It is the value that businesses provide that allows them to remain in business. The value that a business provides is what customers choose to pay for. Customers are prepared to give something that they have, usually time or money, in exchange for something that the business provides.
It is a simple concept, but often so simple that too many businesses don’t understand and review their value proposition. They haven’t spent enough time and research understanding how and where they provide value to their customers.
A business’s value proposition can’t be fixed. Value is contextual as things change around us, so the relative value of things will also change. The internet has been one of the most significant change agents as far as businesses are concerned. The value that once was provided by things like the Radio Times and the video hire company Blockbuster has been superseded by online listings and video streaming. In the global crash of the last few years many businesses have seen their value position plummet in the hierarchy of all of the choices their clients could make. For some businesses it has brought their particular value proposition into a better position. I believe that high quality ready meals are more popular than ever, probably replacing the option of eating out.
It is important for businesses to be able to clearly and concisely state their value proposition, to themselves if not to their clients. Understanding that value proposition will be the major criterion against which many decisions will need to be weighed. Being able to judge whether a certain action will add to, or detract from your value proposition is a major factor in maintaining success.
I have noticed many stores now expect customers to navigate self service checkouts, that many retailers are reducing their opening hours. Some of my local motor retailers are closed on a Sunday, and their owners are wondering why people are flocking to the internet. If I am going to have no human interaction I might as well buy on line when at least I can do it at a time that suits me without a machine squawking commands at me.
So what is your value proposition? Where do you score?
Remember value has very little to do with price. Some of the highest priced businesses are able to charge high prices simply because they absolutely understand their value proposition and are extraordinarily single minded in their focus. As Jeffery Gitomer once wrote, “Differentiate with value, or die with price.”