. Just delivering less of the same messages you did a year ago is not likely to be cost-effective in this abnormal market. By reassessing your Value Proposition in response to this new economic climate, you can ensure that your marketing and sales messages are clearly focused on a valid Value Proposition for the current market and deliver what is important to your customers right now. It will ensure that you are not wasting money producing sales and marketing collaterals and buying media that is simply delivering the wrong messages to the wrong people at the wrong time.
3) Energising and refocusing the leadership team With the right help, the Value Proposition reassessment process is an invigorating experience for a business leadership team. It will challenge preconceptions; force the business to look outside of itself and see itself through its customers eyes; identify differences and create a common understanding of direction and objectives; help to guide and benchmark business strategy; enable the business to assess itself against market opportunities and competitor strengths; and it will re-energise and re-focus the executive team involved in the process. Although it demands an investment of key people’s time, and should ideally be guided by experts who will facilitate the process, contribute vital objectivity and help to articulate the outputs, it will probably involve less time and expense than might be expected. The ROI is usually instantaneous.
4) Improving staff engagement Staff, and especially senior management and sales teams, are more engaged when there is a clear understanding of the Value Proposition. If you as business leaders don’t understand or can’t clearly articulate it, how can your staff – and what message is your sales team likely to be delivering? Achieving effective engagement with your employer brand is never fully effective without your staff sharing a clear and common understanding of its Value Proposition.
So how do you establish whether your Value Proposition is strong and clearly understood? Start by considering the following questions for your organisation. If you and the rest of your leadership team were asked individually to define your Value Proposition, a) Would there be a document that you could refer to which defines it – and if so, how long ago was it last reviewed? b) If not, how easy would it be for each of you to individually write down a clear and concise definition, and how closely aligned would your individual definitions be?
In the States they have a typically up-front approach to these questions. They call it the elevator test. It’s based on the premise of being asked by a stranger in an elevator about your company. You have from the ground floor to the top floor to explain what it does and the value it delivers for its customers? If you can’t do it without hesitation, or you’d need to be in the Empire State Building to have time to explain it, then you’ve failed.
If this thought makes you head for the stairwell for fear of being accosted in a lift, then its time to starting thinking about your Value Proposition and calling on some expert help to review it, articulate it and disseminate it. Do it now and you’ll be taking a positive and pro-active step to steering your business through this recession.
Supplementary
What is a Value Proposition? A headline in DM News once proclaimed: ‘Nobody buys a Value Proposition’. So why are they so important?
Michael Lanning, a McKinsey & Company consultant, was the first to establish the term Value Proposition in 1984. Lanning defined it as; ‘the combination of resulting experiences, including price, which an organization delivers to a group of intended customers, in return for those customers buying/using and otherwise doing what the organization wants rather than taking some competing alternative’.
Since Lanning’s coining of the phrase, every marketing expert worth mentioning has redefined and re-interpreted it in their own way. However there is common agreement that a Value Proposition is much more that what an organisation does, or the features and benefits of the products and services it sells. It is essentially about the value that the customer perceives they have received; including the comparative value with other potential solutions and how they feel about the experience as a whole (including the service they received and the people they came into contact with). Essentially, it explains why customer buy from you.
Value Propositions should be the single most important factor guiding the marketing communications and sales messages presented to customers. There should be a clearly defined, well articulated, and up-to-date Value Proposition for every business, and in many cases for each brand, product or service offered by a business.
NB. While a well articulated Value Proposition statement can sometimes be used verbatim in sales and marketing communication, it is usually only used in its raw form within a company to achieve consensus and common understanding throughout the business. It is then re-crafted visually and textually in sales and marketing collaterals for delivery to external target audiences.
Article by Andy Criddle, Communication Consultant and Director of With One Voice
(www.withonevoice.co.uk).
Author: Andy Criddle
Article Source: EzineArticles.com
Provided by: Creditcard Currency Conversion Fee
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