Communicating a Clear Value Proposition

March 25, 2014 Business Strategy, Customers, Marketing, The Manager's Resource Handbook

How to Communicate Your Value Proposition to Customers

Companies compete on a daily basis for a finite amount of sales and revenue in the market. Whether we are a small business, a conglomerate, a B2B or B2C firm, we all have competitors. As we chase the next sale, the next contract or the next service appointment, though, there are ways of making our company stand out against the competition. In every proposal we write or offer we make, catching your customers’ attention offend depends on how well understand the customers’ needs, and how well we communicate our unique value proposition.

What Makes Your Company Special?

It goes without saying 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 pump out product quickly, but only after you’ve waited a month for them to return your calls. So, not all businesses are equal.

“Identifying your value proposition is not necessary about being better than your competitor, but more about figuring out how you are different from them.”

In classic business theory, the term value proposition is defined as the combination of unique characteristics and abilities that your firm has to offer its customers. In other words, your value proposition is the key deciding factor that motivates a given customer to make a purchase from your firm instead of another.

Unfortunately, depending on your market or industry, knowing what it is that makes your company special is not always easy. As a result, when bidding on a new contract, or making an offer to a potential customer, many businesses struggle to communicate how they can best be of benefit to the customer. They simply offer a price based on a defined work scope.

An Example of Understanding Your Value Proposition:
You and another company compete for the same customers. Your business has a higher cost structure that your competitor which forces you to charge higher prices. However, when compared to your competitor, you know you produce a superior quality product and offer better customer service. This is your value proposition. While perhaps not of interest to all customers, t
hese features and capabilities are valuable to certain customers, who may care more about quality and customer support rather than the extra 10% you charge.

How Can You Identify Your Value Proposition?

Identifying your value proposition is not necessary about being better than your competitor, but more about figuring out how you are different from them. 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 the deal maker.

An excellent way to help you identify what makes you special is conducting a SWOT analysis. A SWOT analysis is an in-depth evaluation of your organization that can help you identify some of those things that make your business different – and special.

The SWOT analysis will help you identify several things that make your organization unique and different. Armed with this information, you can then define your target customers.

Your target customers should be those who value those unique aspects of your firm. If you are able to charge lower prices, you should target price-sensitive customer. If you produce higher quality product, target customers who are brand-sensitive or are willing to pay more for a better product.

Here are some other examples of a value proposition and unique characteristics that your business may be able to offer customers:

Examples of Value Propositions That May Apply To Your Business:
Higher quality product or service – If the customer perceives the value of your offering to be superior, it can overcome concerns of cost or lead time.
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. Customers interested in fast results may value your speed.
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.

Once you’ve identified your ideal customer and understand the unique ways you can bring value to your customers, you have a win strategy. This special value you bring should be communicated in company information, business proposals and in-person presentations.

Communicating Your Value Proposition Can Grow Your Business

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? Your value proposition is a combination of your ideal target and understanding what makes your business different from your customers. 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.