What is a Value Proposition and why do I need one?
If you are in business, like me, there is hardly a day that goes by that you don’t hear someone talking about a value proposition.
But what is a value proposition?
The Wikipedia definition is as follows: “A value proposition is a promise of value to be delivered, communicated, and acknowledged.” It then goes onto say that; “Developing a value proposition is based on a review and analysis of the benefits, costs, and value that an organisation can deliver to its customers, prospective customers.”
However, the definition I prefer was provided to me a number of years ago, by a friend and colleague:
A value proposition is a proposition to which your target market will want to say ‘yes’.
A couple of aspects, in particular, appealed to me about this definition:
A value proposition is not about what you do, it is about what the client gets.
A value proposition is not aimed at the whole world but your target market.
These insights prompt two important questions:
Who are your target clients?
To what are your target clients wanting to say ‘yes’?
Who are your target clients?
This is one of the most important and, yet, misunderstood questions I have encountered, over many years in my role as a business strategist. Many clients resist the concept telling me that they work for a broad range of clients. This type of comment shows they do not understand the difference between ‘target’ and ‘accept’.
Think about a lioness hiding in the tall grass. She sees a heard of wildebeest a couple of hundred metres away. Would she accept any of them? I would guess so. But is that the way she hunts? Absolutely not. Why? Because she has learned that chasing any and all will mean she is more likely to go hungry. Instead she focuses on one animal and chases that.
The lesson is, if you attempt to appeal to everyone you are likely to appeal to no one.
Who are the clients you want to attract more of, the ones that you can add maximum value to and whom are profitable to you? Which clients are in your ‘sweet spot’?
Once you know, you are in a position to develop a deeper understanding of what is. Important to your target clients and understand to what they will want to say ‘yes’.
To what are your target clients wanting to say ‘yes’?
Clients will want to say ‘yes’ to something that helps them solve a problem or enables them to capture an opportunity. In other words, anything that enables them to better address their challenges.
So, what challenges do you address? Clients are not interested in your services (what you do), no matter how wonderful you think they are, they want to know what they get. How will they be better off after engaging you?
Do you know the key challenges your clients face? The results of the recent NAB survey* would suggest that there is a gap between what many accountants think their SME clients want and what their SME clients actually say they want. My key takeout from this survey, if it could be summarised in a single statement, is; In order to succeed in the future, it will be critical for accountants to better understand what their business clients really want.
Developing the skills to understand client challenges – their real needs and wants – is often a challenge for accountants seeking to move into SME advisory services. Many are stuck in the ‘expert mode’ and experts depend on ‘knowing’. If you believe you know then you are not hearing what clients are really telling you. This reminds me of the quote “our biggest blind spots occur where we are most confident we are right”.
Why is a value proposition important?
A value proposition is, quite simply, the foundation stone for the entire business. Everything else you do stems from a clear value proposition – it should pervade every part of your business. It dictates the look and feel of your business, how you communicate with your clients, the services you provide, the people you hire, how you use technology and so on.
A good value proposition is more than a tag line, it should ‘speak’ directly to your target market and pique their interest in you. It should be a strong attractor.
Do you have a clear and compelling value proposition? Could you improve your business outcomes by developing a clear value proposition?
Do your clients have a clear and compelling value proposition? Is this an opportunity for you to assist your clients?
* In the first quarter of the 2018 calendar year NAB released the results of their research into the accounting profession and SME market. The report is titled “Key Insights into the Australian Accounting Industry”. This report will the subject of my next blog.
Warwick Cavell is a thought leader in communicating for results and strategy implementation. For over 25 years, he has helped leaders improve business performance by changing the way people communicate and work to solve problems – both internally and with their clients. He is a highly respected facilitator, coach, speaker and trainer, and author of regular blogs.
