There is no better way to learn how to tackle the numerous marketing challenges facing every company than by hearing the stories directly from the chief executives and other top managers themselves.
I recently taught a “Business to Business Marketing” course to part-time MBA students at the University of Maryland’s Robert H. Smith School of Business. In the class, 14 CEOs — mostly of local tech start-ups — presented actual marketing case studies featuring their companies. Day One of the course started where every entrepreneur’s marketing plan should begin: How to develop the right value proposition.
If you get the value proposition wrong, everything else in the marketing mix is simply not going to yield optimal results. Unfortunately, many early stage or start-up companies don’t do this correctly. They tend to focus on their bells and whistles, rather than the real value their product or solution offers.
A value proposition really begins with understanding what problem or pain can be solved by the offering. Business buyers decide to purchase based on what value or benefit it will bring to their operation, to their employees, to their revenue. Buyers are looking for many different types of value. Typical types of value are:
Economic.Save money or help make more money.
Productivity. Get more done with the same employee base.
Time benefits. Accomplish more in a specific time frame.
Social benefits. Meet social or environmental goals.
These all relate to understanding what matters to the buyer and then communicating that value.
There are three steps to developing a value proposition that resonates:
Understand value from the buyer’s perspective.
Create messages that address those pain points.
Communicate that value in every message and everything your company does.
Once you create your value proposition, you aren’t done. Constantly monitor the market in which you operate and keep an eye what your competitors are doing as well as on other changes taking place. You will likely need to update your value proposition as the market evolves.
Take MindsEye Solutions, for example. The company offers a software and hardware platform that automates many of the steps involved in e-discovery — which is the review of digital information during litigation. This sector has many competitors.
For MindsEye, the first challenge was to create a value proposition that separated it from all the other companies that offered similar technology. Because the company was one of the few that offered a simple user interface and in-depth reporting, it made getting up and running much easier and faster for new customers than other options. The founders did not merely focus on the existence of the platform in their value proposition, but instead focused what value that platform provided. Essentially, the value was “simplifying e-discovery”... saving time in getting started and eliminating a lot of hassle in the process. That value proposition worked well for quite some time.
Then, about a year ago, a trend taking hold among law firms started to become more widespread: Firms adopting fixed or alternative fees instead of the traditional hourly billing. With fixed fees, it became critical that legal teams became ultra-productive when it came to e-discovery — or risk spending more time on a matter than what they were being paid.
That market shift presented an interested opportunity for MindsEye: Was there a way to capitalize on this new market occurrence with a revised value proposition? Of course. MindsEye focused on a new message that addressed the ability of their solution to enable attorneys to do more ... while spending less time in the process. The company tagline even evolved to fit this new value proposition: “Discover More. Review Less.”
The MindsEye product did not change. The buyer did not change. But what mattered to the buyer did change.
So, another lesson here is that a value proposition doesn’t last forever.
Liz Sara is founder and managing director of Best Marketing and an entrepreneur-in-residence at the Dingman Center of Entrepreneurship.