Value Proposition

  • Value Proposition
    Summary

    Value Proposition

    Value Proposition Definition

    A Value proposition describes the bundle of products and services that create value for a specific customer segment. It is why customers turn to one company over another.

    It solves a customer problem or satisfies a customer need. A Value proposition is an aggregation or bundle, of benefits that a company offers customers

    What value does it offer the customer. It may be quantitative (e.g. price, cost reduction, risk reduction) or qualitative (e.g. design, customer experience, convenience).

    Value Proposition Development

    It may be developed totally in house or it may be a combination of in house and external products and services. It may require completely new development or may be need the configuration and assembly of existing units.

    It is a complex undertaking and often requires a combination of skills and inputs with constant customer communication and feedback.

    A Product manager often is designated to create a plan and execute using project management techniques. But in cases where a bespoke solution is being created for a customer this may well be lead by an Account Director or manager with project management assistance.


    Addressing Customer Needs

    A Value Proposition is created by addressing customer needs. Understanding these needs is a cornerstone to creating a Value Proposition. The clear communication of the value to be derived in a way that is understood and agreed by the customer with reference to his needs is important to an effective and efficient sale.

  • Value Proposition
    Addressing Customer Needs

    Value Proposition - Addressing Customer Needs

    Use Customer Profile

    The construction of the Value Proposition will lean heavily on the information gleaned in constructing the customer profile

    Relevant Customer needsa nd current methods of addressing should be available

    Customer Needs

    • New Needs - New Technology Or Innovative Offering enables addressing of new needs
    • Improved Performance
    • Customization - Tailoring Products and Services to specific needs
    • Getting The Job Done - Helping Customer get certain jobs done
    • Superior Design
    • Brand/Status - Normally consumer goods - customers perceive value in using a particular brand e.g. Rolex
    • Price - Similar Value at lower Price
    • Cost Reduction - Helping Customers reduce Costs
    • Risk Reduction - Service Level Guarantees, Customer References reduce actual and perceived risk
    • Accessibility - Making products and services available to customers who previously lacked them
    • Convenience/usability - Making things more convenient or easier to use
  • Value Proposition
    Communicating Value Throughout Sale

    Communicating Value Throughout the Sale

    A deep understanding of value, the customer needs and the value proposition can turn Sales People into Business Consultants

    A well crafted Value Proposition is a key Sales Tool that can deliver significant increases in sales efficiency and effectiveness.


    Good sales tools and training can turn ordinary sales people into business consultants as it will give them the knowledge & confidence to work at higher levels in the customer organisation, to ask the right questions to Qualify thoroughly, to understand organizations offering in detail and then give them the ability to control and manage the sale.

    The Value proposition is the foundation but other sales tools include Value Analysis document - normally a spreadsheet that demonstrates value by showing a return on the required customer investment

  • Value Proposition
    Structure

    Value Proposition - Structure

    Best relationships are based on value

    Value is referenced throughout the sale. It may well start with a straw-man, built using data from a previously successful customer or reference and extrapolated to address this particular customer. It will be developed as the sale proceeds as more detail on the solution is developed and information on the assumptions is discovered. In some cases, some pilots may need to be implemented to test some key assumptions in the value equation.

    The best relationships in business have the delivery of value as their foundation. A sales person that is perceived to consistently deliver value (advice, information, solutions) will be better placed to form better relationships.

    Value flows throughout the organisation

    A Goal/Objective for the CEO flows down to the CMO and down to the marketing department.
    For instance the CEO may have an objective of increasing the average revenue per user. This will be come a lead generation objective by the marketing department and an opportunity conversion objective by sales. A Value chain may be created to move from clearly known objectives at the top of the organisation to create new ones lower down the organisation.

    Value Proposition Example

    We believe that Company A should be able to

    • Increase efficiency by 10% resulting in a 5% increase in profits per annum.
    • With an upside of
      • Improve knowledge sharing, security and workforce effectiveness

    Through the ability to

    • Design and implement new business processes using the latest technology

    As a result of

    • Outsourcing specific document intensive processes in HR, Legal & Supply Chain departments

    For an investment of

    • Set up – £XM set up
    • Ongoing – Annual Service charge of £YM

    Based on the following Assumptions

    • 5 Year contract
    • Set up in Yr 1
    • Relevant staff transferred according to TUPE.
    • Benefits realized in years 2-5.