WATCH: Creating Strong Value Propositions

Transcription:
Hi, and welcome back to the ACE video series. I’m going to talk to you about creating strong value propositions. As I’m sure you’re aware, having a product needs a strong value proposition to truly prove its value within the marketplace. Right?

So creating products, putting products out there and launching products in the market, we need to be sure that we have a strong value proposition. So that any people or any target segment that we’re looking to purchase our product. Understands how it solves any problem, issue or need that they may have.

So let’s jump into the definition when we look at value propositions. A value proposition defines the need and proves the benefit of the product to a targeted customer or customers within a particular target segment. The important piece here is that we need to be sure that we are identifying the needs, the problem, the issues of particular target segments.

Therefore, we can create a strong value prop that speaks directly to that segment when we’re looking to launch our products and create products for the market. Therefore, if you’re following me here, we may have one product that could have multiple value propositions based on different target segments.

We don’t want to go out there with our product and say it does all these things. And not speak particularly to those target segments, because then we leave it up to them to try to find out what the real value is to them. We want to have strong value propositions that say, here are your needs. Here are the issues here, the problems we’ve uncovered. Here’s how this product solves it.

And it may be different for different, different target segments, I’ll throw out now, that if we look from a B2B perspective, we would look at some areas that we may look to increase. Right what are some of the value or some of the things that we could be looking for from an economic proof perspective? Even one of them may be it improves revenue by maybe this percentage or this amount or this dollar amount. You could save time, but maybe minutes or hours or days or also could be a percentage as well. It improves operating efficiencies. How does it do this? By what percentage? Maybe it enables more rapid decision-making, right?

Allowing this and this to happen allowing to cut down process time by this percentage. Any of these can be utilized from a B2B perspective. So these are some of the things we may look and see. And this list could go on. There could be others as well. But the next question I will have for you is, do emotions impact your willingness to pay? Do emotions have a part in a value prop as well? I would argue that, yes, they do. Maybe more so in the consumer or in the customer world. We may be played on from an emotional perspective. But I also argue that in a B2B world, that’s important as well, maybe. How are you seen in front of your boss? Are you able to get home in time from your job based on a B2B tool to make a child soccer game or make any athletic event for one of your children, or be home in time for dinner with your spouse? All of these things could play a part.

I’d like to go through an example with you and give you a real-life experience related to a product and a value proposition. Fourteen years ago, my daughter was born. My daughter was born in a situation where she wasn’t in good shape when she was first born, and she needed to spend three weeks in the natal intensive care unit. I remember 14 years ago; I used to walk into the room where she was with many other babies, and there were beeps and buzzes and all the different things going on.

I’d have to scrub my hands. And put on all the gear before I walked in, and I would sit with her and she had wires all over her. And different monitors were doing different things at different times. Over time, I got used to going into that room and understanding what these different readings should be. What was her heart rate supposed to look like? What was the oxygen level supposed to look like? Where should the different readings on different charts be? And over time, I became more comfortable knowing that one beep. I needed to get a nurse a different beep. I didn’t have to worry about it.

Maybe something was detached that was on her little body. Well, then the day came when we got to go home. I got to leave the hospital and take my baby home with me. But that’s when the fear set in. I get back home, and I put her in her little bassinet. And then I wonder what her oxygen level and heart rate are. And I started panicking. How am I supposed to raise a baby if I don’t know all these things?

This was my first child, so I didn’t understand what my mother later taught me: that babies are durable and will be OK. But all my mind knew was that I needed to know what these rates and all these different things were for me to successfully raise my child. If at that time. This product you see here was available, I will tell you right now that I would have paid thousands upon thousands for this product from an emotional perspective, for peace of mind perspective, for me to feel great about making sure I’m the best parent I can be. I would have done this. That’s how emotions can play a part here.

Now, this product retails for only a few dollars. But at that time, I’m telling you, I would have paid thousands because, emotionally, that was something I was looking for. I’m sure you could also think of something that emotionally plays a part with a ticket sale for a concert, maybe a pair of shoes, a watch, one person would look at it and say, I’d never spend that much. Another person looks at it and says, oh, I would spend twice as much as that. All of this plays a part in value. And as I mentioned just a second ago, it also plays a part in the price. And when we look at price and value, if we’re truly pricing our products based on the value that we’re adding value-based pricing, then we know that we’re getting the best price for it. Right here we read.

Value is the intersection between customer benefits and the price they are willing to pay.

So what does that intersection look like? Therefore, putting that on its side, the more value we can prove within our product, the stronger the value proposition. Likely the better price we can put on our product when we put it out in the market.

We also like to say price becomes relevant in the absence of value. So people argue about the price. They say I want a lower price. We’ve got to cut the price all the time. And I always ask them, are you proving the strong value proposition first? Do they understand a product’s value before understanding what that price is? Often the answer is no. They’re walking in telling you what a product is, and then they’re saying, cut the price. One way to avoid that or to help to minimize that objection is to create a strong value proposition along the way to help to maybe minimize some of that pricing objections. So what have we covered here today? We took a look at value propositions. What do they do? They provide a benefit or benefit based on target segment needs, focusing on particular target segments, understanding them in detail segments, not big and broad, and allowing them to or making them, for that matter, making them find what the benefit is, cutting down to be specific target segments and speak directly to them and how this particular product or solution meets their needs.

Emotions play a part, whether it’s B2C, B2B, or whatever it may be. Emotions will play a part in this product. So try to understand the needs of your target segments so that you can leverage that when creating strong value propositions. And lastly, better value is an often better price.

Value-based pricing will also allow us to match the value with the price.