Did you know that developing a value proposition is one of the most difficult of all marketing activities? It’s why many companies let their sales departments make up stuff and sell on hype. But most businesses don’t even try. Instead, they choose the middle of the road—without one at all. It’s easier but like most things easy, it is also a mistake. When you walk down the middle of the road you’ll likely get run over. You must choose a side and here are your choices 1) be the low cost provider or 2) create unique value. That’s it. If you’re stuck in the middle consider this: there can be only one with the lowest price and, it is very difficult to combine unique value with lowest price. Each approach requires an entire business model to back it up. If you chose value this post offers some crucial tips on how to turn your solutions from a “so what” to a “must have.” Here’s a newsflash: Serving your customers and providing products and services are just things you do—they’re expected. These activities constitute nothing more than the price of admission to the industrial coatings category—or any other category for that matter. There’s not much return you can actually take to the bank. In other words, just because your company keeps busy doing these things doesn’t mean it’s what your customers are really buying. These activities are important only because they help produce the impact you want. But they aren’t the impact. Your company can get trapped thinking that your business is about managing these activities. It’s not. Producing positive results is what your customers really care about. If you’ve been struggling, trying to come up with a value proposition worth promoting, you may have been looking in the wrong place. Here’s how customers look at it.
In the article “Are Your Chemicals of Any Value” published by SpecialChem, CEO and founder Christophe Cabarry offers a couple of powerful insights about value creation. For starters, an easy to understand definition for Value Proposition: (my phrasing) The quotient of perceived benefits (the “positive things”) minus perceived sacrifices (what it takes to get the benefit), things like downtime, approvals, increased costs and the like. The key words to note: “Benefit” and “sacrifice.”
The other insight is just as simple to understand: “In a B2B environment … there are 2 and only 2 generic ways to provide Benefits to a customer:
- Reduce his cost
- Increase his revenues
The impact of either reducing costs or increasing revenue for your customer are the only two benefits that will create the perception of value for your business. Your clients and customers come to you because they benefit from the relationship. They don’t hire you for a swell professional experience—that’s just table stakes. So meaningful value propositions are about the outcome, not the process. When you know exactly what customers want, you can more easily develop “must-have solutions.” And, when you focus on the right stuff you elevate your business above the competition. I never said it would be easy but the great news is that companies that invest the effort to hone and validate their value propositions always get a big return on their investment.
There is so much more to come on this subject! Please stay tuned. Send me your comments.
Photo by: Katie Welch