Value Proposition Development

Why should customers buy

from you?

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The Customer Value Driven Organisation

Your customers only care about the outcomes you can help them achieve.

Organization

Customer value

propositions

Customer problems

Customer outcomes

The ultimate customer value comes from helping your

customers achieve their desired outcomes whether that

relates to business success or personal ambition

You can help your customers achieve their outcomes by

solving their problems and satisfying their needs.

Your customer value propositions communicate how you

will solve your customers’ most important problems and

why they should choose to buy from you.

Driven by a clear purpose, the organization exists to

efficiently and effectively solve your customers’ problems

to help them achieve their outcomes.

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Customer outcomes and problems

• What do they want

to achieve, what are

their goals?

• What problems do

they care about?

• What are they

excited about?

Promise of value that resonates

• Benefits that solve

their urgent

problems and help

them achieve their

goals

• Why they should

care about your

solution?

Competitive Difference

• Demonstrate points

of difference from

your competition

that matter to your

customers.

• Put action plans in

place to improve

important areas.

Evidence and quantification

• Create trust -why

should your

customer believe

you?

• Create a vision of

how your solution

will help them

achieve their goals.

The customer’s perspective

What’s in it for them?

Why choose to buy from you?

Prove it

A Value Proposition has 4 essential elementsIt shows how products/services create value for a specific customer segment

The elements can take on different levels of importance depending

on the competitive environment and the point in the sales cycle.

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Customer value propositions are applied throughout the customer journey

Customer value propositions create the narrative which lead your

customers through the buying process.

Individual

customer view

A vision of the future solution

from the individual customers’

perspective; with proof.

Customer

segment view

Building a story which stands out,

based on clear needs and

compelling evidence.

Generic Value

Proposition

A succinct message which generates interest,

leading to the desire to find out more.

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Customer Value Proposition development can be broken in to 7 key steps.

The customer value

driven organisation

Customer segments and ideal customers

Customer Discovery

Value MapYour difference

Crafting value propositions

ExecutionTesting

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The first stage of customer segmentation often focuses on demographics.

Behaviour

– Values and culture

– How decisions are made

– Willingness to change

– Approach to risk

– Loyalty

The second stage develops better resonance through defining

segments focussed on customers’ behaviours and needs.

Needs

– Product functions

– Delivery

– Quality (Great to perfect)

– Support level

– Pricing

STEP 1 – Define customer segments and ideal customers

Who are your real customers?

Who are your channel partners and influencers?Focus on your ideal customers

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STEP 1 –Ideal customers have higher lifetime spend and provide referrals to more ideal customers

Willing to engage in

conversation and share their

problems

Willingness to take action and

change

Urgency with a problem or opportunity

Aligned to your strategy and

purpose

Can be served efficiently and

effectively

Your value propositions resonate more with your ideal customers.

Ideal Customers

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Customer Segment:

Best CustomersCharacteristics of the

bestIdeal Customer Criteria

Characteristics of the worst

Worst Customers

Structure to help develop ideal customer criteria

List top 3 to 5 best customers and the characteristics that make them the best

List top 3 to 5 worst customers and the characteristics that

make them the worst

Define the standards against which you will measure your ideal customers

Develop an ideal customer score card to use in your sales pipeline

• Rank the five most important criteria

• Score each sales opportunity from 0 to 5 against the criteria

• Total score out of 25 gives a relative comparison of opportunity attractiveness

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Step 2 - Customer Discovery A cross functional team works to develop a complete picture of your market and customers

This session will produce lots of questions that you don’t currently have answers for. Customer

discovery is iterative and continuous and develops as you spend more time with your customers.

Customer Discovery CanvasCustomer Segment: L&D leaders in retailers

Customer Problems and Needs

Customer Outcomes

Customer Insights

2. What outcomes do

your customers

want?

Prioritise them

3. What problems do they have and what insights can

you gain?

Prioritise them

1. Be clear on your customer segment

4. The team must spend lots of time with customers to test

and develop the canvas

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Questions to help you focus on customer outcomesFor your defined customer segments, what do your customers want to achieve.

Put yourself in their position and think about the people involved.

For companies

• What is their purpose?

• What is their business strategy? How do they achieve it?

• What new business models are emerging?

• How do they increase sales and reduce costs?

• What factors are disrupting the customer segment?

For consumers

• What are they trying to achieve?

• What are their ambitions?

• Why do they care?

Thinking about market challenges and opportunities from your customers’ perspective

leads to insights in to what they really need which can lead to real differentiation.

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Customers see value in different ways.Think of their problems and needs in terms of economic,

functional and emotional value.

• Solutions to problems

• Ease of deployment

• Environmental impact

Your customers value your offering in direct relation to their needs

Return on investment• Increased sales• Cost or time savings• Cost of ownership• Increased productivity

• Brand• Style• Trusting Relationships • Security

Economic Value

Emotional Value

Functional Value

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In B2B sales, make sure that you understand and identify the different buyer types, they have different criteria and needs.

Economic Role

Practical Role

Technical Role

Role: Gives final approval to buy

Focus: Bottom line and effect on organisation

Asks: What return will I get on this investment?

Role: Screens out products - gate keepers

Focus: Match to specifications and technical

standards

Asks: Does this meet the specified criteria?

Role: Judge impact on operational performance

Focus: How does it perform in use - they will live

with it

Asks: How does this impact my responsibilities?

Consider all touch points with your customer and make sure the whole company is involved

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Customer Problems and Needs- Think about individuals within your customer segments.

• What improvements do they want and how much does it matter?

• What are their biggest pains and how much do they hurt?

• How do they manage risk when adopting new solutions?

• What does success look like to them personally?

• Imagine ‘a day in their life’.

• What gets them to celebrate?

• Who are the decision makers?

• How do they measure Return On Investment?

• Is there urgency to solve the problem? If not at the top of the list, is it in the top two to five? (There are finite £’s, time, people, resources).

Customer problems and needs are identified by really listening to your customers,

make sure that everyone understands that this is a key part of their role.

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Developing customer insightsBased on their most important outcomes, how can you surprise

them with solutions they don’t know they can have.

• What solutions can you develop based on combining a knowledge of

market problems with your unique competencies.

• What do they dream about – how can you make it happen?

• What keeps them awake at night and how can you remove the worry?

• What would go beyond their expectations?

• What risks do they fear taking – and why?

Insights are gained by truly understanding the market place and the

outcomes that your customers want to achieve.

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Step 3 – Product/Service Value MapHow does your product/service add value that resonates with your

customers?

The value map forms the basis for developing your value propositions

Value Map

Customer Segment: L&D leaders in retail

Product/Service Features

Performance Benefits

DelightersBenefits which

satisfy

customer

insights.

Product/service

benefits that solve

your customers’

most important

problems.

Define your

product/service

and its features

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Step 4 – Competitive PositionExample of Competitive Canvas applied to Value Proposition Workshop versus a Website Designer

Points of difference

Points of parity

Points of negativedifference

Identify Points of Difference– focus on areas that resonate with your customers

• What are you better at? Emphasize areas of competitive advantage

• For points of parity, focus on proving you can deliver and actions to improve

• For weak areas, create and execute plans to improve.

3

2

1

HIGH

MEDIUM

LOW

Website

Designer

Value Proposition

Workshop

Top customer needs and insights (Ranked)

Develop

sust

ainable

differe

ntiatio

n

Rapid

New

Pro

duct

Adoption

Whole

busin

ess

focu

sed o

n valu

e

Comm

unicate

com

plex f

eature

s

Get atte

ntion w

ith

busy cu

stom

ers

1

1

1 2

3

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Most important

customer outcomes

1.

2.

3.

Customer

problems/insights

Key benefits – how

you solve key

problems

Competitive

difference

Proof and

quantification

Step 5 – Develop compelling value propositionsUse the customer discovery and competitive canvases to build your value proposition for your defined customer segment based on their most important outcomes and problems.

Your value proposition is more than an ‘elevator pitch’. You need to craft

and build a story which develops credibility with how you solve important

customer problems and help deliver customer outcomes.

Prioritized

customer

problems and

insights. Be

clear on the

buyer type

they apply to.

Your benefits

must solve

important

customer

problems and

help deliver

customer

outcomes

Focus on the

one or two

points of

difference

where you

offer better

competitive

value.

Often the

most difficult

area, how will

you create a

vision that

your

customers

will trust?

Define the most important outcomes

within your customer segment

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Step 5 -Ideas to strengthen the customer value proposition

Value

Proposition

Customer

Resistance

Risk

Effort

Price

Promise

Differentiation

Proof

Help with

techniques

to deploy

Demonstrate

what success

will look like

Change

business

model

Build evidence

and trust

Strengthen

points of

difference

More

compelling

benefits

Customer Segment.

Focused on ideal customers’

outcomes and problems.

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Step 5 – The Proof is in the PuddingYour value propositions need to create a compelling vision for your

customers and to achieve this you need messages that your customers trust

Consider these four important approaches to get your customers to

trust your messages and visualize how you can help them.

Prototyping – customers react

better if they can touch it. So

focus on building ‘minimum

viable products’ to get feedback

during your development of

new products and services.

Research shows that the most

important way to develop trust is

through referrals from existing

customers.

So after you’ve made the sale

make sure you ask for referrals.

Case studies & whitepapers

demonstrate outcomes

achieved for existing

customers.

Make sure that your ideal

customers will relate to your

case studies.

Offer a trial period to help

prove the value. Getting

your customers to actually

use your products gets

them engaged.

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if you have identified your customers’ most

important problems and whether you have a

compelling solution that they value and will help

deliver their desired outcomes.

Step 6 – Test and refine your value propositions

Testing can only take place in front of your

customers. A structured approach will verify

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Step 7 – Execution; putting it to work.Your value proposition is your ‘promise of value’ to your customers,

make sure it is an integral part of your whole business.

• Make value proposition development a core business skill with clear focus on understanding customer outcomes and problems.

• Create marketing briefs for direction to external agencies with clarity on the customer outcomes and problems you are focusing on and what your value propositions are.

• Improve your sales tools, make sure they are focused on customer outcomes and problems.

• Base New Product Developments on customer outcomes and problems, develop products/services that solve your customers’ most important problems.

• Review your business model. What changes can you make to improve the value you offer your customers.

The challenge is to make Customer Value Proposition development a

core business skill and an embedded part of your culture so that your

organization is truly driven by customer value.

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Recommended reading

• Business Model Generation and Value Proposition Design by Alex Osterwalder et al are two of the most readable and practical business books I’ve come across. Building on work by Steve Blank, Eric Ries and Clayton Christensen, they pull together a lot of recent business thinking.

• Start with Why by Simon Sinek gets to the heart of your business. His TED talk, ‘People don’t buy what you do they buy why you do it’ is compelling.

• Blue Ocean Strategy by Kim and Mauborgne is the basis for the competitive canvas and argues that you need to search for ‘uncontested market space’.

• Good Strategy Bad Strategy by Richard Rumelt is one of the best of the many books on strategy. He advises approaching strategy in 3 phases – diagnosis, a guiding policy and coherent action.

• Harvard Business Review article - Customer Value Propositions in Business Markets by Anderson, Narus and Rossum, is a must read with good examples and structure.

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Helping you answer the biggest question –

Why should customers buy from you?

E: mike@mikeinnes.com

W: mikeinnes.com

Copyright © 2017 Mike Innes