Selling Your Value Proposition

by Cindy Barnes

  Quantitative research – used to:

  Test specific hypotheses uncovered by qualitative research

  Search for and identify specific evidence for noted behaviours

  Provide data on market sectors and subsegments (similarities and differences)

  Identify and confirm data related to a specific and tightly focused issue

  Look for consensus or disagreement on a topic

  Determine the common characteristics of particular groups

  SOURCE © Futurecurve

  The limitations of traditional qualitative research

  The solution is not simply to switch to traditional qualitative research – asking open questions and analysing the results. Here, the pitfall is that research subjects do not always tell you what they really think. Most importantly, they are not always open about their emotions, so they don’t always tell you how they feel, either.

  To get inside customers’ heads and truly understand their motivations, a different approach is needed – one that uses social sciences research techniques rooted in psychology and anthropology.

  Figure 3.2 shows the different types of research on a continuum. If you want to understand a customer’s value experience in depth, it is best to start on the left-hand side, using social sciences techniques to ‘see your business through your customers’ eyes’. Interpretative phenomenological analysis (IPA) is one way to gain this perspective. It enables researchers to explore in detail how people make sense of their personal and social world. It focuses on the meanings that particular experiences, events, states or objects hold for individuals.

  Figure 3.2 Research continuum

  It is concerned with the person’s personal perception or account of an object or event.

  In IPA, the researcher plays an active role in the research process as she immerses herself in the individual’s world. She is concerned with trying to understand what the world looks like from someone else’s point of view. The outcome of a study aims to ‘give voice’ to and ‘make sense’ of an individual or group’s worldview.

  When companies understand how their customers genuinely experience their company, products and services, this approach provides immensely powerful insights that can lead to transformative change.

  What will the company be able to do differently by this stage?

  From this second stage of the Value Proposition Builder™, the company gains a rich, deep understanding of its customers and what they actually value. With this insight, it can:

  create the core set of powerful messaging and stories for sales and marketing;

  improve key account management and go-to-market approaches for customers and distributors;

  identify how customer expectations are changing and what they are changing to, enabling the company to adjust its approach and offerings accordingly;

  have confidence in moving forward, with clarity and focus about its true value.

  Note: Any negative experiences uncovered during the customer interviewing process will need to be fixed operationally.

  The big win for me was the customer value experience. The deep level of information and insights that were uncovered was astonishing. Not in a million years would my customers have shared that vital information with me.

  Paul Foley, CEO, DreamTec Software

  As Matt Dixon of the Corporate Executive Board says:

  Two-thirds of what drives customer effort in a service setting is not what they had to do to get their problem fixed, but how they felt about what they had to do. And it turns out that companies can really think very differently and creatively in terms of creating a low-effort service experience by better understanding of the customer’s emotional contact and trying to do things in the moment that manages that emotional contact. It turns out that an easy service experience is a lot cheaper for companies to deliver – it shows a much deeper empathy for the customer; what the customer really wants in their moment of need.

  3 Offerings

  The third stage of the Value Proposition Builder™ process is a detailed analysis of a business’s offerings to customers, using a powerful tool – the Value Pyramid™ (Figure 3.3). This tool maps product and service offerings against the value they deliver to customers.

  If customers have a clear idea of what they want to buy, then the inherent value of the company’s offering is likely to be a ‘component’ or commodity. If customers have a clear idea of what they want to buy, then the inherent value of the company’s offering is likely to be understood at the Components or commodity level of the Value PyramidTM (see Figure 3.3, page 68). Customers that do not know what to buy may perceive the offering that can solve their problem at the Solutions or Co-created Value level.

  The Value Pyramid™ places each of a company’s offerings into one of these categories, enabling the business to manage, position and sell its offerings to maximum effect. It helps a business to:

  analyse the value that its offerings bring to its customers;

  map these offerings against the type of buyer and price accordingly;

  Figure 3.3 The Value Pyramid™

  SOURCE Futurecurve, 2016

  ensure the go-to-market approach is right – consultative and relational or transactional;

  innovate, often at no additional cost, and discover underserved markets;

  create real differentiation.

  Any organization will be able to map its offerings, customer buyers, competitors, pricing, margin, key accounts and even internal teams on to the Value Pyramid™ – and this process will reveal where best to deploy each to best advantage.

  What will the company be able to do differently at this stage?

  A business can map customers, competitors, buyers and internal teams on to the Value Pyramid™, creating a clear understanding of its current and desired future market positioning (Figure 3.4). This will:

  show the company’s portfolio of offerings based on value to customers;

  provide a clear view about where offerings do/do not meet customer value-based expectations;

  enable the company to manage the cost of sale in bid situations;

  allow positioning for profitability and where to position for cash flow;

  Figure 3.4 Worked example of Value Pyramid™

  SOURCE Futurecurve, 2016

  reveal where to position for best competitive advantage;

  enable low-cost innovation through repackaging and repositioning offerings;

  mean that pricing strategies can be aligned with customer value.

  When offerings are positioned high up the Value Pyramid™, the person responsible for buying within the customer organization will change; for example from a procurement professional at the lower levels of the pyramid, to someone in the C-suite at the higher levels. So the sales approach will need to shift. We will discuss this shift in greater detail in later chapters. What is important to point out at this stage is ‘The Solution Gap’. This gap demonstrates why, if you are starting at the bottom of the Value Pyramid™, companies find it challenging to cross The Solution Gap to move to a higher level (Figure 3.5). A firm that sells mobile phone accessories at motorway service stations, for example, would not be able to sell an enterprise-wide telecoms solution. However, a company at the top of the pyramid is likely to have the high levels of trust and credibility that would easily allow it to sell commodity products in addition to higher value products and services. Firms wanting to move up the pyramid from the bottom need a company-wide strategy: their salespeople or business units cannot do it alone.

  Figure 3.5 The Value Pyramid™ showing ‘The Solution Gap’

  SOURCE Futurecurve, 2016

  4 Value hierarchy

  Value themes

  By this point, a business will have deconstructed and clarified its value. The next step is to take the outputs from the first three stages of the Value Proposition BuilderTM and use a value hierarchy mapping exercise to produce a refined view of how customers perceive this value. Then a
business can begin the process of refining and prioritizing benefits that will allow it to develop a compelling value proposition.

  Prioritizing value is critical. Businesses often get stuck at this stage because they want to include all of their key areas of value. However, only their customers will know what is of real value to them. Companies may have many areas of value they could legitimately claim but, crucially, the value experience interviews research will have identified the ones that really matter to customers.

  Another reason for prioritizing value areas comes from behavioural economics, which shows us that too much choice slows purchasing decisions. Being clear, direct and succinct wins the day.

  5 Alternatives and differentiation

  Competitor and collaboration analysis

  This stage compares your value against your competitors’ value. Such an approach is a radical departure from most competitor research, which generally compares products and services – which is why it can only be done at this later stage in the process.

  Useful questions to ask include:

  Which alternatives can deliver the best value to customers?

  In what time frame?

  Are competitors able to deliver this value cheaper, faster and better?

  What makes an organization different from and better than its competition?

  What does the overall competitive landscape look like?

  How do these offerings provide competitive advantage? And how can a business combine them to best effect to marginalize its competitors?

  Other alternatives and substitutes are also compared, including the ‘do nothing’ and ‘we’ll do it ourselves’ customer responses. Value propositions are compelling when they demonstrate why customers should choose you over other options.

  6 Proof/evidence

  The clinching element of a powerful value proposition is the proof that it works. The final stage is to design the evidence tools you need, such as case studies, testimonials, fact sheets and genuine total cost of ownership (TCO) and return on investment (ROI) models. Rational value needs to be validated by hard facts and numbers. Emotional value, on the other hand, needs to be supported by third-party validation, usually provided by existing customers who can talk with authenticity about how the company’s value has impacted them.

  Any proof needs to be backed up by clear examples, and show customers how this evidence is relevant to their business. This stage of creating a value proposition is also a very powerful derisking element for customers. It shows them why they should choose the business over any other option, how they can build their internal business case and justify their investment, and, more importantly, the return on solving their problem. This last stage provides the foundation for creating powerful messaging and stories.

  Figure 3.6 Value Proposition Blueprint™ with example outputs

  SOURCE Futurecurve, 2016

  Value Proposition Blueprint™

  A company following this process will now have a clear Value Proposition Blueprint™ (Figure 3.6). It may be helpful to think of all the detail that is part of this value proposition as being the company’s ‘treasure chest’ into which all the company jewels have been carefully placed. From this central repository of value, messages and stories can be created for sales and marketing that have been carefully crafted and carefully targeted, and are truly authentic.

  The Value Proposition BlueprintTM is not about fixing the sales team or the marketing approach. It is a systematic way of designing optimum customer experiences based on what customers and stakeholders actually value. It is a specific model for how to design optimal customer experiences for customers and the organization based on what customers value and what can be delivered now, as well as suggesting future innovations. Think of it as a design model. Wrapped around the blueprint is the overarching story of the organization addressed to key audiences. The stories are then tailored to specific sales propositions for specific customers. This final point will be covered in Chapter 6.

  * * *

  CASE STUDY

  Mergermarket Group

  Faced with a fast-changing market, business intelligence provider Mergermarket Group used the Value Proposition BuilderTM to help one of its divisions understand and refine its value proposition.

  The company

  Mergermarket Group is a successful financial intelligence and analysis company that provides the advisory, corporate and financial communities with forward-looking intelligence, analysis and data, enabling them to keep up with the latest market developments.

  A 500-strong team of journalists and analysts produces proprietary intelligence and in-depth analysis, enabling customers to spot new business opportunities fast and maintain a competitive edge. Customers who subscribe to the Mergermarket Group’s range of products include: investment banks, law firms, hedge funds, private equity firms and major advisory firms, together with many corporate businesses.

  The group has grown an enviable reputation in the fixed income investments market with products that provide in-depth and comprehensive content, which its competitors cannot match. Over the last 15 years the group has expanded, with over 1,000 staff in 65 locations across three world regions: the Americas, with the regional office in New York; Europe, with the regional office in London; and Asia Pacific, with the regional office in Hong Kong.

  The market challenge

  The Fixed Income Group, with its products including Debtwire, Xtract Research and Capital Profile, is a well-established and consistently successful part of the Mergermarket Group. However, the business is seeing increasing competitive threats in its major geographies and understands that action is required to maintain its leading market position.

  Rapid growth has led to the development of a portfolio of products that are offered to customers as separate subscriptions. It is recognized that customers may now have differing expectations of their market intelligence providers and that current product offerings reflect the structure of the group organization rather than a customer’s need for a solution, ie the customer is paying for separate subscriptions with overlapping content. The potential impact is a reduction in the cumulative value of the products and weakening customer loyalty.

  Value proposition objectives

  Mergermarket Group wanted to understand: what it is about its Fixed Income Group products and people that customers really value and how customers view the portfolio. They wanted to gain an appreciation of how to position these products in the financial intelligence and analysis market.

  Research approach

  The market environment was reviewed and 51 in-depth, hour-long customer and employee psychology-based interviews were conducted across three continents. The findings were analysed and a workshop was held in the USA where the key value themes were created for the Fixed Income Group products.

  Findings

  Without exception, the Fixed Income Group products were highly valued and respected by customers, who recognize their value and, in particular, the independence of the analysis and recommendations. Customers see the products as market leaders in their category.

  Customers want the Fixed Income Group products to be successful and maintain their market position. However, packaging, pricing and lack of investment in the product database, for example into access via mobile technologies, means that the customers are exploring alternatives.

  Mergermarket Group’s people are liked and respected and customers want stronger and proactive business communication at all levels of seniority.

  Three major value themes arose from the value proposition research: trust, tailored/flexible and timely. These themes formed the central pillars for messaging and product development, pricing and packaging. Each geographic area had a nuanced emphasis on the importance of these themes: for the US market it was ‘timely’; for Europe, the Middle East and Africa (EMEA) markets it was ‘tailored/flexible’ and for Asia Pacific (APAC) markets it was ‘trust’.

  Working with the Value Proposition Buil
derTM: a client perspective

  Jonathan Reed, Global Managing Director, Fixed Income Group, comments:

  There were two things that really stood out. One was it reaffirmed a lot of the belief that we had internally and supported the changes that we were making. And I think it encouraged us to make further changes, and a really big eye-opening moment as well in many ways was that we were not ‘solution selling’ as much as we had hoped. We had aspirations to solution sell, and technology certainly was an impediment to that and that is one of the things that we were on the road to address but it kind of galvanized us to do that. That was a big stand-out moment – that we had to change the approach – and I think all of the feedback and messaging around how we could position ourselves, which the Value Proposition BuilderTM framed, for us very much shared the direction we wanted to head in.

  We have Net Promoter Score, we have CRM and sales interfaced and certainly a lot of customer engagement in many parts of our business. Rather than trying to extract pieces of information from customers during meetings, which might also centre on something else, I think the independent aspect of the Value Proposition BuilderTM process, the committed time frame with our customer, enabled the interviewers to really spend a lot of time probing and asking questions in a way that I think would be more challenging for us to do because inevitably customers would have other questions of us: about technology features, new content we are bringing online, commercial issues, etc, which can cloud the ability to extrapolate that information – so that aspect was really important.