A value proposition is the missing link that connects customer needs with your organizational capabilities. It serves as the arms and legs of the organization in identifying elements sought by customers and then obtaining alignment around these elements.
Value proposition design is mainly an internal exercise. It requires defining, measuring and delivering the experience customers receive from the brand. The exercise involves understanding customer needs to then align internal actions to win in the marketplace.
The process to develop a value proposition begins with a customer insight. For Starbucks, it may be that customers want a “third place” to work and relax. Or, Southwest Airlines customers might want a transparent, accessible experience. The value proposition is then built around this deep insight.
What are the benefits to developing a value proposition? A value proposition can:
- Create a multi-dimensional definition of brand value. The strongest value propositions encompass a broad set of customer benefits in the form of value elements. Historically, businesses and brands tended to deliver highly focused benefits, although recently organizations have designed their value propositions more broadly. The elements of your value proposition work together to comprise a greater sense of value. The whole is greater than the sum of the parts.
- Surround the customer with multiple touchpoints. Companies are increasingly enhancing the value of their products by creating customer experiences, either by leveraging what they know about their customer or by adding touchpoints. For example, Nike, historically, was a product company. In an effort to enhance their proposition, Nike continuously adds additional service touchpoints such as Nike+ to track workouts.
- Drive strategies and actions across the organization. The value proposition can be thought of as a statement of strategy – what the brand intends to stand for and deliver on in the marketplace. A value proposition framework provides focus and direction to the company and is useful in strategic decision-making. To aid decision-making, the organization has to develop the strategic guideposts upon which to assesses individual growth opportunities. McDonalds knows, for example, speed of service is an ante value element that must be delivered. When evaluating new menu items, the decision to include them depends on the impact to speed service.
Find these business strategy tips helpful? Using tested and rigorous processes, EquiBrand Consulting can help you develop a winning value proposition for your organization. Contact us today to learn more.