You Need a Substantive Value Proposition to Fight the Big Bear

As we have seen (yet again), greed – the achilles heel of the rational market – works its dark tricks perpetuating the bull into a rising spiral of economic mayhem.  Then, as the big bear spies the precariousness it seizes the opportunity to feed malevolently on scurrilous lechers  who grab hopelessly onto their sinking business carcasses.  So it goes….

Of course, after the mess is cleared the businesses which survive are those who have a truly competitive value proposition.  In my work I come across companies who struggle with their value proposition.  Poor value propositions often survive in the undisciplined  buoyancy of a bull market, but when the pennies are tight, buyers start to scrutinize their suppliers to see where the can cut and save.  To survive this, sellers need to ensure that their buyers are really clear on two things:

1. They know what they are getting for their money  and how they are better off from the purchase.  
2. They can’t make a better purchase from a competitor.

The problem so often encountered by sales and marketing is distinguishing between the widget (be it a service or product) and the value it creates.  The widget in itself has no value.  The value is determined by what the widget allows you to achieve.  Hence, a mobile phone is merely a piece of metal and plastic which hooks up to a telephone signal.  The value attached to the phone is that it allows you to communicate with friends or business contacts, access information from the internet or amuse yourself listening to music or playing games.  The value proposition is about what it adds to your lifestyle or business opportunities. How it makes your life or business better (if thats what you”re into).

Of course value per se is a subjective concept in the eyes of those who have a need or see a purpose.  In order to focus a value proposition, you need to identify the needs of your customers.  What is their perception of  the world  and how could they use your product to improve their circumstances.  Your value proposition isn’t about what you think your product can do for people, it’s about what they think it can do for them.  

A common error is for sellers to define the value of their product from their perspective rather than from the perspective of potential customers.   If you define the value, your placing limitations around your market (common in insurance and banking).  The alternative is to listen to your customers (or potential customers), to understand their needs and aspirations and then how your product/service could help them solve the problem.  If you can solve these questions the market is your oyster.