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Home arrow Marketing arrow Value-ology: Aligning sales and marketing to shape and deliver profitable customer value propositions

Value Propositions: So What Are They?

In this chapter we will look at:

  • • What a value proposition is, and is not
  • • The different levels and types of value propositions
  • • Why a value proposition approach is important to the growth of your company
  • • Providing the important first step for effectively implementing a value proposition approach for your customers and your company
  • • A process for developing value propositions
  • • Creating a ‘golden thread’ from market level to individual Customer Value Propositions (CVPs)

So far we have seen that the concept of value is difficult to pin down and contentious. It’s a word that means different things to different people. For that reason it’s important for your organisation to take time to establish a definition that works for the company and its customers.

The definition of value that we will be moving forward with is the one we outlined in Chap. 1:

Value = perceived relevant and distinct benefit — total cost of ownership

Hopefully you will already have found the tools we gave you to establish ‘base camp’ in your journey to implement a more effective value-based approach to marketing and selling.

© The Author(s) 2017 S. Kelly et al., Value-ology,

DOI 10.1007/978-3-319-45626-3_2

With this in mind, we can turn our attention to a concept that can be equally contentious: value propositions. We thought a story would best illustrate this.

A friend of ours worked for a large tech company in the USA that was acquiring a similar sized company. The chief marketing officer (CMO) position was given to someone from the acquired company who was based on the other side of the country. After a few weeks, the CMO called an ‘emergency’ value proposition session for a selection of the Vice-Presidents, Directors and Managers in the marketing team, who were told to fly in over the weekend. The purpose of the meeting was not made entirely clear; it seemed to be about deciding what the value proposition of the newly united company was.

Surprise number one was that the CMO did not take part in the whole session, just flitting in and out between other calendar appointments. The task of doing the pre-work for developing the joint company value proposition and presenting it to the broader team had fallen to a couple of managers from the acquired company.

What quickly became apparent was the complete absence of customer value in the work that was being presented. It was all about the combined assets of the company and the ‘features’ that those assets could provide for customers. Even the people from the acquiring company were talking past each other because they had completely different views of value, depending how close to the customer they were.

A fruitless, frustrating day was spent trying to help refine these capability statements and features. Our friend didn’t hang around long in the new company as the difference between this capabilities, feature-led view of value and their overt customer-centred view did not sit well.

Exercise 1: So what do we take from this? Jot down your thoughts about this scenario; now compare them with ours!

The takeaways:

A common definition. Like value it cannot be taken for granted that when you hear the term ‘value proposition’ that people mean the same thing. We recommend that after you’ve set on a company view of what value means to you and your customers you should nail down a definition for value propositions so you are talking a common language—not past each other! This becomes a useful tool to use when new hires are brought on board who may come from somewhere where value is viewed in a different way, or not at all. It’s clearly very important for mergers and acquisitions to ensure things get off on the right footing. We will look at definitions of value propositions later in the chapter, and will give you tools to help develop value propositions. We will give you the definition we use, so you can carry it through the rest of the book.

Preparation is key. We also think there is a lesson about who should be involved, and what preparation you need to undertake before you call together a session to develop value propositions. Involving customers, in the shape of researching their needs, is something we will discuss more in Chap. 4. We see this as preparation 101. We are also big advocates in heavily involving sales in this process. In business-to-business (B2B) they are the people who are out with the customer, way more often than marketers. How marketing and sales can effectively work together to develop value propositions is the focus of Chap. 9.

It starts at the top. There is also a leadership issue here regarding how involved the CMO should be in this process. We believe that they have to be seen to be taking clear ownership for the value proposition approach and ensuring they involve other stakeholders in the process. Quite how this should be done, and the capabilities required for marketing leadership, are for another book.

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