Value Propositions – Revisited

A very Happy New Year to all our blog readers and Catalyst Centre fans.

Embracing 2015 with gusto, we made sure that our Catalyst Centre tenants started the year as they mean to go on, with determination and maximum effort! Their task might have sounded easy – going back to basics and revisiting value propositions – but it was actually hugely challenging.

The fundamental core of a business’s value proposition is: what are you actually going to do for somebody’s life? How will it be different?  And why is it something people will be willing to pay for?

In a process that has been described as “a subtle combination of intellect, careful strategic planning, and trial and error”, really getting to grips with what it is that sets you apart from the rest and nailing down exactly what you do into a few sentences is difficult, but vitally important to get right. There’s no doubt that this is a daunting task – even big businesses struggle with this – but Speakers David Bream, Director of SETsquared Southampton, and Phil Sharpe, Catalyst Centre Mentor, stressed that unless it’s done, you’ll never have a successful business, let alone one that is worthy of investment.

David and Phil helped our Catalyst Centre tenants to see the wood for the trees, referring to a new book entitled Value Proposition Design. Most entrepreneurs have to work 24/7/365 to be successful so, as the clock is always ticking, there’s no point in wasting time (and potentially money) asking the wrong questions.

According to Value Proposition Design, there are eight steps to take to arrive at your business’s compelling value proposition. These are:

  1. Identify your customer segment(s).
  2. List what jobs they do and how important each is, without forgetting emotional pulls that influence their life and buying practices.
  3. Listen to your customers’ pains – isolate real pains, not just minor whinges.
  4. Listen to what your customers’ aspirations and desired gains are.
  5. List your products and services and then quantify their relevance to your customers (are they essential or nice-to-have?).
  6. Quantify how much your product will reduce customers’ pains.
  7. Quantify how much your product will deliver against customers’ aspirations.
  8. Evaluate the fit between the value proposition and the customer segments to create a business model to deliver value at a profit to the targeted customer profile.

Central to all of these points is talking to your customers, and both David and Phil warned that often they aren’t as forthcoming as you may like them to be. Even when they are, you need to ensure that you’re not projecting onto them what you want to hear. It’s important to make sure that you’re picking up on real facts that your potential customers are telling you, not just assuming their answers based on your own model of life. In going through this process, you may realise that you’ve been making a lot of wrong assumptions but it’s better to know this sooner rather than later so that you can act on these.

So, what are you waiting for? Is 2015 your time to start a business? If so, make sure you pick up a copy of Value Proposition Design and get your application in to be a part of the Catalyst Centre team 2015 – it could be the best decision you make this year!

Next week we’ll be looking at some brilliant value propositions, so don’t miss out!