Factfile 15
Developing a customer value proposition
The old distinction between a product and a service is essentially a false one in the modern b2b market.
Services tend to be developed into a series of discrete products so that they can be deployed and accounted for while products are often sold on the basis of the service package that surrounds them (customer service and access to information, for example).
The concept of a customer value proposition is used to describe the value of a particular product and service to the customer. A customer value proposition can be developed against this simple checklist:
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Customers:
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Who are the best target customers or segments.
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Theme:
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What is the essence of our offering to them - the central idea behind our product or service.
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Benefits:
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What unique benefits distinguish our proposition from that of our competitors.What additional or secondary benefits help to reinforce this Distinctiveness.
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Pricing:
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What is our relative price positioning in the marketplace.
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Trade Off:
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What will customers not get when they chose us rather than the Competition.
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To be most effective, customer value propositions should be:
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Focused on the customer and articulated in the customer?s language .
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Be stated clearly and unambiguously.
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Be based on a distinct set of differentiators and customer benefits.
Understanding which particular features of a product are seen as adding value in the eyes of the customer is the key to subsequent pricing decisions. And will ensure that the product or service delivers value to your own business as well as the end customer.
The concept of customer preference modelling is used to identify the underlying preferences in the decision making process. This is usually done through a software package, but in essence the idea is built around asking the customer to select between different pairs of brand attributes in order to establish a ranking or quantification between different value preferences.
This allows the b2b marketer to be clear about which preferences drive the purchasing decision for a particular group of customers and then relate them directly to product attributes and delivery channels.