We read a lot about boosting customer satisfaction and cherishing loyalty. Modern consumers are digitally empowered. They expect value propositions that are highly personalised and relevant.
The fundamental question that remains to be answered is:
When you know that your customer is the most precious resource that can make or break your business, are you seizing it or saving it?
It is only those companies that are able to design customer value propositions with the customer at the centre that gain the strategic and competitive upper hand.
Understanding Customer Value Proposition
Understandably so, making significant changes to your fundamental business offerings in not an option. The best way forward is a play on what the customer perceives as value.
So, what is customer value proposition precisely?
Everyone would agree that the customer value proposition was a relatively simple concept to begin with. Mycustomer.com defines it as, “Customer value proposition is a business’s way of generating value in their product or service when targeting potential customer.”
Simply put, the customer value proposition is part of a business’s marketing strategy that provides a declaration of intent to the end consumer. It helps to maintain the company’s economic moat. The bigger, the wider the moat, the more the brand becomes resilient to competition.
The customer value proposition also introduces the consumer to what the brand stands for, how it functions and operates, and why it deserves the customer’s loyalty at all. This is an added benefit as it appeals to a customer’s strongest decision-making drivers.
Gaining customer trust can only happen when businesses cultivate strong relationships between the consumer and the brand. Having the right value proposition certainly contributes to the process.
The Importance of a Comprehensive Value Proposition
Customer value proposition design today is significantly swayed by direct or indirect environmental and social influencers. The velocity of this transformation has been primarily triggered by the market’s move towards being more digital.
The simple concept has become way more complex and now comprises several hierarchies. These levels go on to decide the significance of the services received by the customer in comparison to what they were expecting to experience from their purchase.
There is a healthier way to design a value proposition that your consumers can buy into in the long run. An injection of ethics, a splurge in their confidence, being dependable and triggering positive emotions are the fundamentals of creating a solid value proposition for customers.
Remember that value lies inside the mind of the customer, and it means different things to different people. Therefore, that automatically makes understanding the customer value proposition an extremely important parameter for accelerating business growth.
Uncovering customer needs lets you align the customer value proposition effectively. So, not only do you get a comprehensive understanding of each individual customer, but you can also locate potential growth opportunities for the future.
Remember that the customer value proposition is the only thing that can successfully link the customer, company, and shareholder together.
Designing A Comprehensive Value Proposition
So, how can you initiate value proposition design?
How you design an effective value proposition for your customers is aimed to largely assist them with their decision to purchase from your brand or not. What you need to do is to focus on a more realistic snapshot of their approach to purchasing your products or services. This, in turn, needs to be aligned to your overall strategy.
Other than that, a customer value proposition is also about what is important or unimportant to your clients. For example, if they feel that they are happy to pay more for a premium service or product, they will. Or else, the general tendency may be to bypass these premium offerings for more products and services that are available at a more reasonable price tag.
This is possibly how you can define a customer value proposition in action. The key is to allow customer reactions to drive your strategies and offerings.
This gives you a more robust understanding of what each of your customers can provide, an even clearer view of the value of your business, plus the potential opportunities to increase value going forward.
Customer Value Proposition That Accelerates Business Growth
As a business selling products and services, customers are the very foundation of existence and success. Given that there are many other vendors competing for the same customers, a company that is able to identify customer needs properly and meet them, will succeed.
There is no such thing as an average customer. And businesses need to understand that.
Customers are central to every stage of the marketing process, and their buying habits are influenced by factors such as culture and the media. In addition to that, businesses need to concentrate on designing an effective customer value proposition that drives growth.
You may adopt the following strategies:
Customer Market Segmentation: It is essential for businesses to consider and be focused on the distinctive requirements, wants, and preferences of each individual market by smartly managing the demographic groups as opposed to concentrating on channels or products. By targeting your customer value proposition to suit the needs of key consumer segments, businesses will be able to attract a larger section of the market.
Laser Focus: Businesses are able to enhance their perceived value by sharpening and narrowing their customer segments. Customers tend to feel more appreciated by businesses when they observe the effort that the brand has put into building market segments that are based on, for example, gender or age specific groups.
Customer Views at an Atomic Level: It is not enough that value proposition design is based just on the foundation of simple segmentation. The demands of the modern day customer are for personalised and tailormade offerings. And only those brands that are clever enough to make use of technology to access an atomic level overview of each individual lead will be able to deliver products and services according to what customers expect in the future.
Analytics that is Actionable: Marketers should be equipped to respond to any changing customer behaviour and be ready to instantaneously adapt their value proposition to match it. This may also translate into understanding the customer and their needs on a more granular level. It may also imply that by responding to these pointers, the business is dedicated to ensuring customer retention.
Ability to React to Customer Demands and Trends: Customer evolution, just like products, is part of the overall process. Forecasting trends, understanding shifts in consumer behaviour and adapting to the ever-changing requirements to incorporate a wider customer segment creates that broader growth opportunity. The key lies in adapting to these shifts and reacting to customer demands in a timelier fashion.
Personalise Your Customer Value Proposition
A meagre 6% of global marketers confess to having excellent knowledge of their customers, says a CMO Council Study from 2008.
You have to know your customers before you start to create your unique customer value proposition. Begin with developing buyer personas. This helps to zero in on your niche target audience and assess what they want out of your business as customers.
The more detailed your personas are, the better. To picture your protagonist, always start with research. Your research surveys should include questions that help you understand why a prospect or customer is interested in your services.
Here is a customer value proposition example from the hospitality sector.
You wish to take a holiday in Goa and have gone to a vacation booking website to reserve a hotel. When you run a search with your parameters like date, beachfront location in Goa, etc., the website returns 50 results.
You browse through the results but are extremely confused about which hotel to opt for. You send a message to the vacation booking website seeking assistance with your purchase. As soon as the message is sent, the customer finds himself talking directly with an agent.
Since you are an existing customer, the agent is able to access your past activities and history on their website. That’s all the information that the agent needs to initiate a personalised value proposition design.
The customer will be taking the holiday with his infant daughter, requires a breakfast inclusive rate and a 300 sq. ft. room, among other things. Beach access is also an important parameter in his hotel selection. The agent narrows down the suggestions to two or three hotel options, which will trigger a quick action from the customer’s end. And to seal the deal, he throws in a Rs. 1000 per day meal voucher and 2 pieces of laundry daily. This completely personalised the value proposition for the customer, resulting in a hard sale.
The concept of a customer value proposition is about people. And the very being of the business depends on this sole resource.
Digitization and automation are unquestionably smart business investments. However, the key to creating a value proposition is to understand their customer’s emotional journey that they experience when deciding to purchase a product. The right emotions can only be triggered by the business with the right customer value proposition in place. This, in turn, helps motivate the customer towards closing the purchase.
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Put yourself in your customer’s shoes to optimise your customer value proposition. By embracing insights into what your customers expect of you, the brand will continuously accelerate business growth and align organisational evolution in line with customer expectations.
In the end, those who dig deep and develop a more intricate understanding of their customers will win the race.
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What is a customer value proposition?
To ensure effective marketing for your products and services, you need to have a robust customer value proposition. The value proposition can be developed taking into account consumer intelligence, competition insights along with the valuation of the product. A well thought out customer proposition that provides a precise and statement that supports the offering’s value.
What should be the core of your value proposition?
Your competitive edge should form the core of your customer value proposition. It should be able to clearly show your customers why they should buy from your brand rather than your competition. As long as your offering is unique, you will be able to outperform your competition ensuring that your customer value proposition is a standout.
How do you write a value statement for a product?
The manner in which you formulate your customer value proposition will depend a lot on how your structure the statement. Towards that you first need to identify the key advantages that your offering provides. Follow that up with a description of each and every benefit. Detect your customer main points and link your value proposition statement with the core areas. Lastly, differentiate your brand as the best provider of this value proposition.