Suppose you and I are out for burgers at a favourite local place. Where do you imagine we’ll go? Fast food? A casual café? A gourmet restaurant? Each will sell us a burger, but each will deliver a different sense of value.
Which of those three lunch experiences offers the best value? It depends.
Value isn’t about price.
Every marketer thinks long and hard about their ‘value proposition’—the offer their brand makes in exchange for your hard-earned pocket money. Think of a value proposition as a formula—a group of factors that together justify exchanging a particular amount of money for a particular product experience.
Value is in the eye of the beholder. Learn what your customers value, and you’ll see the path to a scalable enterprise.
Suppose the fast food franchise in question was McDonald’s. Their value proposition is built on four equally important pillars: they’re fast, consistent, family-friendly, and affordable. In the McDonald’s case, price is important, but it’s not the whole story: Speed is a big factor—you get your Big Mac in less than two minutes. Consistency is incredible—that Big Mac is the same in London as in Vancouver, or Tokyo, or Paris. And your kids get a toy with their Happy Meal!
Contrast that with a high-end steak house, with locally sourced, top quality beef, white linen service, gourmet sides, and a high price. That’s very different. Low price is much less of an issue—you’re paying for the white glove service. Sourcing and preparation are vital—each burger is presented not just as sustenance but as a story. You’ll pay more, because you’ll receive more, but the ‘more’ isn’t just about tangible product. It’s about a broader experience.
Which offers the better value? Again, it depends. Different customers will find one more valuable than the other depending on the experience they’re looking for, or expecting. The better you can anticipate and meet your customer’s expectation of an experience, the more value they will see in your ‘burger’—or whatever it is you really sell.
How should you define the ‘value’ you offer?
There are five key factors to consider, when you’re defining your value proposition.
What are your customers really buying? Or, if you’re in the social sector, why are your donors really giving? The only way to answer this is to ask them—ideally through customer interviews, which provide much richer information than surveys. Startups are coached through ‘customer validation’: they’re tasked to meet with potential customers and ask them open-ended questions about why they buy. Effective brands never stop asking and learning: customer validation is a vital aspect of any marketer’s (or fundraiser’s) job.
Functional benefits and emotional benefits are complementary parts of a value proposition. The common ground between them is the essence of the ‘brand promise’—the brand’s commitment to its customers.
What functional benefits do they achieve? Every purchase (or donation) solves a pain or delivers a gain for the customer (or donor). Understanding the diversity of ‘pains’ and ‘gains’ is essential. Or put another way, if you don’t know what problem your customer is trying to solve, or what opportunity they’re trying to seize, you can’t really understand why they buy (or give).
What emotional benefits do they achieve? This is different. Whereas functional benefits solve a real issue, emotional benefits meet customers’ desires for something less tangible—a sense of belonging, perhaps, or a purpose that’s bigger than themselves. [The high-end steak house mentioned above may include the emotional benefit of ‘feeling good about supporting local farmers’ as part of their value proposition; conversely, McDonald’s may include a sentimental attachment to childhood in their brand.]
What do you deliver that others cannot? Every organization has competitors. In contemporary, socially responsible business, we like to see them as peers or potential collaborators, but if customers have limited resources (and they always do) then there is real competition to earn a customer. Leading brands know what they can do that others can’t.
What’s your minimum viable transaction? Here’s a fabulous thought exercise to help you define your value proposition…. First, an example: Picture your favourite local burger joint. Now imagine the smallest possible version of it…. Might it be a simple podium in a shopping mall, from behind which a smiling server hands you a paper-wrapped burger dressed just to your liking? Would this still be your burger place?
If you can define the simplest possible expression of the customer experience you deliver, that’s a great way to analyze your value proposition. Every successful brand, regardless of the sector they occupy, must be able to communicate, replicate and scale the delivery of their value proposition from a place of understanding this minimum, or ‘core,’ customer experience.
How do you put your value proposition in action?
Start with a deep understanding of customer expectations and needs. Add a clear articulation of your functional and emotional benefits. Then look for the common ground between them. The rubber hits the road where your customers’ needs are met—or exceeded—by your ability to keep your promise about the benefits they’ll enjoy. In other words, your ability to deliver value is tied to your ability to make a promise you can keep, to people who care about what you have to offer.
Mike Rowlands is President & CEO at Junxion. Get in touch with us to learn more about our TrustBrand approach, and how we’ve helped enterprises like yours to define and deliver a distinct value proposition.