We hear it all the time. Businesses are constantly trying to enhance and market the value their products or services provide customers. For both new and established businesses, having a clearly defined and easily understood value proposition is not only the ‘price of entry’, but can also be a powerful source of competitive differentiation.
To start, I’d like to define the term ‘value proposition’. Osterwalder defines value proposition as something that solves a customer problem or satisfies a customer need. Some VPs may be innovative and represent a new or disruptive offer. Others may be similar to existing offerings with differing features or attributes. When starting to think about your VP, here are a few questions that might help kick-start the conversation:
- What value do we deliver to the customer?
- Which one of our customer’s problems are we helping solve?
- Which customer needs are we satisfying?
- What bundles of products and services are we offering to each customer segment?
To be more specific, here are a few elements that can contribute to customer value creation:
- Newness: some VPs satisfy and entirely new set of needs the customer does not know exist because there isn’t any similar offering in the market. Cell phones, for instance, created a whole new industry around mobile telecommunications.
- Customization: tailoring products to address the specific needs of a customer segment creates value.
- Design: an important yet difficult element to measure – but we’ve seen it done really well (i.e., Apple).
- Accessibility: making products and services available to customers who previously lacked access to them is another source of value. The pervasiveness of mobile technology has made accessibility a ‘must have’ for businesses. Businesses must meet their customers where they are.
This list certainly isn’t meant to be exhaustive, but I hope it provides some guidance for those looking to define / re-define their value proposition. The next post on #Business Model Generation will focus on Channels. Stay tuned!
