Your Value Proposition Is Vague
And Ambiguous (Even To You) (#5 Article)

Your value proposition sits at the heart of your business model. It needs to relate clearly and specifically to your identified customer segments. However, when pressed, most organisations find it very difficult to articulate.  So the rhetorical question is: “Is it important you have a clear and unambiguous value proposition?”  If you answered no to this question then please feel free to stop reading this. However, if you answered yes, I have some further questions for you.

Take out a piece of paper and write down your definition of a value proposition. At your next team meeting, invite your team to do the same. Do not share yours beforehand. This is an individual exercise. I would suggest that when you reveal your individual responses that there will be a vastly different array of answers. Now there is a good chance that the Marketing & Sales person might come up with a relatively accurate definition and you might satisfy yourself by saying, “Well, the person who needs to know does know.” But is that right?  Shouldn’t everyone’s daily activities be aligned to executing your value proposition as effectively and efficiently as possible? But they can’t even define it?

Put simply, a value proposition is why your customer buys from you and not the competition. There is only one value proposition per customer segment. There are only between two-and-six  attributes of a value proposition and price is not one of them. Price is how value is shared.

Now for the second exercise. Follow the same process, write down what your value proposition actually is. Ask your team to do the same. You will need to choose a specific customer segment or client. If you can’t do that you have another issue, but I’m going to assume you have a clear customer segmentation strategy and that is well understood.

OK, you will have come up with a list. If you have more than six, there is a little problem. It is highly unlikely that your customer can remember more than four and most likely only two or three.

You will also have items on your list like service, reliability, and quality. My question now to you is: What do you think your competitor would write if he was reading this book and doing the same exercise? Pretty similar terms most likely? So, I need you to get more specific. What particularly does your customer value in your service over and above what a competitor would provide?

When I run this exercise with executive teams it becomes a very confronting exercise as it quickly becomes evident that not only is there no agreed understanding of what is meant by a value proposition, there is no agreement to what your specific value proposition contains. You cannot have a conversation more sophisticated than the common understanding of the shared language. If you agree with my opening statement that your value proposition is at the heart of your business model, there is no way you can have alignment of people and processes to drive growth and profitability in your organisation.

Alexander Osterwalder, author of Business Model Canvas (Wiley 2011) and Value Proposition Design (Wiley 2014) recently cited in an interview that one of the major causes of organisations “screwing up” their value proposition was communication.

He said: “Product management, marketing, and sales all speak a different language. That’s one of the reasons why we invented the Value Proposition Canvas. To give people a shared language across functions and disciplines in (large) corporations. That saves a lot of time and energy, and allows for very focused messaging.”

He goes on to say that falling in love with product ideas too early in the process and having to change them later on in the process when it gets expensive is the area of value proposition design that is the biggest waste of time. “You want to prototype and test alternatives early on to deeply understand your customers’ jobs, pains, and gains.”

However the biggest issue still remains companies building stuff or creating services nobody really wants that have no distinctive unique point of differentiation. When companies fall in love with their products and services and the features they offer and ignore how it actually helps their customer do something more effective or efficiently, they run the risk of becoming quickly irrelevant in a rapidly moving marketplace.

This is when it’s time to employ team-based strategic thinking.

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