By Ian Ash
In last week’s article, we discussed the power and value of having a business strategy.
In this article I would like to build on this by defining the term value proposition and showing how it relates to strategy.
According to Google, a value proposition is a simple statement that clearly communicates the product or service benefit you promise to deliver to your customers. It’s ultimately what makes your product attractive to your ideal customer.
So clearly then, a good value proposition is well worth having since it is fundamentally what will drive sales, but it is actually serves a greater purpose as well.
In working with businesses, I often ask business owners what specific value do you bring to your clients and how is this different from the competition?
It is a loaded question that forces the owner to think hard about why customers should buy from them as opposed to those in a similar space.
Price might be a possible reason but you have to have pretty deep pockets to use lowest price as the key differentiator (for example Harvey Norman’s The Shop With Confidence Price Guarantee and also Bunnings who recently dropped its lowest prices are just the beginning slogan).
In practice, it is far better to differentiate through value.
Terms like high quality, great customer service and honesty in our dealings may come to mind and whilst laudable, and quite possibly true, they are not unique differentiators (i.e. anyone can say this and many do!), so there needs to be more.
This gets to the heart of why the business exists and what it sees as its primary value to the marketplace.
Since the origins of the business often lie in the passion the business owner has for the product or service or the perception of a need or gap in the market, there is much to draw on to define its uniqueness.
In practice, the essence of a true value proposition articulates what the company is ultimately trying to achieve and what it sees as its primary purpose.
The former is known as the company vision and the latter, the company mission.
If these two key components have been well defined for a business, then the combination of these will immediately highlight (or make it very easy to derive) the company’s value proposition.
Since the value proposition really stems from the heart of what the business is trying to achieve, creation of this important statement cannot be delegated out to external organisations to create for marketing purposes.
However, once defined, it does become an invaluable asset for marketing organisations to utilise in order to promote the business.
A well-defined value proposition will definitely help to increase revenue from customers, but it also serves many other purposes as well.
According to Wikipedia, “In marketing, a company’s value proposition is the full mix of benefits or economic value which it promises to deliver to the current and future customers who will buy their products and/or services”.
This statement is essential to any form of marketing communication.
Especially now with the current labour shortage, businesses are finding that to appeal to younger members of the workforce, the business itself needs to define a compelling reason for employees to be attracted to it in the first place and want to stay in it for the long term.
Millennials especially want to work for a business that knows where it is going and is doing good in the world, i.e. creating real value.
A well-defined value proposition is also therefore an indispensable aid to acquiring the right staff to enable the company’s value to be realised.
So, in summary, define your vision (what success ultimately looks like for the business), articulate your mission (your differentiated purpose in the world) and this will enable you to create a value proposition that will distinguish you from the competition, attract and retain better staff and enable greater business success.
Ian Ash is the managing director of OrgMent Business Solutions.
