Customer Value Propositions in Business Markets PDF

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Customer Value Propositions in Business Markets...

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Customer Value Propositions in Business Markets There is no general consensus about what a customer value proposition is or what makes one persuasive. It is often undervalued by managers. The goal of a CPV is: How can you persuade your business customers to pay the premium prices your offerings deserve? The building blocks of a successful CPV are - Points of parity: Product elements with the same performance or functionality as the next best alternative Points of difference: Elements that make the offering superior or inferior to the next best alternatives - Points of contention: Points where the supplier and customer differ in perception. The supplier thinks it is a point of parity/difference whereas the customer sees this differently The different ways companies use the term “value proposition” can be classified into three types - All benefits: Listing all the benefits their offering might possibly give to customers. Requires knowledge of the own market offering. The danger of this is that relatively irrelevant benefits will also be put on the list - Favorable points of difference: The relative benefits a customer has knowing there are also alternatives. Requires knowledge of own market offering and that of competitors. The danger of this is that the differences listed might not all be valuable. - Resonating focus: Critical issues in their business and deliver a customer value proposition that’s simple yet powerfully captivating. This requires customer value research which can be difficult to conduct. It’s important that value propositions are also differentiated from the competitors’ value propositions with a value word equation a supplier can show points of difference or points of contention as mathematical operators like + or / Demonstrate customer value in advance: takes 2 steps - Value case histories: Document the cost savings or added value that reference customers have actually received from their use of the suppliers’ market offering - Value calculators: customer value assessment tools, typically spreadsheets Document customer value: Document cost savings and incremental profits offerings deliver to the customer. The ability of a supplier to predict cost savings and added value comes with experience. Superior business performance: Can be achieved when a CPV is properly constructed and delivered. Here, the CPV is a guiding beacon for the strategy and performance. To achieve superior performance the CPV must be measurable, distinctive and sustainable....