Understand Your Customers To Underpin Your Value To Them
by Brad Oelmann, a consultant with Farrell Growth Group, a leading agribusiness consulting firm.
There has been much discussion around value propositions in the past several years. As a point of reference, let’s define a value proposition. It is a promise of value to be delivered, communicated and acknowledged. It is a belief from the customer about how value will be delivered, experienced or acquired. Focus on some of these “watchouts” as you develop or review your value proposition.
Watchout #1
How has our customer changed?
A value proposition is developed at a point in time. We look at our customers and see a need we believe we can address better than competitors. It is important to have an ongoing understanding of where our target customers are going with their businesses, so we can adjust our value proposition to bring value. First, the profitability outlook for their businesses may have changed. Second, they may have increased or decreased the size of their operations or changed their focus. Third, factors such as consumer preferences, sustainability, food security and data-driven decision-making are all more important than they were a few years ago. These could all directly or indirectly impact a value proposition.
Watchout #2
How have our competitors changed?
Assuming we have been successful in executing our value proposition, competitors will most likely respond in some fashion. First, they may invest in a way that narrows or eliminates the difference the customer perceives in our value propositions. Second, they may change the price-value relationship of their offers to make them more attractive. Finally, they may offer something that our target customers may value more than what they see in our offer. It is important to understand how our key competitors are modifying their approach and re-evaluating their needs.
Watchout #3
How are you measuring success?
It’s easy to look at overall top-line sales and bottom-line profits to measure the success of our approach. But most of the time, we need to dig deeper. Inflation and deflation in the products we sell can mask true results. Customers get bigger and smaller. Suppliers don’t always follow through with their value propositions. It is very important to measure the cost and value of our proposition over time.
Every business is dynamic. Customers, competitors, suppliers and consumers are constantly evolving and changing. We need to make sure our value proposition is keeping up with the changes in the world around us.
