Recently my colleague, Karen Utgoff, wrote a post to help business owners, entrepreneurs, executives, marketers, and product managers better understand the important role value propositions can play in ensuring business success. Whether your business has been around for a year or for decades, evaluating the relevance of and adherence to your value proposition is well worth the effort. What you learn can serve as the basis for unifying and aligning marketing and operational priorities to ensure you stay on track for long-term success even as you respond to immediate demands.
Once businesses get off the ground, business plans often get set aside in favor of greasing whatever wheel is squeaking on a day-to-day basis. Perhaps past assumptions about who your customers are and what products/services they need were off or markets have changed, and you find yourselves busily serving other customers with different needs. Or, maybe your value proposition is crystal clear in your mind, but not carried out as you might hope by employees or well supported by your company’s capabilities. Especially when customers keep walking in the door, it’s easy to lose sight of the big picture. Read on for some ideas about how to get started on your VP Assessment.
Get a team together. Involve everyone whom you rely upon to implement your value proposition. Don’t overlook your support areas like HR, customer service, and systems or key external professionals including your suppliers, creative agencies, channel partners, banker, or tax accountant. To keep costs down, you might have a small working group, but get input from all corners and run results by all key stakeholders.
Review your assumptions. Start with the basics; clearly define your customer. Consider demographics (age, gender, and economic status), psychographics (likes, dislikes and values), and geography. Start by listing as many attributes as possible and from that list pick the top few that most accurately describe your customer base. Your company may serve more than one market, but start with one and then repeat this process with others.
Make a list of customers’ needs that your company addresses. Note whether it is an operational, economic or emotional concern. Pay close attention to needs your business meets that the competition doesn’t. These important differentiators can inform your internal and external communication and help you maintain margins.
Here’s an example:
A worker-owned co-operative, Pioneer Valley PhotoVoltaics (PV Squared), sells and services reliable, custom-designed, renewable energy systems for homeowners, businesses and institutions located within about 100 miles of Greenfield, MA. Through experience, they have learned that their customers are seeking solutions for operational, economic and emotional needs. Customers’ economic needs include predictable energy costs, excellent return on investment, and support for the local community in terms of good jobs for local residents. Operational needs include long-term system reliability, efficient system operation, better public health (cleaner air and water), and stronger grid infrastructure. Emotional needs include helping to address serious social and economic problems — reducing atmospheric carbon, energy independence and conflict reduction. Many customers also appreciate that PV Squared is a locally based, worker-owned cooperative.
Because incentives such as tax credits and rebates differ from year to year, interest rates vary, and energy costs fluctuate, relying exclusively on an economic appeal could be risky. Similarly, expecting customers to make an investment solely to improve public health and community job growth is unrealistic. While many appreciate system reliability and promoting increased distributed power generation, most customers seek additional benefits before making a purchase. While there are competitors who meet some of the needs, few — if any — meet all as well as PV Squared does. With this three-pronged approach, PV Squared has the flexibility to respond to changing conditions while staying on their chosen path to sustained, long-term success.
Assess your ability to follow through. Don’t fall into the trap of promising more than you can deliver or assuming everyone in your organization knows your company’s priorities. Here are some questions for self-examination:
- Can each of your employees articulate your value proposition? Are their actions consistent with it?
- Would your customers, employees, vendors and suppliers agree?
- Is fulfillment of the promise represented by your value proposition achievable? Providing the highest quality, most personalized service and lowest price while cultivating a profitable business is a practical impossibility.
- Do you have the key resources, capabilities, and partnerships you need to fulfill the value proposition? If not, what would it take to build that capability and what evidence would demonstrate that you were successful?
- How have you tested to ensure that you really are meeting customers’ key needs?
- Do your customer have other needs that you are not solving?
- How does your value proposition compare to that of your competitors?
Use the results of your VP Assessment to build a list of improvement opportunities. In a future post, I’ll discuss ways to evaluate the list of possible initiatives and select ones that have the most potential for your business so that you can develop both operational and marketing goals.
© Copyright 2015 Laurie Breitner. All rights reserved.