What’s In Your Wallet?
I borrowed the title of this month’s column from Capital One. If you’ve seen their commercials, the tagline conveys to potential customers that Capital One’s credit card services offer greater security and fraud protection than competing products in the marketplace. In marketing lingo, we would call this a unique selling proposition or value proposition.
At this year’s Big Grower Executive Summit (see page 14), one of the topics that generated much discussion was how to create a compelling value proposition that would accentuate a grower’s competitive strategy in the face of this economic downturn. The problem is that many companies go to market without a fully defined customer value proposition. Instead, growers tend to market a nice list of “powerful” benefits (which their competitors most likely state they have too).
The Proposition’s Purpose
The underlying purpose of a value proposition is to identify and satisfy an unmet need in your target market. An effective value proposition describes what you do in terms of tangible business results for the customer. However, it’s more than a statement of offer or a buy-line: It’s a commitment to deliver a specific combination of resulting experiences, at a particular price, to a group of target customers, more profitably and better than the competition.
For a customer value proposition to be uniquely persuasive, it must be distinctive, measurable, defendable and sustainable. It is critical to define and support the value proposition in such a way that your customers will pay more for your product than the competition’s, or that substantially more customers will desire your product over the competition’s. Developing a value proposition is the most difficult and time-consuming of all marketing activities. That’s probably why so many companies go to market without one clearly articulated.
Establish Your Proposition
The value proposition sits at the top of the marketing hierarchy, because market positioning and advertising and promotional messaging depend on it. To develop a strong, defendable value proposition, you will need your management team’s time and attention for at least a few hours and maybe even a couple of days. That may sound impossible, but the only way to do this right is to get at the core thinking of the people who define your company. You can do some homework first to shorten meeting time and delegate tasks that can be done outside of meetings.
Your job in defining your value proposition is to uncover the value that your company offers, which your customers and prospects will want to buy. You are not developing a long list of benefits — your competitors will more than likely have the same list! Differentiating your business can be tough, but the following list of activities is a methodology that can be used to get to the best possible results.
Start with your core competencies. Develop a list of your company’s internal capabilities in growing, marketing and distributing high-quality plants. In some cases, your core competency can be internally developed technology or mechanization. It could be plants you brought to market first or plants only you offer to the market. What makes your offering clearly superior to any alternative?
Study your customers. What problems do you solve for your customer? What problems do they want solved but no one has fixed yet? Is there a new trend or driving force in any of your key customer segments (e.g., sustainability)? If you don’t already know what your customers are thinking, you must do the “research” to find out: Interact with them as much as possible and note how they phrase their needs.
Turn core competencies into customer values. Using your customers’ language, redefine your core competencies as value statements. In other words, translate a technological or product advantage into a customer-stated advantage and list points that justify or validate your basis for each advantage.
Study the competition. Choose your top three or four competitors and study the language they use to market their company and products. Determine their value propositions and whether they can defend them (with proprietary technology, patents, proximity to market). Compare their core competencies with yours and highlight any area where the market believes your competitor has an advantage but you now have parity. State this to your customers in your next meeting to level the playing field.
Look at trends in the industry. Even though the green industry is maturing, change still occurs rapidly, particularly compared to two decades ago. Can you get out in front of an up-and-coming trend and grab first-mover advantages in the market?
Analyze your value chain. The value chain describes the full range of activities required to bring a product or service from conception, through the different phases of production, delivery to final consumers and final disposal after use. It is important to recognize that a firm’s every activity either adds to or detracts from the value of the final product. Value-chain analysis not only helps identify value-adding activities; it also allows you to determine whether you can support your value proposition across every part of the company, from research and development to delivery and support channels. Identify areas in your company where you are weak and where you can tweak (e.g., lean flow analysis). Beef up those areas to support your value proposition.
Articulate the value proposition. Develop a value proposition statement that everyone involved in marketing and service activities will use as the starting point for developing positioning or messaging strategies for products or services. If you can, back up your assertion by documenting what the customer saves or earns by choosing your company. Remember, your prospects and customers probably do not want to hear about your product’s performance, your technical advances or the complementary services you are offering — or anything else — unless it answers the question, “What’s in it for me?”
Deliver on your value proposition. Just creating great value propositions will not win and retain business. You must deliver real value and assure that customers’ real needs are addressed. Failing to do that will destroy a relationship over time. Your value proposition must be reflected in product and service definition and development.
Test the value proposition. The last step — which really begins the iterative process all over again — is to test your value proposition with customers to see whether it resonates. Continually ask yourself these questions: Can you defend your value proposition? What are the points that prove your value assertions? Can you quantify the value that you are providing to your customers?
Finally, watch the market, track your competitors, and listen to your customers. If you can no longer defend your value proposition, it’s time to review, adapt, adjust or start over in order to stay ahead of the curve.
The bottom line: If you develop, articulate and successfully implement your value proposition, then at the end of the day, you’ll know exactly what’s in your wallet.