Discussion 1
Module at a glance
Intro – What is a Customer Value Proposition
Defining Customer Value
Types of Value Propositions
Elements of effective and ineffective CVPs (analysis of Value Propositions).
Analysis of Customer Value Propositions: Students research and analyze a series of Value Propositions (includes recognizing weak Value Propositions and transforming these to effective value propositions
Tools and techniques for building a CVP
Designing Value Propositions: Researching, evaluating and writing CVP’s
Learning Objectives
Understand the value of having a Customer Value Proposition (CVP); illustrated by examples of real-world Companies across a variety of business settings
Introduce the key elements of researching, analyzing and writing Value Propositions
Recognize what a CVP is and is not;
Acquire the tools and techniques for writing effective Value Propositions
Enhance problem-solving skills by offering an approach and set of analytical tools (e.g. concepts, frameworks, templates) for creating Value Propositions
Enhance written and oral communication skills; while improving the ability to work effectively in team and collaborative situations
Fundamentals of Customer Value
Customer Value
Mohan Sawhney on Customer Value
Author & Professor, Kellogg School of Management, Feb 3, 2010.
Video: 4:22 min
Prof. Mohan Sawhney is a globally recognized scholar, teacher, consultant and speaker in business innovation, modern marketing and enterprise analytics. Business Week named him one of the 25 most influential people in e-Business. He is also a Fellow of the World Economic Forum. He advises and speaks to Global 2000 firms and governments worldwide and his consulting clients include most of Fortune 100 companies. Prof. Sawhney has authored seven management books: his most recent book, The Sentient Enterprise: The Evolution of Business Decision Making, was published in October 2017 and was on the WSJ bestseller list. He holds a Ph.D. in Marketing from the Wharton School of the University of Pennsylvania.
“You must understand what the end customer wants as it will not be possible for you to transform yourself until you understand how your customer is being transformed and being disrupted.”
Mohan Sawhney. Opening Keynote,
Edge 2017, August 14, 2017. https://www.arnnet.com.au/article/625940/edge-2017-may-live-interesting-times/
What is Customer Value?
Value is customer-defined
The first lesson on value is that what you sell (products and services) is not what your customers buy (utility and value).
Value is about Outcomes
To understand how customers define value, you must focus on the outcomes that customers want when they buy and use your products.
Value is contextual
Value is multidimensional
Value is a trade-off
Total benefits that customers get vs total costs they incur
Value is relative
Based on the next-best alternative
“What the business thinks it produces is not of first importance. ... What the customer thinks he is buying, what he considers value, is decisive. And what the customer buys and considers value is never a product. It is always utility, that is, what a product does for him.”
Peter Drucker,
Patriarch of Management Theory
“In the factories, we make cosmetics. In the department stores, we sell hope.”
Charles Revson, Founder of Revlon
Article: Fundamentals of Customer Value, Mohanbir Sawhney, Kellogg School of Management.
https://mthink.com/legacy/www.crmproject.com/content/pdf/CRM4_wp_sawhney.pdf
Why is customer VALUE important?
Customers want value, not products
Companies that deliver value grow faster
Companies that deliver value to their customers enjoy a competitive edge in the market
Value has strategic importance for a company as every touchpoint or interaction a customer has with that company, its products, services impacts value – i.e., promotes – adds to, detracts from.
Managing customer value is essential in today’s information-based, big-data, service-now economy -- in fact, it can be the game-changer
What is a Customer Value Proposition
A value proposition is a promise of value to be delivered.
It’s the main reason a prospect should buy from you
(and not from your competitor)
HubSpot Infographic: How to Write a Great Value Proposition [Infographic], Lindsay Kolowich, June 5, 2018
Customer Value Proposition Defined
Mohan Sawhney, Kellogg School of Management,
Feb 3, 2010. 5:19 min
VIDEO
Creating Customer Value
Creating value is about getting the customer experience right.
Business strategy and customer experience: A CEO’s Perspective.
PwC, March 31, 2016 (2:14 Min)
Delivering unique, personalized experiences
“Serving customers is about value – wanting it, creating it, exchanging it – always has been.”
CX = Customer Value = Growth
VIDEO
Creating Customer Value – Intuit CEO
Brad Smith, CEO, Intuit, talks about Intuit's journey and it's innovative approach to creating customer value. Sept, 2014, 3:12 min
VIDEO
CORE COMPETENCIES:
Customer-driven innovation
Design for delight (rapid experimentation (prototypes)
Customer Value Proposition
Part of a firm’s business model
An element of strategy
A reflection of the value a firm offers its customers
A carefully crafted marketing message
Communicates a clear point of differentiation
Value propositions have five fundamental elements:
Appeal – I want this
Exclusivity – I can only get this from you
Clarity – I understand this
Credibility – I believe you
Proof
Michael Porter’s Model
Which customers?
Which needs?
What relative price?
WHAT END USERS AND CHANNELS?
WHICH PRODUCTS, SERVICES, FEATURES?
PREMIUM OR DISCOUNT?
A value proposition answers these there questions:
A Value Proposition is not…
Is not a slogan
Is not a catch phrase
Is not a tagline
Is not a positioning statement
Is not a list of features and benefits
Is not product-centric
Is not an elevator pitch
Benefits of a compelling Value Proposition
Provides customers a reason why they should buy from you!
Provides customers an immediate understanding of what your company has to offer – i.e., value to the customer
Differentiates the Company/Product from the competition
Funnels the right customers to your company – attracts the ideal customer to your business
It envisions the customer experience
Perspective on Value
Kevin Keller discussed the concept of points of parity versus points of difference in his article for Harvard Business Review, “Three Questions You Need to Ask About Your Brand.” He used it with respect to brand positioning, product development, and brand extensions.
Points of Parity (POPs): These are the features you offer that are important to your prospects that you also share with your competitors. Most marketers spend their time here, loudly trumpeting how they can do what their competitors do too, only *better*! That’s a strategy to fail.
Points of Difference (PODs): Here’s where you can win the game. These are the features that are important to your prospects and not available from your competitors.
Points of Irrelevance (POIs): You may have spent a lot of effort developing great features, but if nobody wants them, you should kill them.
Source: Three Questions You Need to Ask About Your Brand, Kevin Lane Keller, Brian Sternthal, and Alice Tybout, HBR, September 2002.
Driving Customer Value – Caterpillar
Caterpillar Defines Customer Value
Video: Caterpillar's Director of IoT on improving the value proposition for customers (4 min)
VIDEO
Article: Smart Iron - How Caterpillar is Leveraging Data to Maximize Customer Experience, Quick Base, Blog, January 17, 2017. https://www.quickbase.com/blog/smart-iron-how-caterpillar-is-leveraging-data-to-maximize-customer-experience
“Our vision is that by enhancing our Cat Connect Technology and Services offerings, entire fleets and worksites – every machine, engine, truck, light tower, smart device, and drone – will eventually share data on one common Caterpillar technology platform and speak the same language. Today we have over 500,000 connected assets, making it the largest connected industrial fleet in the world.”
Value Proposition Examples
Article: 7 of the Best Value Proposition Examples We’ve Ever Seen
By Dan Shewan, WordStream, April 13, 2018
https://www.wordstream.com/blog/ws/2016/04/27/value-proposition-examples
Apple iPhone – The Experience IS the Product
Value Proposition Examples
32 of the BEST Value Propositions (Plus How to Write Your Own)
Hyperlink to article…
Scroll through and select illustrative examples
https://optinmonster.com/32-value-propositions-that-are-impossible-to-resist/