Just look at the high street; it’s a war zone. Big name retailers such as Game, Peacocks, Barratt’s and Mothercare have all hit the headlines for the wrong reasons over the past few weeks. But there are success stories too, such as Matalan, Majestic Wines, Burberry and Jack Wills.
The key to success is developing a value proposition which resonates with customers. And value, of course, is not the same thing as price. Take the examples of Matalan and Burberry; they are at different ends of the price spectrum, yet each is successful for the same reason – they understand how to add value.
This begs the question: why do so many firms struggle with their value propositions? Amongst the traps commonly encountered when creating value propositions are:
- An all in benefits approach – simply listing all of the benefits an offering might deliver
- A differential benefits approach – the extra benefits conferred over competitors’ products
The problem with both of these approaches is that they may claim advantages for features customers do not want or place emphasis on points of difference which are not valued by customers. Examples of this trap would be:
- car insurance companies including breakdown cover as standard in their premium but not offering a reduction where this is not required
- internet providers bundling routers as part of a package but not offering a discount where this is not needed
The challenge for suppliers is to achieve a resonating focus by making their offering superior on the points which really matter to customers. Then they need to communicate it in a way which demonstrates understanding of customers’ priorities.
Zen Internet is a great example of a company which understands its market and has achieved a resonating focus with their customers. Some of the ways they have done this are by having UK-only call centres, very competent technical support staff and fast broadband which is never slowed down (shaped) when a customer uses it heavily. As a consequence they find themselves top of the Which? survey by a considerable margin.
To avoid the customer value proposition traps you need to get inside the mind and behind the eyes of your customer. In doing this, you too can achieve a resonating focus by thinking and seeing the world in exactly the same way as your customer. And a good starting point for this is to commission a customer survey.