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aardmaan blog - What's your value proposition?

What's your value proposition?

Published September 26, 2007 by Gillian Hunter

Many years ago Peter Day of the BBC tracked down Scott Adams, creator of the Dilbert cartoon strip, for an interview. Scott made one serious point that successful companies consistently made the best products and services that people wanted to buy and also concentrated on the means of getting the product to the customer.

Scott went on to comment how amazed he always was at the amount of resources companies would put into initiatives that had absolutely nothing to do with those basic objectives.

What customers really want is value And, this is where many companies fool themselves. Value from the customers point of view - isn't always what you think it is. It certainly isn't the benefits you ascribe to the features of your product or service. This is only part of the picture. It's about the issues that are important to the customer.

Here's the tough bit - you need to search for the customer value Your value proposition needs to resonate with the customer. It doesn't do any good to just say "we can save you money", "we can increase your productivity" etc. Anyone can say that. And they do. You need to understand what matters the most to your customers. You have to be able to back up these statements - else it's just hot air.

Set yourself apart - create a strong value driven differential It gets very exciting once begin to use your value add to set yourself apart from the competition. If you can set yourself apart with a value add that no-one else, or very few can offer, you begin to make the price argument fairly irrelevant. It's highly likely your customers are willing to pay more for stuff you hadn't realised was important to them.

If you don't do this - you will literally be throwing money away Say, for example, your customer wants to buy a million widgets. The customer tells you he can buy the same widget from company X for 1 less per unit. What he doesn't tell you is that they would be willing to buy at a higher price because your after-sales services makes it a good deal for them. What would you do? Cut the price to win the deal? Or take the time to find where the value is to the customer - and push the value?

The truth is your customers really want you to understand them, understand what matters to them - so that you can serve them better It takes time and persistence to really understand your customers. Everyone in the company has a role to play in getting to really understand the customer and the value you deliver. The payoff is that it can help you focus your operations, allocate resource where it is needed and deliver services and product that customers actually want.

What the Business Gurus say Harvard Business Review's paper, Customer Value Propositions in Business Markets comments: "Some managers view the value proposition as a form of spin their marketing departments develop for advertising and promotional copy. This shortsighted view neglects the very real contribution of value propositions to superior business performance." I

If you want to know where to grow your business - focus on your value proposition!