One of the buzz words in business is “value proposition.”  How many times do people ask, “what is your value proposition?” 

Before defining a value proposition, it is very helpful to think about what your customers value.  In other words, what matters and has value to customers?

Typically, customers find value in having the solutions to their actual problem provided in a way that makes sense at a reasonable price.  Speaking from a procurement perspective, customers often value: 

Tailoring of the solution to their environment so that customers can roll the solution out and, like a piece in a jigsaw puzzle, it just fits snuggly into place without gaps or overlaps.

Quality of the processes and deliverable solution so that the project is relatively painless - the process is smooth, conflict is minimal and quickly resolved, administration of the contract is easy for the parties to do, and the results meet the business needs. 

Responsiveness to the customer’s needs is often valued.  From project to project and customer to customer, the responsiveness that the customer needs can vary a great deal.

Some people try to sell customers on a solution to a situation that the customers do not perceive as a problem.  This involves multiple layers of selling.  Customers have to be sold on the idea that they have a problem.  Then, customers have to be sold on the importance of resolving that problem.  The third thing that customers have to be sold on is that the specific problem is more important than whatever the funding would have otherwise been used to correct.  Finally, after all that, customers have to be sold on a supplier’s suitability.  Wouldn’t it make more sense to find out what the customer perceives as the problem, understand why the customer needs to resolve it, explore the customer’s budget, and save the selling for the end when it is necessary to help the customer understand the supplier’s qualifications?

Reasonable prices.  Price is a double-edged sword.  If a supplier is perceived to undercharge on price, the supplier is likely to be eliminated based on quality concerns.  In other words, the customer is uncertain if the supplier can meet the customer’s needs.  In contrast, if the supplier is perceived to overcharge on price, the customer tries to negotiate price (often with inadequate information) or walks away because the price is too high.

By understanding what matters to customers, suppliers can tailor their offering to reflect what customers value.  At the end of the day, this is the most compelling value proposition of all.  How do you get there from here? 

Filed by Coleen Davis at 6:39 pm under Business Acumen, Customers, Marketing, Negotiations