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What’s your customer value proposition is?



It is Alexander Osterwalder who, in his book Value Proposition Design: How to Create Products and Services Customers Want, says “Your customers are the judge, jury, and executioner of your value proposition. They will be merciless if you don’t find fit!”
For years I believed “creating value” was just a business and marketing abstract concept and that once a business convinces itself of its value, the targeted customer would automatically be willing to pay money in exchange of goods and/or services.

I probably was not the only one who underestimated the importance of this concept, perhaps explaining why most businesses fail to invest adequate time to dig into the subject, developing and articulating their value proposition until they find a strategic ‘‘sweet spot” — where the target customers’ needs fit with what’s special about the product or service offering and its capabilities in a way that competitors cannot match.
In my consulting years in the private sector, I recall how potential clients would knock at our doors to request our solutions and services (of course this was at a time when I was working for a global IT and business consulting firm).
My later experience in the public sector was a sharp contrast.
Customer Service Managers and marketers were always at pains trying to sign-up new customers and renewing service level agreements.

It would take months and years to convince a client of our products and services.
Even upon signing up the client, there were never-ending customer satisfaction issues that we, as lines of business, would constantly have to address — with little success.
But why would our customers be so unhappy with our products and services?  Is our pricing not right?
Is it our customer-facing personnel that is not well-trained?
We would ponder on these questions constantly, yet still not grasping what value means to our customers. It was always assumed.
Once the light bulb came on, it dawned on me that “value creation” is not just a kind of business-speak.
Rather, creating value captures a salient distinction from doing other things that businesses do to make profit. It is the essence of any business.

The ability of a business to create value is what causes people to want to trade with it.
When a customer is willing to take out their wallet and hand you their money, it is because something is compelling them to give up their money.
They are convinced that, out of that money exchange, they will get something that addresses their need, which is value.
Granted, value can mean many different things, it really depends on the context.
From a business perspective, there is a direct correspondence of relative worth of a good or service and value as determined in an exchange for money.

Thus the latter refers to financial value and the former addresses intrinsic value.
Successful companies have somehow found a way of understanding their customers, properly constructing their value propositions and delivering that value.
Their ability to do that has helped them focus on what their offerings are really worth to the customer.
Not all those successful have been the first to introduce products and/or services to markets.
They have, however, done key things right and one of them is developing smart business models centred around a Customer Value Proposition (CVP) — a promise of potential value that a business delivers to its customers and in essence is the reason why a customer would choose to engage with the business over existing market competition.

Defining a good Customer Value Proposition helps articulate the relevance of a product or service offering by explaining how it solves a problem or improves the customer’s situation in a manner that is different to competitors. There may be several ways of solving the customer’s problem.
Your promise may be premised on delivering quality cheaper and/or faster than everybody else, or you may deliver a better product or service.
Some of those ways may be in existence on the market through competition, also promising to solve these problems.

It is, therefore, important that this promise of value be unique and lucidly expressed in terms of the target buyer, the buyer’s problem being solved, and why the offering is distinctly better than existing alternatives.
More importantly, the promise you make to your customers is the one you have to keep. Your unique value proposition, therefore, is not just a list of customer benefits.
Depending on the type of Value Proposition, it may have to include all favourable points of difference your offering has relative to the next best alternative (favourable points of difference) or key points of difference — and perhaps, a point of parity — to deliver the superior value to the customer for the foreseeable future (resonating focus).

It may be new value, additional value to what you have been offering or better value.
Whichever is adopted, your Value Proposition needs to be well-thought of and crafted as it will dictate and influence your marketing and overall business strategy.
There is no point in dazzling value propositions and yet not actually having the people, processes, tools and requisite experience to back it up.

The truth is that value creation and capture are crucial aspects of any strategic analysis. Innovators, business strategists and entrepreneurs at large work hard to understand exactly what value means to their customers so they can generate it.
However, though on the surface, value propositions seem simple and very straightforward, consumer research studies suggest that value propositions that resonate with customers are exceptionally elusive.
One reason for this is little attention paid on researching and understanding customers prior to developing an offering.

Once companies instil discipline in understanding their customers, they can start making smarter choices about where to allocate limited resources to deliver the value.
If given enough attention, a value proposition can breathe clarity into your business.
A good value proposition is the keystone to developing a strong marketing strategy and moving everyone in your business in the right direction.
The question is: Can you say what your customer Value Proposition is?
Are your customers, who are “the judge, jury, and executioner of your value proposition” crystal clear about how your offering solves their problem?

l Fundisile Serame holds a Masters in Business Information Technology from Tswane University of Technology. She is a Gordon Institute of Business Science (GIBS) alumnus.
She has extensive training in the IT sector both private and public sector

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