Creating customer value
A value proposition is just one way of communicating how a business differs from the competition. When considering a business value proposition, a good place to start is to think about what is in it for the customer, what benefit will be derived from them using the product or service being offered?
Often, businesses confuse value propositions with words of ‘high quality’, ‘satisfaction’, ‘great customer service’, ‘lowest prices’. These are just general statements that anyone can use; there is no credibility in these statements because there is no uniqueness. The best outcome is achieved when the statements used enable the business to be perceived as something unique in the market and something unique in the eyes of any potential customer.
FedEx saw an opportunity to deliver packages in a speedier manner by owning their own aeroplanes, which enabled them to be able to ship and deliver items in accordance with the customers schedule and not the schedule of the passenger airlines. They came up with the ‘When you absolutely positively have to have it overnight’ slogan to express this value and differentiate themselves. The customers did not really care that FedEx had their own planes; all they wanted was the benefit of having their packages delivered overnight to the recipients’ door. This is one example of how a business created a value proposition.
Why would a business want to create a value proposition anyway? It communicates the main advantage over the competition. It communicates why potential customers should choose it. The key aspect of any value proposition is that it must be measurable and it must be beneficial. Thinking about FedEx’s value proposition again and in particular the use of the word ‘overnight’. They have a unique benefit and they can deliver on that. The best value proposition is specific, concise, measurable and conveys a definitive customer benefit.
Deciding what a business represents up front not only establishes value externally but can also create the direction for the entire business to focus on striving to achieve day-in day-out. One approach to developing a value proposition is to ask ourselves the following questions:
- What do our target customers want?
- What can we offer to achieve that?
- In what way is it better than the competition?
By identifying three things that represent the brand in this manner will result in identifying what is natural, what is independent and maybe even quirky. Everything that follows has to be consistent with these characteristics. Remember, a value proposition is about your customer and the benefits provided to them. And all important is that whatever we come up with, we must be sure we can deliver on. Finally, making sure that everyone connected with and working in your entire company knows and understands your value proposition and is able to act upon it supports the proposition internally.
Like the business environment we operate in, a value proposition is dynamic and therefore it is never too late to adjust it. Take a moment to reflect on your value proposition.