You Can’t Be the Worst at Everything: How Understanding Your Value Proposition Can Increase Revenue
Companies compete on a daily basis for business and revenue. Whether you’re a small business, big business, B2B or B2C firm, you will compete every day for the next sale, the next contract or the next service appointment.
It goes without saying, though, that not all businesses are the same. Some businesses are more expensive than others. Some will have good quality, others will have better. Some companies are slow to churn out product, and others churn out product quickly, but only after you’ve waited a month for them to return your calls. So, not all businesses are equal.
In classic business theory, there is a term called ‘value proposition.’ Your value proposition is the combination of unique characteristics and abilities that your firm has to offer its customers. It is the why that drives a customer to make a given purchasing selection from a given firm.
Many businesses fail to identify what it is that makes them special. When bidding on a new contract, or making an offer to a potential customer, many businesses miss out on the opportunity to emphasize where they can best be of benefit to the customer. They simply offer a price and define a work scope.
In a simple example, a business may have a higher cost structure that its competitor resulting in higher prices. Compared to its competitor, though, this firm may have the ability to produce a superior quality product, deliver the end result faster, or offer better customer service. Each of these features and abilities are valuable to customers, who may care more about quick results, than an extra 20% in price. As a matter of practice, businesses need to look at the special abilities and skills that make them stand out. Price, although important, is not always a deal breaker. Your unique abilities, in contrast, may be a deal maker.
Doing a SWOT analysis of your business can help you identify some of those things that make your business special. In addition, here are some other examples of a value proposition and unique characteristics that your business may be able to offer customers:
Higher quality product or service – If the customer perceives the value of your offering to be superior, it can overcome concerns of cost.
Superior skills or knowledge – If your staff has special qualifications or certifications, this can be of value to customers who seek expertise.
Operational capacity – Having capacity within your operations enables you to be swift and deliver results quickly.
Size of Business – Small businesses can offer customers special attention and focus. Larger firms may not be able to pay as close attention to customers.
Financial resources – Having financial resources at your disposal signals to customers that you are stable and their partnership with you is secure.
If you are struggling to capture business, look at your value proposition. What are you best at? What can you offer customers that your competitors can not? While you may not be the best in terms of price or speed, you are still the best at something. Once you identify that thing that makes you special, emphasize that in your marketing and sales efforts. Remember, customers are paying you for the value you bring to them, not just the basic product or service you deliver.