Helping Small Business Grow – Create Value Proposition
As a business coach to many companies in South Florida (Miami, Fort Lauderdale, Palm Beach) as well as across the U.S. and Canada, I spend a lot of time helping small and medium businesses address sales growth rate issues. The lack of attention to this area is surprising. Ironically, when one talks to the leaders of these companies, they insist they have done all they can. In my experience, there has been more talk than action, particularly in the business-to-business arena.
In most situations, when I sit down with a business coaching client, I find the real dilemma is that they continue the same sales and marketing strategies that failed in the previous year, hoping that things will magically get better for them. The changes they had made were minor and did not get to the root of their problem.
Importance of a Good Business Strategy
This is a series of articles dedicated to Helping Small Business Grow, It is important that you get the sequence of the articles right. For example, I see some companies experiencing constant turnover in their sales force, followed by leadership complaining about how the salespeople keep failing. However, the most common reason for this kind of turnover is failed strategy.
A bad business strategy results in sending good salespeople out to get slaughtered. In my experience, when you have a good strategy, even a bad salesperson can sell your product or service. The first article addressed “choosing a customer focus.” This article is going to focus on the “unusual offering” that is appropriate to attract the customer segment you’ve defined as your prime target.
How To Create Value Proposition
“Unusual offering” is most commonly referred to as a value proposition. To create value proposition, a company needs to be able to differentiate their product and services from those offered by their competition.
Unusual vs. Unique
I’ve chosen the word “unusual” instead of “unique” for a reason. While the difference between “unusual” and “unique” is subtle, I find the standard for “unusual” is much more achievable for most businesses. Unique offerings are very difficult to create and almost impossible to sustain for very long. However, the best businesses have mastered consistency in unusual offerings.
Value Proposition Example
For example, everyone in the fast food industry knows they are supposed to deliver consistent quality in food, fast. Yet they don’t. McDonald’s has a better track record in terms of moving customers through lines than other fast food restaurants. When it comes to customer service, Nordstrom has been able to set themselves apart from competitors who claim high-quality service as their differentiator.
How To Help Your Small Business Grow
In order to help your small business grow, your “unusual offering” / value proposition has to be focused on your target customer. As a reminder from my previous article, Helping Small Businesses Grow – Choosing Your Customer Segment, your target customer is the “core customer” that your company has chosen to focus on. Core customers are most likely to appreciate your company’s unusual offering, they will tend to be the most profitable business segment for you, and they are a large enough segment for you to achieve your revenue goals.
Create An Unusual Offering Different From Competition
The concept of configuring an unusual offering that is different from your competition is essential for two reasons:
- The better able you are to distinguish your company from your competitor (“unusual offering”), the easier it becomes to appeal to your target customer.
- The more people you try to please by adding features, benefits and services, the higher your cost structure becomes and the less you stand out to your target customer.
While it is true that it is getting more and more difficult to create differentiation, failure to do so is a prime reason for businesses to experience sales growth issues. Those companies that are still growing and have not created differentiation have to spend significantly more time and money to acquire a customer than a company that has differentiation. This cost usually shows itself in lower gross margins because they’ve narrowed their primary means to compete to pricing.
Does Your Business Have an Unusual Offering?
While every business owner recognizes the importance of “unusual offering” in helping a small business grow, many do not have one of their own. Many confuse “unusual offering” with marketing and positioning. A common mistake many business owners make is to create their marketing before they really develop an “unusual offering.” Worse, some develop an “unusual offering” on paper that they cannot back up through operations. It should work in reverse.
Once you develop and master your unusual offering, customers will easily agree to choose you over your competition. Then you can create marketing campaigns that make it easy for people to notice you, and have salespeople that can convert the core customers as they walk into the sales process.
How To Capture Your Ideal Customer Segment
So how do you bundle your products and services in a way that captures your ideal customer segment? First, I recommend that you get out of your office, and start talking to existing and potential customers. Too often I find that companies believe they already know what customers want. Typically they are wrong.
How do I know? The same companies that tell me they have it figured out are also having difficulty acquiring new customers. They do not have an extraordinary share of the core customers they seek. They are not growing faster than their competition, and they are not increasing market share.
The reason you need to talk to current and potential customers is to find out what you and no one else is getting totally right. If you focus on that totally right thing, it would swing prospects more often than not in your direction. This is not an easy question, which is why so many companies avoid it!
8 Key Elements That Add Value To Unusual Offering
In order to help your small business grow, your unusual offering may not need to be a dramatic change from your current offering. You may already have an unusual offering that you have not isolated. You may want a good bundle or aggregation of products and services that helps solve customers’ needs in a special way that totally fits their situation. You may have the same mix of elements as your competition, but you can combine them differently or decide to add or subtract items from your offering in untraditional ways. You may also consider your potential customers’ options when configuring your bundle.
Depending on your core client and the options available to them, you need to consider the how the following 8 elements add value to your unusual offering and value proposition:
What is their total cost today? Do they know what their total cost is? What would additional features, benefits services be worth to your prospect in terms of time, value to their customers, the growth of their business, reducing their stress, etc. If you added new features, services, and benefits would they pay more for it, or would you just be increasing your cost of doing business?
2. Cost/Risk Reduction
How can you modify your offering in a way that can substantially reduce customer costs? How can the design of your product or service reduce risk for your customer?
What trends are occurring technologically, economically, environmentally, industry-wide that call for a new advancement in how your product or service is sold, delivered, distributed or marketed?
What performance enhancement to your product or service is the most valuable to your customer? Would your customer pay more for this enhancement, and would you lose customers to a competitor that made the enhancement while you did not? Is this enhancement necessary to keep up with minimum expectations? At what point does the performance improvement no longer make a difference in the customer’s buying patterns?
To what extent does customization to product or service significantly enhance value?
To what extent does design make a difference in the usability of your product or service? Can design make your product more appealing or usable?
To what extent does brand or status influence the buyer?
Is there a way that you can make your offering more accessible to your target client?
Are You Guilty of Working On Intuition vs. Knowledge?
There are a lot of ways to add value proposition to your product or service. It takes creativity and truly understanding the needs, wants and desires of your target audience. Too often leaders are working on intuition rather than knowledge when creating their offering, and it severely hampers the growth of their small business.
As an executive and business coach, I can provide you with practical business solutions to accelerate your business growth. To learn how to improve your growth potential, contact Howard Shore at 305.722.7213.