Organisations I have worked with have used the term “Value Proposition” with different emphases. Some focus on the “why us?” aspects – you should buy your widget products or your widget maintenance services from us because we are, for example, cheaper, faster, certified, more reliable, etc. Others focus on the product and service portfolio – what we offer[1]. Clearly these are not completely separate categories and the value received by the customer will always be a mix of the portfolio and the broader characteristics. In this section though we focus more on the broader characteristics than the product and service portfolio (although that portfolio is always more or less implied).
In articulating a “value proposition”, three assertions should be considered:
- A proposition has an identified target customer base
Nothing is ‘inherently valuable’: there has to be a customer who wants it enough to pay for it.
Not all customers have the same needs
- A proposition appeals to an accepted metric of value.
It must relate to something the customer already perceives as valuable (or can be persuaded to perceive as valuable). Value is a social convention. It can be influenced.
Perception is reality – if the customers do not (literally) buy into your value proposition, then your proposition is not valuable to them and hence not valuable.
“Honey, I found you the cheapest cardiologist in town” – Is not a good value proposition for most of the target audience. In terms of Value Configurations, a cardiologist would be a specialist Value Shop and typically “compete” by reputation, not price.
- A proposition is substantive
It is not a slogan, brand or concept. It is something that can be pursued to contract (and delivered) with no surprises. It’s not enough to give the client a warm feeling – we have to be able to agree Conditions of Satisfaction and then deliver against them.
[1] There is a third minor usage – the “value proposition” of the company itself (not just of its products and services). In this case identity, purpose and vision are likely to be more appropriate concepts than value proposition