Do you Have a Disconnect with Your Customers? Reclaim Your Value Proposition
There are instances where an organization doesn’t need to create an innovative, new offer. Rather a prime opportunity may exist to revisit its current value proposition. If your offer is stagnant or declining in your market, perhaps your value proposition is not connecting with your customers.
It is critical that a value proposition—a clear statement about the tangible benefits a customer will realize from using your products or services—be routinely vetted by customers in order for an organization to create a sustainable method for capturing the value that it creates. To ensure that a value proposition remains compelling, an organization must create processes and procedures to measure customer needs on an on-going basis to drive improvements and remain relevant. Although it may seem simple, our experience shows that it may not always be the case.
When an organization’s value proposition does not evolve with customer needs, the supplier begins to experience “symptoms” of disconnection. Such symptoms can be:
- An absence in growth in the core customer base
- A decline in customer retention
- The rise of alternatives and/or substitutes inundating the marketplace
In an ever-changing business climate it is crucial to understand what is truly unique about your business that your customers value. We have a process for helping suppliers reconnect with customers, by revisiting and reclaiming their value propositions. The purpose is to capture enough market insights and feedback to effectively reclaim value propositions in a way that accomplishes the following:
- Determine which customers want what because not all customers are compelled by the same benefits
- Target each customer segment with a specific value proposition
- Make sure that the message is crisp and clear
Step 1: Actionable Customer Insights
There is no better way to reconnect than to understand the value of your product by going into the marketplace and having conversations with your customers. However, there is an art to gathering actionable insights. We have found that some key elements to gathering such insights are the appropriate format for those conversations to take place, developing pointed questions that get to the right issues, or even identifying the right individuals to speak with. Furthermore, the analysis of those conversations, in order to draw the correct insights, is key. For example, one company did not sell product to one of its customers’ foreign locations. After initially assuming that its offer was not connecting in that country the company decided to explore a bit deeper. They set the appropriate context to have a constructive conversation with the key decision maker, prepared pointed questions, and found something not only actionable, but magical. It turns out its offer was not the issue, instead this foreign location used a transport system that required a different size component. The company switched to producing the component to fit this customers’ foreign requirements. As a result, it not only gained new orders from that customer, but also from new customers in that country.
Step 2: Validate Customer Needs
We also emphasize the criticality in understanding customer segment needs. Value propositions can become stale because needs and products are always evolving. For example, ACME Company developed a software solution that integrated well with the leading ERP in the market. After a few years, ACME sales grew stagnant. When the firm gathered insights from the market they learned that the ERP with which it had aligned had lost market share and that another ERP who gained share had integrated with one of ACME’s competitors. Had ACME understood this shift in the market it could have developed a parallel product to integrate with this new ERP entrant. Instead, it faced an uphill battle to win back market share. That is one very basic example, but it should be clear that given the multitude of factors at play here, it’s important to validate the customer needs and unmet requirements; uncover new, more insightful information; and test urban legends and foregone conclusions. To do so, some questions you may want to evaluate are:
- Have segments shifted, making the marketplace no longer the same?
- Have purchase decision factors changed, making the needs that once were met inconsequential?
- Have issues or potential opportunities arisen within different segments?
Step 3: Communicate a Crisp, Clear Message
Regardless of the medium in which you gather insights and validate your customer needs, the goal of this exercise should be to deliver a clear value proposition that accomplishes the following:
- Tells your customer base what differentiates you within the marketplace
- Aligns with what your target customers want and/or need
- Highlights the features and benefits of your offer
- Quantifies the value
Simply put, your value proposition must convey value, relevancy, and unique differentiation. Additionally, strong value propositions deliver business results, which can be complemented further through the use of metrics, measurements, use cases, testimonials and total cost of ownership calculations.
Accelerating Growth: A Case Study
One company we worked with was frustrated with stagnating revenue levels and the harsh reality that its customers were beginning to seek alternatives. The missing ingredient to the client’s success seemed to be the absence of customer insights. The company spent valuable time and resources in speaking with and listening to the marketplace in hopes that they would be told what they thought they already knew. To its surprise, they found that there existed a clear misalignment between its offer and how its customers perceived the value they delivered. Ultimately, some initiatives were developed to refresh its value proposition for some of the company’s major customer segments. Furthermore, the company developed some pointed use cases that outlined what it brought to the table for its customers.
These initiatives addressed the misalignments and identified short-term opportunities for it to capture as well as long-term plays where it could act as flag-bearers. Through the right execution of these initiatives the company is expected to grow its revenue by 80 percent after five years.
The moral of the story is that it’s important to listen to the market, and sometimes reclaiming your value proposition can be the key to unlocking unprecedented growth for your company.