Guest Post by Stephan Liozu
Are you able to clearly articulate the value proposition for your strategy, your business model, or your products and services? Can you recite in one quick minute this value proposition, and two or three value drivers that illustrate its power and monetized value? If you are a business leader in the trenches or an multi-tasking entrepreneur, chances are that you have not gone through the exercise and are not ready for it.
I was recently participating in a top management conversation at a fairly large high tech start up and I asked people around the room if they were able to articulate the business model value proposition and their critical value drivers. The question took them by surprise and generated some interesting internal discussions. The original thought was to have a pricing discussion but it quickly turned into a discussion on business model fundamentals and the business overall value proposition. The conversation uncovered internal disagreements, some frustration among the various executives, and a real need to take a step back and reflect.
Case closed! How can one have a creative and constructive discussion on pricing models without have a clear idea of what your business model is all about and what types of differentiating features you bring to your customers? This is fundamental exercise that every marketing manager, business manager, innovator, and entrepreneur should go through to create a crisp value story that will create excitement and interest for customer, investors and partners.
The overall value proposition needs to reflect the main differentiating dimensions of your business model or product/service. It needs to short and crisp and resonate with customers by using the vocabulary they are using. Then based on this crisp statement, you can extract a maximum of three value drivers from your offering. Focus on value drivers that are tangible and measurable but also that are the most relevant for your customers. In other words, focus on the bang for the buck. Finally, for these three value drivers, you need to calculate and extract the monetized value i.e. the financial benefits you will bring to your customers. These are typically cost savings or incremental revenues.
Here is an example of how it might look:
The value proposition for (PRODUCT) is to bring quality peace-of-mind to flooring
installers in need of installation success whatever job site conditions.
Our products reduce installation time by (X%), provide (Y%) more coverage
per bag and come with a 100% warranty for XZ years.
Installers save an average of ($XX) per installed square foot
whatever the conditions of the job site are.
Do not get me wrong! This is very difficult exercise but a very worthy one. It gets even more complicated when you consider a business model or an entire corporate strategy. But imagine the power of having an army of marketers and merchants being able to all recite the same value proposition and promote the same value drivers for a business model or a product or service.
If you are an entrepreneur or an inventor in search of funding, you need to go through this exercise and practice the speech. Bankers and investors will need to hear the differentiating power of your idea, concept or proposal. They need to see that you have confidence in your value proposition, your value drivers and that you have gone through the exercise of monetizing your differential economic value. That is the rational discussion they will need to have with you. Keep it short though. Simpler is better!
One way to be able to build this one minute elevator speech is to use the Economic Value Estimation® process which is now available in the LeveragePoint value-based pricing platform. The platform provides you with everything you need to prepare the content of your elevator speech. Then you need to write something powerful and practice it.
There has never been a better time to pay attention to value. Be bold! Join the value-based revolution.
Stephan Liozu is President & CEO of Ardex Americas (www.stephanliozu.com), an innovative and high-performance building-materials company located in Pittsburgh, PA. He is also a PhD candidate in Management at Case Western Reserve University and can be reached at sliozu@case.edu.
