What is the Definition of a “Value Proposition”?

Val·ue: relative worth, utility, or importance; a fair return or equivalent in goods, services, or money for something exchanged; a numerical quantity that is assigned by calculation or measurement; the monetary worth of something

Prop·o·si·tion: an expression in language or signs of something that can be believed, doubted, or denied or is either true or false; the point to be discussed; something offered for consideration or acceptance: a theorem or problem to be demonstrated or performed

Value proposition

A statement of an important client problem (Need) that proposes the way (Approach) you will use client resources (££) to deliver superior client features per unit cost (Benefits) compared to others in their market(s) (Competition).

N Customer/Market Need

A Your unique Approach

B Client/Customer Benefits

C Alternative approaches Competition

A Systematic Process for Value Proposition Development

“NABC” captures the essential, defining ingredients of a Value Proposition

A Typical First Value Proposition

N ABC

Test of a Value Proposition

Compelling answer to the question: “Why will we win business?”

Applies to all clients

The end goal is a compelling, quantitative Value Proposition that is easy to remember

Example – 1st draft NABC

Need

– Mobile phone use is increasing

– People like to use mobile phones while driving

– Government is regulating use because it is worried about the danger of distracted drivers talking on mobile phones in their cars

– An emerging need for a safe way to communicate while driving

Approach

– Leverage SRI’s world-class voice recognition technology to provide a hands-free solution

– Sell low-cost software that enables cell phones to use voice activation for dialing and hanging up

Benefits

– Hands free is safer

– Software applies to most mobile phones

– Software is easy to install

– Value added service for mobile carriers

Competition

– Growing number of cars have built in speech-activated car phones

– Not all states are pushing the mobile phone safety issue through legislation

Quantitative not qualitative

Need

–Not: The market is growing fast

–Rather: Our market segment is £2M per year and growing at 20% per year

Approach

– Not: We have a clever design

–Rather: We have created a one-step process that replaces the current two-step process with the same quality

Benefits

– Not: The ROI is excellent

–Rather: Our one-step process reduces our cost by 50% and results in an expected ROI of 50% per year with a profit of £3M in Year 3

Competition

– Not: We are better than our competitors

– Rather: Our competitor is Evergreen Corporation, which uses the current two-step process. We own the IP for our new process

Example – 2nd draft NABC

Need

• Consumers want to continue being able to use their mobile phones while driving

• Mobile phones are difficult to use when you have to see where you are going!

• Many governments are legislating against use of mobile phones in cars

• Mobile phone usage will decrease in cars with a loss of £10M telecom revenue

• For us, as a mobile phone provider, this represents a £5M-per-year opportunity

Approach

• Voice-activated dialing

• Simple software overlay on existing phones

• Downloadable to existing phones with a subscription to the “in car service”

• Cost: under £5 per phone

Example – 2nd draft

Customer Benefits

• Convenience – Allows increased phone usage

– Safe, comfortable, easy to use: does not require a new phone

• Quality – Excellent speech recognition (99% accuracy with untrained users, 12 languages)

– Robust (>95%) performance in noisy environments

Company Benefits

• New product = increased sales (10% of phones @ £5 each = £5M)

• Fast time to market = increased market share (75% of headset market)

• Hands-free use = reduced litigation

• Low risk = prototype developed and channels identified

Competition

• Existing phones (requires usage out of the car)

• Speech-activated phone built into car (expensive, £50 more per car – we have 10% better quality with handheld devices and more convenience due to mobility)

Storytelling

Not just about NABC

What is the “hook” that will excite someone

Structure with beginning, middle and end

Why “Watering Holes”?

Watering Holes are focused on specific business opportunities and come and go as needed

The Value Proposition Development Process

Focus on Important Client Needs Write down the Value Proposition (NABC) and Elevator Pitch Iterate often Regularly In a group (Watering Holes) Get out of the office Use pictures, simulations and visuals Protect any IP generated