BUSINESS WORKSHOP Value your proposition
Establishing a clear and concise value proposition in challenging times is vital for all businesses, writes economic strategist Roger Martin-Fagg, who provides thought leadership at business conferences around the world.
O
ver the next few years the forces of competition in the telecoms
industry will intensify and for a business to compete and survive there are just two positioning choices: Get margin by being low cost and charging what the market will bear, or get margin by premium pricing based on a distinctive value proposition, consistently delivered, which gives customers a compelling reason to purchase. In the new economy there is growing evidence that some businesses can offer a premium product or service while simultaneously reducing unit cost. This ‘increasing returns’ phenomenon is a characteristic of the knowledge economy. For an Internet-based service, for example, most of the cost is at the front end and fixed. The variable cost is small once the idea has been fully developed.
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. This must be written in clear language using simple words, so that all employees can work out how to deliver it consistently. A clear proposition will also make resource allocation choices easier.
• They receive the best planning service in the UK
• They find its brokerage offers them the largest choice of upmarket cards in the UK
• They like the company and trust it because it lays its premium reputation on the line every day.
Roger Martin-Fagg
When money is tight, you will want to spend on the things that maintain or extend the value proposition. The value proposition will also act as an attraction for new customers. It will define your position in the market and give you a reputation and therefore a brand. The value proposition will unify the actions of your board and employees and act as a deterrent to the competition. The key is to become a price maker because then you can control your margin. As a model, I’ll use a real example from a greetings card manufacturer. This is their positioning statement: ‘We aspire to transform your
communication, to elevate and enhance what you say, to give the right voice to your feelings so that you are, and always will be, proud to send and honoured to receive one of our cards’.
True vision The card manufacturer’s vision is to become the core card supplier to all up- market retailers and to be the mainstream retailers’ key niche supplier. To achieve its vision the company’s stated aim is to provide the most desirable and inimitable cards, using the most reliable, robust supply chain in the UK. Now, here’s the manufacturer’s
stated value proposition, the source of differentiation that separates this card company from the rest and provides a compelling reason for customers (card retailers) to buy:
• They find unique and best selling ranges not available from other publishers
• They find consistently more design-led ranges and refreshments
• They appreciate the delivery guarantee and five per cent off order value for each late day
• They are assured by an on- the-premises manufacturer using environmentally sourced materials
Can you write a similar set of propositions for your business? It is important to avoid ‘weasel’ words, an informal term for words and phrases that are ambiguous and not supported by facts. They are typically used to create an illusion of clear, direct communication which is generic, sounds right but gives no clarity for action. For example: ‘We are a professional communications business that offers
exceptional value for money’. What does this mean?
If you cannot craft a weasel- free value proposition, you do not have a clear strategy, or it’s in your head alone and not in the heads of your board and employees. Your customers will also be unclear as to why they should buy from you, and your employees will not understand the context for the choices they have to make. Prior to the card manufacturer’s value proposition being agreed and communicated, its sales team were offering the best planning service in the UK to low margin customers. It’s a different story now.
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44 COMMS DEALER MARCH 2011
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