How to Develop a Value Proposition
Let’s take Paul’s discussion a step further
Sawubona.
A few days ago Paul Myers MBA wrote an excellent piece on Value Propositions. This is a topic I share an interest in and have a fair bit of expertise in as well, but in a different way. My purpose is to tag Paul here:
and offer what may be useful as a how-to.
First, Paul rightly points out that every business has to have one. Well, let’s put it this way- if indeed you plan to stick around for a while, you’d better.
I wrote a small, prize-winning book called Tackling the Titans: How to Sell to the Fortune 500. That book is very specific to supply chain, and further to a very narrow part of supply chain. While the material is largely evergreen I don’t recommend it unless you’re involved in supplier diversity. You know if you are. However I will draw from that material here. Please keep in mind that this material is dated in one sense. We don’t know what’s coming. What I do suspect is that we will all still need to work, and in working we still need to figure out what we have to offer that is valuable, if we are going to provide for ourselves and our families.
When I was working in supply chain for the Fortune 100–500, this was my Value Proposition:
I solve the problem of unprepared suppliers.
I got a lot of business. Why? Because in that world, this was a widespread, expensive, irritating problem that kept senior folks up at night. I was uniquely able to solve that problem. A one-woman, micro-business. I did work for 21 of the Fortune 100 and many more of the Fortune 500, and won a national prize for that work. I had a very narrow, well-defined customer base and I absolutely understood what the issue was and how to solve it.
The reason this Value Prop worked was because it nailed a problem for my customers in a language they used and understood. I could back up my claim, which is a whole other discussion, not for this article.
If I might clarify: a VP (to keep it simple) is critical in today’s world simply because most of us have fast-moving minds. If you and I are discussing business, and you can’t communicate what you can do for me/my business/my life very swiftly, you may have lost the chance. They rarely knock twice. While I certainly can’t speak to where we’re headed, people still want to know what you’re doing to do for them, and fast.
Second, depending on the size of your business, the different products or services you offer, you may well and probably will need a crisp, clear, VP for each offering.
Why? Because if I ask you what you/your business does, and you launch into twenty-seven iterations of your company, you’ve lost me.
A Confused Mind Cannot Buy.
Mind if I say that again, louder this time?
A CONFUSED MIND CANNOT BUY.
The complimentary tag to that is Clarity is Power. The more you obfuscate, the more you obliterate your chances of success.
When you and I are hoping to provide work for someone, anyone, no matter what it is, we need to be able to clarify the problems we solve. That’s true whether you and I are bartering for goods or selling to a company.
One of the reasons that entrepreneurial startups have such a shocking failure rate is just this three part combination: we are not clear on our customer, we are not clear on what value we bring to that customer, and above all, we have no clue how to express what we can do for our customers in such a way that our target audience can hear it and respond with a resounding
WE NEED THAT.
Where do you start?
From Paul’s article:
It’s not just our customers’ job to tell us what they need or want. We own that function. We need to observe, interview and ask (using research) while cultivating an innovative mindset to deliver the unknown for our customers of tomorrow.
Kindly let me give you an example. A friend of mine in Nova Scotia sells sandpaper products. At best, she’s a $700k p.a. business. At BEST. Yet this one-woman business successfully sells to Walmart, the biggest gorilla in the world.
I interviewed her about how she does it.
First: before she ever meets with a buyer, she has spent possibly seventy hours of research. That’s not just online. Walks the aisles, identifies where her products should be placed. Studies the layout of the shelves. Notes who the competition is (3M, Chinese products). She researches their pricing, their supply chains. She works in-house with her own team to identify who her unique Wal-Mart customer is to match the conversations she’s had both with real customers shopping for similar products as well as the hardware managers of the Wal-Mart stores. She spends real time with real customers and real managers. Boots on the ground.
Seventy HOURS. By the time she’s done, she actually knows more about the store, the layout, the customers and her competition than the buyers do. Here’s how that’s worked: she only has one product that fits the bill, and Walmart loves it. Their buyers are brutal, unflinching and very professional. She meets them at their own level, with solid, researchable information. They buy from her every single time. Have for years.
She can present a swift, crisp, clean VP which speaks right to the heart of that one Canadian Wal-Mart customer who needs that particular product at that particular price point. And who often prefers a Canadian-made item.
Here’s what I love best about what she said: “Wal-Mart is always asking for more products. We only have one that meets their needs. That’s all we present.” She doesn’t confuse the issue by presenting anything she already knows they won’t buy and that isn’t a fit or that she can’t reduce in price. Or that she does not now and never will have the capacity to produce at the scale that Wal-Mart demands.
Boom. She knows her customer. Wal-Mart is the only huge company she sells to. All the others are much smaller, local Canadian firms. But Wal-Mart on her resume gives her enormous edge, influence and personal power.
She’s done that for every major item in her lineup.
No matter what happens in any kind of future, the likelihood that you and I will need to find a way to make a living is a given. What corporations look like, how supply chains operate are probably going to shift, in ways that we can’t now anticipate. However, doing our best to understand who we wish to serve and why, and how we’re going to do that are all still essential parts of that journey.
Now. To you.
To write your VP, here’s a suggestion to get you started. To make this easier, please just work with ONE, preferably your primary, offering:
1. What is the problem you solve?
2. What is the solution you offer ?
3. Do you really know what keeps your primary customer up at night?
If you can’t speak to #3 without taking another breath, you have work to do. If you, like a young woman in a class of mine in Kansas City once said loudly in my class, think that
BUT EVERYBODY NEEDS MY DATABASES
you will broke inside three, and at the outside, five years.
No. EVERYBODY does not need your databases. There is a particular group for whom you are a perfect fit. Chasing after all the rest will eat your overhead. Find that group. That goes back to knowing your customer (needs analysis, above). Walk the stores, or talk to the potential customer. Do your due diligence. Know your industry, your competition, and precisely who is likely to be a raving fan. And WHY they will be a raving fan.
Here I might point to the number of ads I am still getting from all my outdoor suppliers. All the sales going on for stuff I can’t afford to go to places I can’t fly. And I have no clue, given my entire life is on perma-hold, if any of that will change. Right now it doesn’t matter how great a pair of Kuhl pants is. I have no idea if I will ever need them again. The industry would do well to rethink the campaign to match the times and the realities of most of their customers. One way they could do that is reach out to those of us who review their gear, ask us about our reality, and how they can be more relevant. That’s proactive.
As it relates to our work as writers:
Nobody is going to read your articles unless what you and I write is valuable to someone. Consistently. If not they will not read us. This is one reason why a goodly number of us muted a goodly number of writers recently.
Who is our best customer/reader? Who is likely to love our stuff and why?
If you’re a writer, Medium provides a superb way to discover that: it’s every single word or paragraph that people highlight. Feedback does not get more immediate, helpful or clear. Combine that with comments, and you are being fed what your readers want.
Ignore them at your peril. That’s up to you.
I respond to their comments, and in doing so, get more answers, which is more insight and information for what I might want to do to add further value. It also creates a critical, intimate connection with my reader. That’s priceless.
The other piece in Paul’s comments above addresses the important of sussing out where our customers are heading. I am not a computer person, although I am quite sure that there are predictive algorithms that might serve in many industries. For me, I am old school. I listen to people (I’m a lifetime journalist). In their comments, you can hear a multitude of undercurrents, and potentials for what’s possible.
However we need to learn to listen to what’s being said and be wide open to the implications, rather than to either disregard or dismiss what we hear because it doesn’t support what we think. That’s how we lose business, lose our way and become irrelevant.
Business schools are littered with stories about tone-deaf CEOs.
In my favorite movie about management and leadership (that’s another article) Master and Commander, British Naval Captain Jack Aubrey is contemplating how to deal with a much larger, much better warship than his Surprise. After an aborted visit to the Galapagos, his close friend and naturalist (and ship’s doctor) Dr. Stephen Maturin is only able to secure a few specimens. Maturin and young Lord Blakeley show Aubrey a walking stick insect, or phasmid. When Blakely explains to Lucky Jack that the phasmid both evades his prey and captures his meals through disguise, a brand-new plot is born. I won’t spoil the movie, but you can see the point.
Lucky Jack wasn’t lucky. He was deeply focused on his crew, listened to their input and ideas, knew when to ignore and when to utilize that input, and was able to spin in a second if the advice and situation demanded it. That’s good management. It’s also a good idea if we want to stay in business (or in love, for that matter, but I digress).
When you and I highlight, comment and link material, we are communicating a great deal to our writers. Not only are we saying we like this, but also more of this. Sometimes we ask for more of X, or our take on this topic over here. That may be your phasmid, or your answer to the tricky question of what’s next?
For the sake of brevity I will stop here. You have your homework in the three challenges above. I will provide you with how to craft that VP. Stay tuned. I have to go run off two handfuls of chocolate almonds. In interim kindly re-read Paul’s article above and let’s ask ourselves, what’s next? Who might that next-iteration customer be? How can I research their needs? and how I am the best answer to what keeps them up at night (which may not at all be clear).
Shikoba.