7th October 2020
Does your messaging clearly communicate the value proposition?
What makes an innovation initiative successful? Good ideas and the ability to apply new technology are obviously important, but many initiatives still fail to yield the desired commercial gains. Somehow they fail to capture attention—both internally for employees and externally to support customers. Why is that?
One factor is an indistinct or incomplete value proposition for the technology solution. It’s one thing to create new products, or launch a service with enhanced features, but how do you properly translate that into an opportunity for the customer to benefit in some way? How do you communicate the potential value, so it’s relevant for a range of different customers?
Value propositions are not a sales and marketing nice to have. They differentiate the brand leaders from the imitators. Now, with the continued impact of COVID-19 affecting just about every organisation, honing that message of difference and value with customer insights and market research is even more important. This was the topic of a Port of Tyne 2050 Maritime Innovation Hub seminar, led by Melanie Foster, Founder of HARNESS.
In maritime services, innovation contributes to the development of value propositions that mean more competitive pricing, more efficient delivery by reducing transportation times, a lower carbon footprint with consumption of fewer fossil fuels or improved traceability. Innovation can also reduce regulatory or compliance costs, expand network reach, reduce reliance on labour or increase technological adoption.
80% of the organisations at our event had some form of value proposition, but believed they needed to do more work on improving it further. Here are six ways it could be improved:
1. Over-emphasis on technical features
Many organisations waste buyer attention emphasising complex technical features that are time consuming and difficult to develop, but this messaging can be lost on a buyer. In some instances, a technically new solution to a problem can leave buyers unable to evaluate whether it is the right solution for them. Value is maximised when the benefits presented match the buyer’s needs and, when a company can demonstrate a solution that closely matches those needs, they will secure the sale. If a buyer understands how a solution will provide benefits from the outset, this image of value will be built at an early stage in the sales cycle before a sales intervention. This is how a clear value proposition helps to recoup innovation investment.
2. Market not fully segmented
Critical when developing a value proposition is understanding how innovation effectively ‘diffuses’ into any given market. Depending on the type of customer, they will respond differently to the innovation—not in a linear way, but as a wave of acceptance. This curve of adoption starts with innovators, early adopters and the majorities, finishing with laggards. Each customer type needs its own value proposition—written specifically for their motivations.
The amount of emphasis given to technical features should reflect where a product or service is in a given market. Early adopters and innovator customers may appreciate feature rich descriptions complemented with value, but for mature market products, pure value will be the only deciding factor. Complex sales cycles may require value propositions for different stages in the decision cycle and different levels of decision maker.
3. Invest in competitor analysis
Looking closely at what competitors are doing is one of the most important parts of developing a value proposition. Analyse their current strategy and, as well as reflecting on the pros and cons of your solution vs theirs, try to establish what they might do in the future. How likely is it that they will evolve their approach?
One good method for conducting a competitor analysis is to map your value proposition against rivals from the perspective of the customer. Using a table, create a list of the most important benefits and features for customers in the centre, then add competitor features on one side and yours on the other. Spot the gaps between what customers are looking for, your competitors’ strengths and what you can offer. This should be your value proposition.
4. Align commercial and environmental messaging
Wherever possible overlay the economic benefits of a given solution with opportunities for the customer to contribute towards their sustainability targets. Whereas the emotive triggers that influence B2C consumers are not as applicable in a B2B market, the benefits of selecting a solution that offers commercial benefits and the chance to reduce carbon footprint should not be underestimated. The most successful companies are responding to this by ‘cross pollinating their narratives’.
5. Who actually is the buyer?
The more you know about exactly who your customer is, the better you can appreciate the nuances of their challenges. In a B2B market for complex products, there may be many buyers to consider—operational users, purchasing, the CFO or CEO. Is the buyer technical or someone in the procurement team who has taken a brief and been tasked with finding an appropriate solution? If the buyer is technical, then technical material will be relevant whereas for a CEO, other benefits—for instance, relating to sustainability values—is where messaging should be positioned. By understanding each customer’s requirements and preferences, you can start to create a value proposition that appeals to each decision maker individually.
Without really understanding the customer, marketing materials will likely deliver points of difference, but relatively little clear value for the person you are trying to sell to. Any given solution will have several points of differentiation and this process helps to focus the approach, prioritise messages and tell customers what they want to hear. The more granular the messaging, the more likely it will succeed.
6. Verify perceived value with research
A value proposition needs to be robust and relevant, which is validated through analysis and peer review among relevant groups—both inside and outside the organisation. Without sufficient research, you could be missing an opportunity to tell B2B buyers why they should pick you over a competitor.
Buyers always want to engage with suppliers that fully grasp the critical issues in their organisations. If you invest time in building that knowledge through research, then prospective customers will respect and trust your organisation more highly.
One of the main determinants of competitive advantage in the maritime sector is the ability to offer new and better propositions at competitive costs. This is true in any industry but especially in maritime, which is under increasing pressure to provide more sustainable and efficient alternatives.
Many organisations successfully innovate but they may fail to appreciate the role having a strong value proposition plays in translating that innovation into commercial activity. It may seem like a lot of work to reach a strong value proposition, but the insights gained will always be useful. In the end, innovation that can’t be translated into value will not improve firm performance and the value proposition provides the means to convey that opportunity to prospective customers.
Dr Jo North is Technology and Transformation Director at Port of Tyne, and Lead for the Port’s 2050 Maritime Innovation Hub, as well as being Associate Lecturer for Business Creativity and Innovation at the University of York.