Thursday, October 19, 2006

The Value Proposition

Whoof - what a term. Its driven me nuts - trying to figure out what it means, and how to usefully deploy it in the job. The nightmare is worst for the services marketer - as there is nothing tangible to package, the whole offering looks superficial. Interesting things like economics also interfere when least required. For example, scarcity creates an illusion of value. When the only television channel India had was Doordarshan - a once a month late night program that carried international music videos used to keep me awake, viciously rubbing gritty eyes. I dont think I have looked at MTV in the last 1 year.

Clearly sustainable value propositions cannot be built just due to demand supply imbalances - in the modern age these seem to sort out pretty rapidly. Which pretty much means - whatever you have to offer will without doubt be offered by lots of others. Hang on - then how do you create value ? My opinion - value can only be created through a clearly targeted composite offering which differentiates across service delivery, commercial models and customer experiences. In short - there is no one magic factor that creates value.

I'm currently trying out a sequence of steps which appear to be managing this complexity and generating some output. The first step is what I am calling Targeting and Intelligence. This discovery process is probably the most crucial one in finally delivering a robust proposition. This is the part where you figure out the customer segmentation methodology, name the segments and live the customer's business. The target segment's business value chain, competitive reality and as many other things as possible need to be internalised. Nothing could be better than clearly identifying business problems / goals encountered by the segment. At this point the clever marketer has a discovery / sitanal document in hand

Basis clarity through a robust situation analysis , I will call the next stage Scenario Building. This is a diagnostics stage during which hypothetical scenarios need to be constructed regarding the reason for existence of the business objective / problem the proposition being built should address. For example, if the problem being targeted is companies whose IT intensity is off benchmark - one possible scenario could be due to heightened M&A activity. Once a set of such hypothesis are selected (let us assume only one is) - we reach the stage of Solution Articulation. This is where extremely specific definition needs to be brought to the nature of the solution being proposed to a problem caused by the selected hypothesis.

We are still nowhere close to making a sale on this solution. This will only happen when a very good ROI Model is in place. An important tool that should be developed at this stage is a ROI / TCO calculator - which can put a price value equation to the solution. The additional requirements of this stage are quantification of risk and proposed mitigation. A strong commercial model needs to be put in place so that ROI / TCO can be measured across Time / Cost, Efficiency, Quality and Revenue / Profit.

We're pretty much ready now to hit the road - and the next two stages of the proposition make this possible. The first - Sales Enablement - ensures the presence of custom collateral and collaborative tools that backend a consultative sales approach. The second is the campaign plan - the Awareness and Demand Program.

We're done - almost. The proposition should include a mechanism for Value Measurement and Reporting, so that post implementation the perception of value keeps increasing.

With this I think we will have built a sustainable value proposition - inshallah !