Value proposition development

1. Value Proposition Development Why should customers buy from you?

2. 2 The Customer Value Driven Organisation Your customers only care about the outcomes you can help them achieve. Organization Customer value propositions Customer problems Customer outcomes The ultimate customer value comes from helping your customers achieve their desired outcomes whether that relates to business success or personal ambition You can help your customers achieve their outcomes by solving their problems and satisfying their needs. Your customer value propositions communicate how you will solve your customers’ most important problems and why they should choose to buy from you. Driven by a clear purpose, the organization exists to efficiently and effectively solve your customers’ problems to help them achieve their outcomes.

3. 3 Customer outcomes and problems • What do they want to achieve, what are their goals? • What problems do they care about? • What are they excited about? Promise of value that resonates • Benefits that solve their urgent problems and help them achieve their goals • Why they should care about your solution? Competitive Difference • Demonstrate points of difference from your competition that matter to your customers. • Put action plans in place to improve important areas. Evidence and quantification • Create trust -why should your customer believe you? • Create a vision of how your solution will help them achieve their goals. The customer’s perspective What’s in it for them? Why choose to buy from you? Prove it A Value Proposition has 4 essential elements It shows how products/services create value for a specific customer segment The elements can take on different levels of importance depending on the competitive environment and the point in the sales cycle.

4. 4 Customer value propositions are applied throughout the customer journey Customer value propositions create the narrative which lead your customers through the buying process. Individual customer view A vision of the future solution from the individual customers’ perspective; with proof. Customer segment view Building a story which stands out, based on clear needs and compelling evidence. Generic Value Proposition A succinct message which generates interest, leading to the desire to find out more.

5. 5 Customer Value Proposition development can be broken in to 7 key steps. The customer value driven organisation Customer segments and ideal customers Customer Discovery Value MapYour difference Crafting value propositions ExecutionTesting

6. 6 The first stage of customer segmentation often focuses on demographics. Behaviour – Values and culture – How decisions are made – Willingness to change – Approach to risk – Loyalty The second stage develops better resonance through defining segments focussed on customers’ behaviours and needs. Needs – Product functions – Delivery – Quality (Great to perfect) – Support level – Pricing STEP 1 – Define customer segments and ideal customers Who are your real customers? Who are your channel partners and influencers? Focus on your ideal customers

7. 7 STEP 1 –Ideal customers have higher lifetime spend and provide referrals to more ideal customers Willing to engage in conversation and share their problems Willingness to take action and change Urgency with a problem or opportunity Aligned to your strategy and purpose Can be served efficiently and effectively Your value propositions resonate more with your ideal customers. Ideal Customers

8. 8 Customer Segment: Best Customers Characteristics of the best Ideal Customer Criteria Characteristics of the worst Worst Customers Structure to help develop ideal customer criteria List top 3 to 5 best customers and the characteristics that make them the best List top 3 to 5 worst customers and the characteristics that make them the worst Define the standards against which you will measure your ideal customers Develop an ideal customer score card to use in your sales pipeline • Rank the five most important criteria • Score each sales opportunity from 0 to 5 against the criteria • Total score out of 25 gives a relative comparison of opportunity attractiveness

9. 9 Step 2 - Customer Discovery A cross functional team works to develop a complete picture of your market and customers This session will produce lots of questions that you don’t currently have answers for. Customer discovery is iterative and continuous and develops as you spend more time with your customers. Customer Discovery Canvas Customer Segment: L&D leaders in retailers Customer Problems and Needs Customer Outcomes Customer Insights 2. What outcomes do your customers want? Prioritise them 3. What problems do they have and what insights can you gain? Prioritise them 1. Be clear on your customer segment 4. The team must spend lots of time with customers to test and develop the canvas

10. 10 Questions to help you focus on customer outcomes For your defined customer segments, what do your customers want to achieve. Put yourself in their position and think about the people involved. For companies • What is their purpose? • What is their business strategy? How do they achieve it? • What new business models are emerging? • How do they increase sales and reduce costs? • What factors are disrupting the customer segment? For consumers • What are they trying to achieve? • What are their ambitions? • Why do they care? Thinking about market challenges and opportunities from your customers’ perspective leads to insights in to what they really need which can lead to real differentiation.

11. 11 Customers see value in different ways. Think of their problems and needs in terms of economic, functional and emotional value. • Solutions to problems • Ease of deployment • Environmental impact Your customers value your offering in direct relation to their needs Return on investment • Increased sales • Cost or time savings • Cost of ownership • Increased productivity • Brand • Style • Trusting Relationships • Security Economic Value Emotional Value Functional Value

12. 12 In B2B sales, make sure that you understand and identify the different buyer types, they have different criteria and needs. Economic Role Practical Role Technical Role Role: Gives final approval to buy Focus: Bottom line and effect on organisation Asks: What return will I get on this investment? Role: Screens out products - gate keepers Focus: Match to specifications and technical standards Asks: Does this meet the specified criteria? Role: Judge impact on operational performance Focus: How does it perform in use - they will live with it Asks: How does this impact my responsibilities? Consider all touch points with your customer and make sure the whole company is involved

13. 13 Customer Problems and Needs- Think about individuals within your customer segments. • What improvements do they want and how much does it matter? • What are their biggest pains and how much do they hurt? • How do they manage risk when adopting new solutions? • What does success look like to them personally? • Imagine ‘a day in their life’. • What gets them to celebrate? • Who are the decision makers? • How do they measure Return On Investment? • Is there urgency to solve the problem? If not at the top of the list, is it in the top two to five? (There are finite £’s, time, people, resources). Customer problems and needs are identified by really listening to your customers, make sure that everyone understands that this is a key part of their role.

14. 14 Developing customer insights Based on their most important outcomes, how can you surprise them with solutions they don’t know they can have. • What solutions can you develop based on combining a knowledge of market problems with your unique competencies. • What do they dream about – how can you make it happen? • What keeps them awake at night and how can you remove the worry? • What would go beyond their expectations? • What risks do they fear taking – and why? Insights are gained by truly understanding the market place and the outcomes that your customers want to achieve.

15. 15 Step 3 – Product/Service Value Map How does your product/service add value that resonates with your customers? The value map forms the basis for developing your value propositions Value Map Customer Segment: L&D leaders in retail Product/Service Features Performance Benefits Delighters Benefits which satisfy customer insights. Product/service benefits that solve your customers’ most important problems. Define your product/service and its features

16. 16 Step 4 – Competitive Position Example of Competitive Canvas applied to Value Proposition Workshop versus a Website Designer Points of difference Points of parity Points of negative difference Identify Points of Difference– focus on areas that resonate with your customers • What are you better at? Emphasize areas of competitive advantage • For points of parity, focus on proving you can deliver and actions to improve • For weak areas, create and execute plans to improve. 3 2 1 HIGH MEDIUM LOW Website Designer Value Proposition Workshop Top customer needs and insights (Ranked) Develop sustainable differentiation Rapid New Product Adoption W hole business focused on value Com m unicate com plexfeatures Getattention w ith busycustom ers 1 1 1 2 3

17. 17 Most important customer outcomes 1. 2. 3. Customer problems/insights Key benefits – how you solve key problems Competitive difference Proof and quantification Step 5 – Develop compelling value propositions Use the customer discovery and competitive canvases to build your value proposition for your defined customer segment based on their most important outcomes and problems. Your value proposition is more than an ‘elevator pitch’. You need to craft and build a story which develops credibility with how you solve important customer problems and help deliver customer outcomes. Prioritized customer problems and insights. Be clear on the buyer type they apply to. Your benefits must solve important customer problems and help deliver customer outcomes Focus on the one or two points of difference where you offer better competitive value. Often the most difficult area, how will you create a vision that your customers will trust? Define the most important outcomes within your customer segment

18. 18 Step 5 -Ideas to strengthen the customer value proposition Value Proposition Customer Resistance Risk Effort Price Promise Differentiation Proof Help with techniques to deploy Demonstrate what success will look like Change business model Build evidence and trust Strengthen points of difference More compelling benefits Customer Segment. Focused on ideal customers’ outcomes and problems.

19. 19 Step 5 – The Proof is in the Pudding Your value propositions need to create a compelling vision for your customers and to achieve this you need messages that your customers trust Consider these four important approaches to get your customers to trust your messages and visualize how you can help them. Prototyping – customers react better if they can touch it. So focus on building ‘minimum viable products’ to get feedback during your development of new products and services. Research shows that the most important way to develop trust is through referrals from existing customers. So after you’ve made the sale make sure you ask for referrals. Case studies & whitepapers demonstrate outcomes achieved for existing customers. Make sure that your ideal customers will relate to your case studies. Offer a trial period to help prove the value. Getting your customers to actually use your products gets them engaged.

20. 20 if you have identified your customers’ most important problems and whether you have a compelling solution that they value and will help deliver their desired outcomes. Step 6 – Test and refine your value propositions Testing can only take place in front of your customers. A structured approach will verify

21. 21 Step 7 – Execution; putting it to work. Your value proposition is your ‘promise of value’ to your customers, make sure it is an integral part of your whole business. • Make value proposition development a core business skill with clear focus on understanding customer outcomes and problems. • Create marketing briefs for direction to external agencies with clarity on the customer outcomes and problems you are focusing on and what your value propositions are. • Improve your sales tools, make sure they are focused on customer outcomes and problems. • Base New Product Developments on customer outcomes and problems, develop products/services that solve your customers’ most important problems. • Review your business model. What changes can you make to improve the value you offer your customers. The challenge is to make Customer Value Proposition development a core business skill and an embedded part of your culture so that your organization is truly driven by customer value.

22. 22 Recommended reading • Business Model Generation and Value Proposition Design by Alex Osterwalder et al are two of the most readable and practical business books I’ve come across. Building on work by Steve Blank, Eric Ries and Clayton Christensen, they pull together a lot of recent business thinking. • Start with Why by Simon Sinek gets to the heart of your business. His TED talk, ‘People don’t buy what you do they buy why you do it’ is compelling. • Blue Ocean Strategy by Kim and Mauborgne is the basis for the competitive canvas and argues that you need to search for ‘uncontested market space’. • Good Strategy Bad Strategy by Richard Rumelt is one of the best of the many books on strategy. He advises approaching strategy in 3 phases – diagnosis, a guiding policy and coherent action. • Harvard Business Review article - Customer Value Propositions in Business Markets by Anderson, Narus and Rossum, is a must read with good examples and structure.

Value proposition development

Value proposition development

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