Your value proposition is your promise to your customer. It is the core reason for customers to select your product or service over that of a competitor.
Before you decide on your value proposition verify the following questions:
- Can you own it – Toyota has own reliability. It is known the world over for making reliable cars, not the fastest or the prettiest but the most reliable. To own the term they had to build a product that stands true to its claim.
- Can you prove it – Therefore comes the second point will you be able to prove the claim. Is it a demonstrable feature. Is it something that you can show in action. While proof can also be provided through lab reports, testing facilities and so on but nothing works better than a demonstration of your product claim in action.
- Can you sustain it – Companies commit a mistake of entering with the best quality product and then subsequently reduce the level of quality for reasons of cost and profitability. The promise you are making needs to stand the test of time. Failure to sustain will lead to your proposition being hijacked by another organisation.
Following the above points will help you build and communicate a value proposition that is honest and unique. It is better to not make a promise if you have the slightest doubt about fulfilling it.
Build a holistic approach
You must define your matrix in a holistic manner. Do not treat subjects in isolation especially Price, Quality and Brand.
Price – If you want to drive a price laden value proposition then it should be a significant one. People do not shift preferences for smaller gains.
A price-driven strategy should be based on a clear understanding of the factors that lead to lower pricing. Is it because you enjoy economies of scale or are you simply burning cash in the interest of customer acquisition. Price advantage is the easiest to beat by competition unless it is sustainable. Price reduction by reducing the quality of an existing product will lead to erosion in trust. If you have to build an inferior quality to product do so under a new product or even brand name.
Another idea is to approach the subject with I make it for less over I sell it for less. Let innovation lead the way for you to develop products that are significantly cheaper over the others.
Ensure that your suppliers are in sync with your vision. Carefully hedge where required for extra protection. There are factors out of your control deciding on the input cost. However, the good news is more then often a significant change in price of a raw material would usually mean that it holds true for your competitors as well.
Quality – Your perspective of quality should be followed by that of the consumer. The quality feature that you invest in may not be significant to the consumer. For example in my previous assignment, we built a LED Light with no metal heatsink. While it took a great deal of innovation to make this possible, however as I learnt from the customers the light would go in the ceiling and this feature was not visible. Therefore they did not care so much.
Quality should add value that can be registered by the customer. Toyota cars not breaking down and being cheaper to maintain is a good example.
Brand – Perception plays a very important role. Your brand is the repository of your value system. It is the face of your company. Whatever advantage you want to convert into your core value proposition your brand has to carry that message.
For certain brands, a price reduction may work to a disadvantage. For many price is an indicator of quality and therefore lower prices may signal a negative message. Build a brand that is true to your value proposition and the other way around. Rolex never gives a discount and ensures all its channel partner follow this policy. A channel partner will lose its association with the brand if it tries to promote any discounting message.
Internal branding that is your brand’s message to your employees and stakeholder is critical. If the value proposition is not understood by your team you will have fewer chances of a successful outcome.
Create a brand language that builds a specific messaging that is relatable to your organisation. The message should go beyond the sales team permeating, Brand, Marketing, Finance and Operations as well.
The right language will make it much easier for you to share and benefit from your value proposition. Both Volvo and BMW come in the mid-luxury tier, however one talks about performance and the other safety. All their communication and efforts are dedicated to empower and consolidate their core value message.
Ultimately your value proposition should be the outcome of cross-functional exercise.It should be based on the utmost level of transparency and integrity. However, do not give in the temptation of dual messaging, that is the not the place you want to be, be the cheapest or the best, nothing such as cheap and best works.