March 2006
Putting the Value back into Value Propositions
The recent article, "Customer Value Propositions in Business Markets," published in the March 2006 "Harvard Business Review" by James C. Anderson, James A. Narus and Wouter van Rossum, has some great insights into how to rework value propositions. Throughout this column, I will share some of the highlights from that article as they relate to CRM software.
Three Types of Value Propositions
There are three kinds of value propositions, the authors observe. The first, "all benefits," is what is also known as the Chinese menu approach to delivering value, which is to overwhelm prospects with the list of features an application has.
What's lacking is the benefit assertion, or how the many features of a software application actually translate into benefits. With so many of the companies that are buying software today looking for guidance through the painful task of redefining processes, vendors who list features look out of touch.
The "all benefits" approach also inadvertently stresses the fact that applications are more comparable than not with competitors. The net result is that the "all benefits" approach is a boil-the-ocean value proposition that invites more comparison and competition rather than distancing it.
The second type of value proposition, "favorable points of difference," focuses on defining a competitive position relative to alternatives. This is tricky to do well; in many software sales cycles, the strongest competitors are homegrown, are legacy systems, and have the option of doing nothing. These homegrown legacy systems and processes are substitutes that prospects hold onto because they're known -- even if the systems and processes to use them are known to be inefficient and costly.
Building value propositions to compete with substitute systems and processes takes strong insight into the value of just exactly what the targeted systems and processes are delivering. Many times, software companies stress personalized service and, when pressed, sales reps say that they themselves and their commitment to the prospect constitute the value proposition. This rarely works.
Instead, it's important to first get a very clear idea of what the favorable points of reference are that keep the inefficient and costly processes in place, the authors suggest. Resorting to price or promises of heightened customer service are often irrelevant to buyers who have functioning substitute systems and processes already in place.
The third type of value proposition the authors mention -- and the most successful in influencing prospects, according to their research -- is "resonating focus." The basis of this type of value proposition is to stress only one or two points of difference between competitive and substitute solutions or products. The one or two points of difference are selected because they represent the highest payoff for prospects.
Bottom Line: What truly differentiates one vendor from the next is not the length of its features list -- it is the insight needed to effectively sell against substitute systems and and processes with proven points of difference in the value they deliver.
Posted by LOUISCOLUMBUS on March 20, 2006 at 03:13 PM in Customer Dialogue | Permalink | Comments (0) | TrackBack
Consumer Community Site Simplifies Business
Sometimes simplicity is right under your nose. Or more likely your teenager’s nose. Photo-sharing site Flickr is used by many throughout the world and has received cult status with the online masses.
But I’ll admit, I never once thought of how to use it in business. Until I saw this posting on the Strategic Public Relations blog, one of my favorite industry blogs. (Plus, I know the guy.)
Check out how the free Flickr service can make marketing a little easier.
http://prblog.typepad.com/strategic_public_relation/2006/02/10_flickr_hacks.html
Posted by DonnaBurns on March 7, 2006 at 04:11 PM in Business Optimization | Permalink | Comments (0) | TrackBack
The Power of Negative Thinking
-- by Tom Nies
We’re all familiar with “The Power of Positive Thinking.” Well, quite frankly, too many people today seem to be practicing just the opposite, saddling themselves with negative thoughts and self-doubts, and seeing only flaws and faults all around them.
This reminds me of someone beginning a climb of the Himalayans. The plains are very low and gentle at first and they become steeper as the air becomes more thin. Finally they become very steep.
Now if you will imagine a big empty knapsack on your back, and each time you have a negative thought such as, “I can’t do this, we don’t have that, if only this, if only that,” you bend over and pick up a pebble and place it in your knapsack. And as you go on walking the gentle slopes, you’re putting more and more rocks from your negative thoughts into your knapsack.
The result is that when the climb becomes steep and the air very thin, when you really need to be able to climb, you already have so much weight pulling you back that you can’t progress any further. You, in the easy going, have destroyed your potential for later on.
Each one of us does it. What we need to do instead, as we walk forward, if we are loaded with a big burden, figure out every way you can (every day) to throw a pebble out of your knapsack. Every five minutes, every 10 minutes, get rid of another pebble, another impediment.
Realize that our greatest agent for progress is each one of us, but we’re also our own greatest liability. We’re our greatest friend, our own worst enemy. In realizing this, decide to be a businessperson, not a sales rep. See the big picture, and prepare your knapsack for the “steep climb” just ahead.
Posted by TomNies on March 6, 2006 at 02:22 PM in Business Transformation | Permalink | Comments (0) | TrackBack
