Your competition is trying to poach your customers; competitors that you may know well, new entrants appearing from nowhere, or old rivals who suddenly seem to have got their act together and are on the offensive. It is an ultra-competitive market and complacency is not an option. Your value proposition must be able to answer the single most fundamental question…’why should I buy from you?’
Whether you’re a business leader, owner, entrepreneur, in sales, customer service or management, I’m guessing you’re passionate about what you do. (You wouldn’t be reading this blog if you weren’t!) You’re enthusiastic about your products and services, you believe they’re better than your competitors and understandably you want to tell as many people as possible about them.
Great. Don’t ever lose that passion. Just be mindful of this pitfall.
The challenge when communicating in this style is that the core message is centred on your view of the world, which may not always reflect your customer’s view or motivations. It may detail the features or advantages of your product or service but skim over the benefits. In this scenario your customers hear: ‘ This is what I sell and this is a list of reasons why I think you should buy it!’.
You fall into the trap of explaining the product or service and not the benefit, usually in the style of your internal audience, not your external one.
Your compelling value proposition, your products and services all wrapped up in a value adding bundle of customer joy, is one of the ten business growth enablers which can either drive or derail your business growth ambitions. A compelling one can literally open the door to potential customers, while a weak one will keep the door closed.
5 steps to building a compelling value proposition
#1 Baseline your current product and service offering
Creating a baseline of precisely where you’re at with the maturity of your current product & service offering will give you the platform to systematically and strategically enhance and develop your value proposition working towards the ultimate goal of becoming truly market leading.
When customers are looking to choose your products or services, they don’t want a lengthy description of your business model, that’s not what customers care about. Customers want to know ‘Why should I choose your business?’ and ‘Why should I choose you?’
If you’re not able to clearly articulate the answers to ‘Why should I choose your business?’ and ‘Why should I choose you?’ than it highly likely that your customers are unable to. Work to understand and succinctly answer these two fundamental questions.
What your customers want to hear is a clear statement which demonstrates that you understand their situation and their needs. They want to know that you recognise the challenge they wish to solve, or the outcome they wish to achieve, and they want to hear how you are going to help them address that situation.
#2 Create genuine differentiation in your value proposition
If you’re not creating genuine differentiation then you will just end up as another ‘me to’ brand. Can you deliver a solution that is different from and better than your competitors?
Having differentiators within your products and services can provide a real competitive edge. A Unique Selling Point (USP) is a feature or benefit that separates a product from its competitors. A USP could be a lower price, a smaller version of the product, offering extra functions, or even simply producing a standard product in a range of colours or designs.
Look for specific ways you can differentiate your products and services to give yourself a clear competitive edge. Most likely if a business doesn’t have or can’t develop competitive advantages they won’t survive. Know your business; your strengths, weakness, threats and opportunities and know the same of your competitors.
Once you have established exactly what your offer is, and your entire team can articulate it, it’s critical this message is clear and consistent across all customer interactions and channels.
#3 Establish a robust pricing strategy
Pricing is a highly complex area: get it right and sales and profit flow; get it wrong one way and sales flow, but profit is poor; the other way and sales are poor, but profit per transaction is good. Any price positioning should be based on informed, decision making aligned to your long-term strategic goals.
Review the driver for your current pricing strategy. What serves you well today, may not serve you well as your business evolves. A robust pricing strategy will help you determine the price point at which you can maximise profits on sales.
When setting or adjusting your prices you need to consider a wide range of factors including production and distribution costs, competitor offerings, positioning strategies, your target customer base and your existing customer base.
Remember, your existing customer data is a powerful source of data. Knowing who spends the most, on what, when and where will help you identify who your most profitable customers are, and why.
#4 Align your distribution of products and services to how your customers want to buy and consume them
You may have developed a great product but your business will not realise its full potential in generating profitable revenue unless you find a way to get your product to your customers, efficiently and effectively. Your supply chain should quickly move your product from your work location to your customers with the minimal number of hand-offs, room for errors or delays as possible. An inefficient distribution system will more than likely lose you business as your customers seek alternative providers or solutions which are easily accessible and easy to do business with.
Review your channels to market. Is this what your customers want and need. What are your known gaps in meeting their needs and wants? Review your competitors channels to market. What insights and best practices can you gain? Look beyond your own sector or industry to capture best practice elsewhere.
Your distribution channel – your route to market – should make it easy for your customers to buy what you are offering, in the way they want to buy it, at the time they want to and are ready to consume it.
#5 Deliver product and service innovation
Innovation is not solely about launching new products or services, it is also the process of uncovering new ways to do things. With rapidly changing markets it can be easy to fall behind the curve so innovation should always be a part of your compelling value proposition.
Take a step back and identify the underlying change that is forcing buyers to look for something different, that is forcing buyers to feel pain, and that is causing them to want to look into the marketplace for better solutions. Then make sure it’s your solution they find.
With creative thinking, problems can be solved differently and strategically. The right innovative techniques can help you save precious time and money, and give you a competitive lead in expanding your business. Innovation is vital in any business including yours!
In a connected world, where customers are more informed, more educated and have more choice than ever before it’s simply not good enough to have a mediocre value proposition. You have to have a compelling value proposition.
Is your value proposition compelling?
Well why don’t you take the test and find out.
I’ve developed a simple online tool (The Business Growth Pathway) to help you assess your current products and services which you can access here.
Honestly answer a number of questions on positioning, pricing, channel to market, speed to market plus much more, and in about 20 minutes you’ll get an in-depth personalised report assessing your current value proposition. Is your value proposition compelling?, well only you’ll know the answer to that, but your report will surely give you some clues!
Access your free trial here.