Every successful business has a compelling value proposition…something which really differentiates itself from it’s competitors. How do you find out the value proposition you offer to your customers? Even if you have not thought about it, it always exists. And when you know how to create it, it can work wonders for your business!
In my recent interaction with R Sriram, he gave an extremely simple method to determine value proposition for any business.
There are 9 possible combinations of a value proposition. Here they are:
- More for Less
- More for Same
- More for More
- Less for More
- Less for Same
- Less for Less
- Same for More
- Same for Less
- Same for Same
Okay…I know this sounds confusing. I will make it simple in a moment. Let’s put this in perspective…
A street vendor and a chain like Starbucks, both offer coffee to its customer. Each of these vendors have a different value proposition for the same product i.e. Coffee. A street vendor demands less price for the coffee and in turn do not offer ambiance or a great customer experience. On the other hand, Starbucks’ offer a unique experience to every visitor with a great ambiance and courteous staff along with the coffee, so they charge more for the same coffee. So what do you think each of these businesses’ value propositions are?
Here is the answer…
- Starbucks value proposition is More for More – It offers not just a Coffee but a whole experience that goes along with drinking coffee
- Street vendors value proposition is Less for Less – It fulfills only the basic need i.e. coffee
Likewise, think about your business and what value proposition you offer. Try to brainstorm and find out if this value is really what your customers need…if not, you might not be on the right way!
Here are some hints on creating a compelling value proposition:
1. Before you create a value proposition, find out specific customer needs and target customer segment
2. Value proposition consists of both the price and associated benefits you offer to the customers
3. A good Value proposition is often highly targeted and looks very attractive to the prospective customer
Going one step further, Louis Columbus in his article – “Bringing the Value Back Into Value Propositions” writes :-
“What truly differentiates one vendor from the next is not the length of its features list — it is the insight needed to effectively sell against substitute systems and processes with proven points of difference in the value they deliver.”
This kind of value proposition is based on the principle of ‘Resonating Focus’. It bring such a value to your customers which resonates with their needs.
So, have fun creating the Value Proposition for your business…and do let me know if you need help…