Vistage Speaker Roger Martin-Fagg says: “A business will be growing its sales because customers, consumers and clients purchase on the basis of superior or differentiated value. And you need to be sure what the drivers of satisfaction are.”
“The value proposition is a clear statement of what value you offer, to whom - and in what way. It is different from a mission statement because it focuses on differentiation, or the compelling reason why customers should choose you and not your competitor.”
A value proposition helps define value for money, when people buy from you they do so because you offer value. That value could be price, attitude of employees, ease of purchase, convenience, clarity of offer, your distinguished capability, delivery time, post sales support, local supplier, finance and so on. The value you offer is your value proposition.
If you’re going to drive significant growth you, your employees and your customers need to be clear on the value proposition you’re making.
The value proposition is a clear statement on:
• Your purpose
• Your points of differentiation
• How you delight your customers
• Why customers are loyal
• Why you are so sought after
• Why you’re famous for what you do
The value proposition is not only your statement of the above but it’s the foundation on which you can start to innovate customer experience, value for money, points of difference and to seek new value and new differentiation.
Value For Money = Satisfaction minus Price
As a business grows it is likely that the value proposition will be developed and you will often require a value proposition for each new customer segment that you are serving. For example, if you provide business consulting and training services to small companies, and you choose to grow your business by dealing with large businesses, your value proposition will be likely to change.
Roger Martin-Fagg says: “It may even be that the new value propositions are sufficiently distinct to require a separate division within the business. This ensures that there is complete alignment with the drivers of value for money. Of course it makes no sense to serve market segments where the firm doesn’t have a strong and compelling offer.”
If you’re lucky enough that you don’t retreat back to who you used to be, and what you used to do before you started to grow, without a clear value proposition, your people will start to make it up. Imagine what happens when the troops start to redefine value propositions on a moment-by-moment basis. Your business starts to make bad decisions, you inherit harmful inconsistencies and you’ll start to lose customers or not continue to win new ones. As your company grows, you need to manage the value proposition in as fine detail as you do your finances. You can’t write it down and never look back at it. It has to stay real and as a guide to you and your people.
Roger Martin-Fagg points out: “Once you hit the point that not every colleague and employee is exposed to a clear value proposition you start ending up with customer facing employees answering questions about why a customer should choose you with words like quality, being nice to people, innovative and unique. They make a break between the true value offering and they slip into making it up with weasely words that mean very little and certainly don’t mean differentiation.”
Choose your wording carefully
When it comes to writing down your value proposition don’t get lazy, and make sure you don’t start piling in an answer for every eventuality: Be careful not to go too broad. Keep it real. Keep it brutally simple. Make your proposition clear. Make it succinct.
You are still too broad if you haven’t honed your real compelling difference in a simple language:
• Be clear on what you mean
• Use simple language
• Describe the actions you need to consistently take
What you must do is avoid what Roger calls weasel words. That means avoiding words like ‘quality’, ‘service,’ ‘customer first’, ‘innovative’, ‘unique’ – they mean nothing to you or your customer.
If you don’t follow these basic guidelines then this could happen. This is a real company’s value proposition and, as such, it will remain nameless:
“COMPANYX provides business integration software to integrate, assemble and optimise available IT assets to drive business process productivity. COMPANYX delivers an innovative, enterprise-class business integration platform that incorporates proven integration technology with next generation capabilities into one interoperable set of tools that delivers a unique combination of efficiency, agility and control.”
It means nothing. Just words arranged. It conveys neither real value nor a positioning.
Value propositions should be reviewed on a regular basis, at least once a year, suggests Vistage Chair Julian Cook. If the market has changed and the company’s operations have followed different market patterns, the company’s value proposition has to be refreshed and realigned to the new market realities.
But it’s not just for the customer, it helps everyone involved in an organisation to understand what the organisation is about, what drives it, what it stands for. It’s this combination of clarity to your customers and to your internal organisation that helps to drive significant growth.
You can investigate more and read about the four key cornerstones of growth by downloading our Going for Growth whitepaper and toolkit today: