Lasday: Value is more than price
Since you will rarely win the war on price, help the customer believe in the superiority of your offering.
"Customer value proposition" has become one of the most widely used terms in business markets in recent years. Yet, according to Harvard professors James Anderson, James Narus and Wouter Van Russum, writing in the Harvard Business Review, there is "little agreement as to what actually constitutes a customer value proposition. Additionally, most such propositions make claims of savings and benefits to the customer without backing them up."
An offering may actually provide superior components, but if you, as a Gulf Coast supplier of professional services to our regions' growing corporate community, do not document or at least demonstrate that claim, all is lost. Your prospect will conceivably dismiss the boast as marketing puffery. With increasing responsibility for reducing both costs and timelines, they just don't have the luxury of simply believing suppliers assertions.
They view this as a form of spin your marketing people develop for advertising and promotional copy. This frequent, yet shortsighted, view destroys the real contribution of value propositions outliving superior performance.
Pick one of three
It might be helpful to zero in on three types of value proportions your Gulf Coast enterprise might consider in developing your cause:
1. Your benefits
2. Your points of difference
3. Your resonating focus
The benefit method is your simple listing of all the benefits you believe your offering might deliver to your latest customer. The more you think of the better. This approach requires the least knowledge about customers and competitors and thus, the least amount of work to construct. However, its relative simplicity has a major potential drawback. Your every day benefit assertions may claim advantages that actually provide little benefit to the target customer. The one question it does answer is: "Why should our firm purchase your offering?"
Put yourself in the place of your prospect. Suppose you are one of three presenting Gulf Coast professional service organizations. You and your two competitors give 10 reasons why each of you should be awarded the project. Now, assume the lists from all the firms are almost the same.
If each firm is saying it offers relatively the same advantages, how does the buyer make a choice? That's easy: Each firm is called back to give a final best price.
What happens next? The project goes to the firm that gives the largest price concession. Any minor distinctions that do exist have been overshadowed by the winning firm's greater sameness.
Make A Difference
Now lets examine the higher level, the points of difference value proposition. Here, you are astute enough to recognize that the customer has an alternative. They ask, "Why should our firm purchase your offering instead of your competitors?" It is a more pertinent question than "Why should our firm purchase your offering?"
Knowing that an element of an offering is a point of difference relative to the next best alternative does not, however, convey the value of this difference. Furthermore, a product or service may have several points of difference, complicating your actual understanding of where the key "hot buttons" may exist. Without a detailed understanding of the customer's requirements and preferences, and what it is worth to fulfill them, you'll run the risk that your points of difference have only ho-hum value. Each of these can lead to the pitfall of "value presumption," assuming that favorable points of difference must be valuable to the customer when in fact, they really are not.
Now let's consider the highest form of value propositions: The resonating focus. Although the favorable points of difference value proposition is preferable to the all benefits proposition, the resonating focus proposition should be the gold standard. This approach acknowledges your prospect wants to do business with suppliers that fully grasp critical issues in their business and deliver a customized value proposition that's simple, affordable, powerful and captivating.
You can provide such customer value propositions by making your offerings superior on the few elements that matter most of the target customer. Demonstrate and document this value and communicate it in a way that conveys a sophisticated understanding of your customer's business priorities.
Resonating focus will require you to do research to gain insight into your prospect's specific needs. It requires time, effort, persistence and creativity. Go to extraordinary lengths so you'll be the absolute very best answer to your customer's unique, individual significant needs. You'll earn the business!
Lou Lasday, an independent marketing adviser residing on Longboat Key, creates action-oriented strategic marketing initiatives for Gulf Coast emerging companies. A career direct response executive, he has been a general partner of a major national marketing communications firm and regional president of the American Marketing Association. Lasday can be reached at [email protected].