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Quantum2 Topic of the Month — Creating Well-Defined Value Propositions
If you're not in marketing
when we begin to discuss creating a value proposition, you may find yourself at
a loss. Therefore, we'd like to offer this primer to eliminate any confusion
and give you something of a step-by-step guide to get you started.
What Is a
Value Proposition?
A value proposition drives
the demand for all of the products, services, and solutions that are offered by
the information center. It details the reasons why your customer will use your
services and, in this sense, a successful value proposition makes for a
successful information center.
Because of the importance
of the value proposition, it is worth keeping a few things in mind regarding
its formulation:
- A value proposition should explain why the information
center participates in the market.
Although you may have been serving your customers without really understanding your
information center's implicit value propositions, to be successful you should
give serious thought to approaching your value creation process in a rigorous
and iterative way. If you cannot offer a compelling proposition, why should your
customer use your services?
- To continuously show value you must be proactive about
iterating the process. The key to
success is to keep inventing new value propositions you can deliver to your
customers.
Why Is a
Value Proposition Important?
An information center that
seeks opportunities to serve client needs with finely tuned offerings can demonstrate
significant value. An internal approach
to creating value is all too often the norm: you create your service, then
attempt to find the market. As a result, any value created is, in large part, less
than perfect since it does not grow from a coherent strategy to serve targeted
customer needs.
However, by creating your
value propositions around your market, you can be quick to adapt in response to
any changes, continually reinventing services through a purposeful process of
defining and refining your understanding of customer needs.
The adoption of such a
process guarantees that new developments will be identified and addressed as
they appear, thus helping to embed the information center into the larger
growth strategy of the organization
How Do You
Get Started?
The starting point for a
customer-based value proposition is making an hypothesis based on existing
knowledge of the customer. Your understanding of their needs and interests from
past interactions, previous market research, or even anecdotal evidence should
provide insights required to form the initial premise.
Value propositions should
be compelling and targeted at specific customers. If articulated correctly, it
should clearly explain the areas of your strategy:
1. What
the target customers are expected to do
2. The end-result experiences that will be provided to them if they do what
is expected, including the trade-offs they must endure
3. The merits of the experience
It's helpful to organize your
hypotheses around customer segments, as the value proposition will vary based
on customer type. The hypotheses do not need to be perfect in the early stages
of a project as they will be tested and refined later, through focused
interactions with potential customers. These interactions should not only be
conducted with those people who will directly use your services, but also take
into consideration other stakeholders who may impact the resources you may
require. Examples of these types are:
- Actual users: individuals who use the product on a day‑to-day basis , i.e. main
target
- Resourcers/users: individuals who may not use the product as an actual user, but who are
responsible for the decision to provide the necessary resources
- The customers' customers: individuals from inside or outside the organization
who are affected by the choice of service used by the actual user
Finally, you should use the
ideas generated during this first stage to build an interview guide that will
help to ensure that details do not get overlooked. The interview guide outlines
a process for understanding the needs of customers and reminds you that a value
proposition for each type of customer is required.
Articulating
the Value Proposition
Once the interviews are
complete, it is time to begin formulating the new value propositions. This is a
crucial step in the process and should not be rushed.
As you review the information
from the interviews, explore the following topics:
- How did the
interview support or disprove the initial hypotheses?
- Did they reveal
new opportunities or inefficiencies?
- Did the
interviewees seem to fit into your original categorization of them?
- Based on
discrepancies between expected and actual behaviors, does the category still
seem meaningful? and
Does it seem like
the best method of differentiating potential customers in terms of unmet needs
and value creation?
Your goal is to arrive at categories
that clearly differentiate the different types of customers in terms of the
value that can potentially be created for them, and not in terms of their
superficial differences.
Next, create a series of
cohesive value propositions targeted toward each independent segment that
address the opportunities uncovered during the interviews. Be sure to determine whether you think
this will improve the workflow by removing the pain points.
Finally, a clear
understanding of your value proposition should provide answers to the following
questions:
1. What is the intended time frame over which the value
will be delivered?
2. Who are the intended target key user customers?
3. What do we want these targets to do?
4. What are their best perceived alternatives?
5. What experience of value would these target customers
receive, if they do what is proposed, in comparison to alternatives?
a. What are the benefits?
b. What are the trade-offs?
c. What
experiences are equal to alternatives?
After clearly answering each
of these questions, you will be able to identify an opportunity for a value
proposition that is mutually beneficial to both the organization and potential
customers.
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Betty Jo Hibberd