Factfile 17
Articulating value
There are two components to the communication of value to the customer ? the value statement and the value proposition.
The value statement describes the impact that an organisation can have on the market or on an industry segment. It is a general statement of intent that is applicable to the customer?s business. The value statement is used to position the company to its clients and generate interest and takes the following form, for example:
[Customer] will be able to [improve what] through the ability to [do what] as a result of [what enabler, technology and/or service.]
The value proposition is a customer specific proposal, usually using a value statement as a starting point, that is quantifiable in both value returned to the customer and revenue to the organisation. It is a clear statement of the value the company brings to a particular client and answers the questions:
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How much value (financial benefit to the customer)?
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How soon can the value be realised (timing)?
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How sure is the value (risk)?
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How will the value be measured (value return)?
The value proposition takes the following form:
[Customer] will be able to [improve what] by [how much and/or what percentage] through the ability to [do what] as a result of [what enabler, technology and/or service] for [what total cost ? tangible and intangible]. By [time factor] the company will be able to demonstrate the delivery of value by [a specific, quantifiable measure].
The strongest value propositions should therefore have at their core a financial linkage from an initiative to a measurable improvement in the business ? especially around critical issues.
The more tangible and specific your value proposition, the better the chance of success. The key to a successful value proposition is when our value proposition is greater than either the customer?s own or the competitions.
Quantifying proposition value
Organisations can no longer rely on perceived value to win contracts. If they can quantify value, they will be better positioned to command premium margins based on value, rather than based on cost or competitors' prices.
And they can avoid ?impact gaps? which arise if the value expected by the customer is not realised.
Throughout the sales cycle, the value of the business issue and the service offer must be continually quantified - and the customer must believe in and own the value proposition. It is important to get the customer to understand the financial impact of his problem.
The customer is more likely to quantify pain early in the sales cycle. If the customer can be kept focused on a clear statement of net value, the higher the success rate and revenue will be. This is known as the Economic Value Equation.
Sources of value include:
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Quality levels
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Customer satisfaction levels
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Productivity of assets, people and capital
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Employee satisfaction ? turnover
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Headcount reduction
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Financial measures ? ROI
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New revenue streams
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Expense reduction
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Market share
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Reducing risk
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Timeliness of getting product to market
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Variety and quality of products
Examples of BT Propositions can be seen by clicking here.