A value proposition is your answer to the question, “what value do you deliver to your customers?”
A strong value proposition is not necessarily the messaging you’ll use in your marketing. Rather it’s a tool for you to use internally to create powerful messaging that will resonate with your buyers.
A lot of people know exactly what they do, but they don’t articulate the real value to their buyer. If your buyer has to work out the value for themselves then that makes it harder for them to buy from you.
My definition of marketing is simply making it as easy as possible for people to buy from you. So if your customers have to work out for themselves what value they’re going to get from buying your product or service then you’re not making it easy for them.
It’s important to tell your customers not just WHAT you deliver but also HOW you deliver it and WHY it is important.
So how do you create a value proposition?
In my last two blogs I’ve been taking you through the buyer’s journey, looking at how excellent marketing needs to support our buyers at every step.
If you missed part 1 and part 2, read them here:
Encouraging the first purchase
To reduce the perceived risk at this point in the buyer journey, your customer needs to feel what it’s like to be a customer before they buy.
A product ladder is a series of offers and products that lead from one to the next so people can build a relationship with you and get a sense for what it’d be like to be a customer before they commit to something big. It’s all about reducing perceived risk.
In my previous blog I explained how we all go through a number of stages when we make a buying decision.
Excellent marketing supports our buyers at every stage of their decision-making process so they can move forward.
To do this, you need to have mapped out your customer’s buying journey because it’ll be different for different markets and products. Once you’ve mapped out your customer’s buying journey, you can then look at how you can reduce the perceived risk at every stage and build trust throughout the journey. By reducing risk and building trust at every stage, it becomes easy for customers to decide to choose you. And if it’s easy for people to buy from you then sales will inevitably increase.
If you haven’t read part 1 yet, where we covered the first stages of the buying journey, click here: Part 1
Building buyer’s interest
Once your buyer is aware of you, you need to let them get to know you in their own time. Build trust by providing regular, quality, short-form content such as;
The aim of marketing and sales is to take people on a journey from never having heard of you to being raving fans who buy loyally and tell all their friends. So if you want to understand what marketing excellence looks like then you need to understand how your customers make that journey. And the journey will be different depending on your business, your product and your market.
Some buying journeys are quite short and buyers make their decision quite quickly. Others are longer, involve more stages, and require more support from marketing and sales.
Marketing excellence supports buyers at every stage of their buying decision, all the while building trust and reducing the perceived risk of moving forward.
Most people jump to this stage of the process first. This is the equivalent of placing a first order of 100,000 widgets based on a design on the back of a napkin. Yes, there's a chance they might do the job but you're risking losing a lot of money in the process. (Read 'Turning your marketing upside down' for a more detailed explanation)
First, you need a robust marketing function in your business that leads your customers comfortably through their buying process. You need to make sure you've designed your marketing to be effective and you've tested it out and are confident that it is converting customers with a good return on investment.
The process of doing this will almost always result in an upturn in sales, but if your sights are set higher and you want to grow your business more, you have two choices:
The order of these is important: it is far easier and more efficient to increase sales from existing, proven marketing activities. People often shy away from doing this because they're not confident their activities are delivering ROI. If that's the case, go back and put measures in place so you know whether they're working or not.
What is the difference between cost-based pricing and value-based pricing?
Cost-based pricing is a model where you work out how much a product or service costs to deliver and set your price accordingly. As long as you factor in all your overheads and sales & marketing costs, you will be able to work out your profit margin.
Value-based pricing is a very different model, and people often struggle to get their heads round it, so I use this story to explain what it means...
In my last blog ("What's the point of marketing?") I discussed how the first step in engineering a new product is to establish its purpose. In marketing it's the same, you need to establish the purpose of your marketing and how it needs to support your customers at every stage of their buying decision.
Once you've done that, you need to define your specification.
An engineering specification or functional design specification will typically include everything you want the product to do, how it should work, how it should be manufactured, timescales, cost restrictions and any other pertinent requirements.
In my last blog, I used the example of designing a keyboard. In this scenario, I'd need my specification to describe...
It's always tempting to sidestep this phase or start with a rough outline of what you want to achieve, However, the consequences of this approach can be costly.
Every new product, software, system or process must have a purpose. It must solve a problem or else it has no value and no one will buy it. By deeply understanding the problem your product solves for your customers, you can stay focused on what features will deliver the most value.
For example, if I was designing a new computer keyboard, I would need to consider...
Likewise, you must always stay focused on your marketing's purpose.
I always say that creating a marketing wish-list is easy – it's prioritising it that's the hard part. That's why I use the Watertight Marketing methodology with many of my clients. It's a logical and structured approach to prioritising your marketing activities to get the best return on your investment.
Using this approach, you "traffic-light" the "leaks" in your marketing processes and address the red leaks first, in the right order.
But it's not a once-and-you're-done activity.
I recommend clients review their leaks every six months or so, to stay focused on their priorities and on track to achieve their long-term goals.
As you might imagine, after working on addressing a red leak in your business, hopefully it will turn orange and then eventually green. However, that doesn't always happen. Why? Because you are working towards a constantly moving goal-post.
Most people who aren't marketers think of marketing as "getting your name out there". That if you want more customers, then you just need to tell more people about your product or service.
This assumes two things:
1. That as soon as people hear about you, they'll just "get it" and immediately understand the benefits of your product.
2. That the decision to buy is an easy one that doesn't involve too much thought.
If you sell an impulse-buy, like cupcakes, chocolate bars or jewellery, those assumptions are probably correct. So a marketing strategy that focuses on promotion (or "getting your name out there") is probably correct.
However, for most businesses I work with, at least one of these assumptions is wrong.
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