Time To Review Your Value Proposition.

We can at last say with some confidence that we are seeing some "green shoots of recovery". Recent figures have indicated an acceleration in growth and this points towards a more buoyant economy. Let's not get carried away as we are still operating at levels below the pre 2008 crash. Nevertheless, the supply side of the economy is optimistic that interest in its products and services and hopefully sales will increase next year, as potential  buyers at last dip into their cash hoardings and start investing in their businesses.

A direct consequence of this improvement in sentiment is that many companies will gear up their sales machines in anticipation of improved demand. Collectively that means increased competition for sales.

Also, as buyers start to loosen the purse strings, their years in a very tight market will have changed their perceptions of what is important to them and their expectations of their suppliers and their solutions. This means that your product or service may no longer fit the market as well as it once did. As a result the value you bring to your market may be reduced resulting in a poorer take up of your services and offering your competitors a chance to get ahead.

Identifying your Unique Value Proposition (Photo credit: Intern. Forum Of Visual Practitioners ifvp.org)

New entrants into the market will also be seeking ways to differentiate their product to better reflect buyers changing needs. All these pressures should lead you to the conclusion that you need to review your value. More explicitly you should be reconsidering your value proposition and testing its relevance to a changing market.

Your Value Proposition

Your value proposition is a short statement which explains to your target audience what problem you solve and why they should buy it from you instead of your competition. What is different about your solution or offering compared to your competition. It is sometimes called an elevator pitch or positioning statement. However you want to describe it, now is the time to give it a review.

It's easy to become a little blasé about your value proposition after all you know and love your product. Your target market doesn't have the same attachment and will go after what they want and will not hesitate to ignore you if you no longer meet their needs.

I remember listening to an interview with Jack Nicklaus where he said every year at the beginning of the golf season he would go to his coach and go through the basics of his grip, his stance and his swing in minute detail to make sure that he hadn't picked up any bad habits that might affect his future performance.  Taking that analogy forward we should regularly review our value proposition to ensure its relevance.

Your Value Proposition Components

Lets just remind ourselves what should be included in our value proposition.

What is our target market? Has this changed? Is our market bigger or smaller than before?

What is the current problem we are solving for our target market? Is it an important consideration for customers in our market? For those of you who don’t have a formal value proposition, start with the biggest issue customers have with your industry and see if you address this. If your product or solution is less important to your market than previously, then you’ll have a tough time selling it.

What are we offering? Is it a new product or service? Can we explain it easily?

What is different about our solution? At this point many people talk about a unique selling point. For most businesses finding something that is unique is almost impossible. What you want to isolate is what you do differently or what additional capability you have, that will make them buy from you rather than your competition.

Which brings me to the last point what alternatives are there to what you offer? Why is your offering superior to the competitions? What is the Return on Investment from adopting your solution?

By asking yourselves these questions you should get a good understanding of changes in the market and how that might affect your value proposition. You may be affected by such things as changes in legislation, new products entering the market or your industry being more interested in other problems. Unless you answer these questions, you may well find your value proposition increasingly irrelevant at a time when your target market will be more active than it has been for years.

Exigent Consulting provides specialist services to the Small and Medium Business including Managing High Growth, Business Turnaround, and Mentoring. We help business owners improve the profit performance of their business. 

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Good Culture and Return On Investment

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There has been a lot in the press and blogosphere recently about how its people that matter in providing a competitive advantage to a business. In a recent discussion with a number of  high growth companies, whilst there was a general acceptance that people and more specifically Culture mattered; there was a mixture of both skepticism and confusion about how one might quantify the benefits. 

Buddhist Flags Tibet

I went away to think about how I could use simple recognisable examples to demonstrate the economic value of "good" culture over a "bad" culture. 

Lets take two examples. The first is a company which might be described as having a bad culture or perhaps a culture where the employees don't feel engaged or committed to the business. I expect we can all recognise similar companies.

In this business employees turn up for work between 8 and 9 am but do not voluntarily start their work and continue to read their newspapers or use their smartphones until 9am. During the working day they stick religiously to the rules having 15 mins break in the morning and having their 1 hour lunch break. At the end of the day to make sure they can leave at 5pm exactly, consequently work winds down around 4:45 and everything is put away, necessary ablutions done in time for a mass exit at 5pm.

In the second business where they have a "good" culture staff arrive between 8 and 9am and mostly start their working day when they arrive, whilst everyone takes a lunch break many can be found back at their desks working resulting in them having substantially less than the mandatory hour. When 5pm arrives most of the staff are still working and they gradually drift away from work over the next  hour.

So its easy to see that on average people in the company with a "good" culture or where they are engaged with the organisation work longer. For the sake of this example lets assume that on average the "good" culture business get 30 minutes more per day per employee than the business with a "bad" culture. Based on my everyday example I don't think that's an unreasonable estimate to make.

Over a week that's 2.5 hours per employee on the basis that an employee works 46 weeks a year, excluding holiday entitlement and public holidays, that equates to 115 hours per employee per year or if you prefer about 16.5 days.   

For a company with 10 employees that's 165 extra free days work or 33 man weeks. That about 3/4 of a full time employee every year for a 50 man company that's 3.5 man years of effort extra.

So what does that mean in financial terms. That's a bit more difficult to quantify because were are going to have to make some assumptions about average pay across the business. Using composite rate of £10 an hour, which I suspect is a little conservative but makes the maths easier, we get an economic benefit of about £1150 per employee per year. For our 10 man company that £11500 per year. For our 50 man company that's £57500 comfortably more than a couple of employees. If we assume the businesses are in aerospace, IT or other high skilled industries the financial benefit increases dramatically because the average hourly rate is probably closer to £25 than £10.

So what have we discovered? Firstly I would say small differences matter 30 minutes a day isn't much spread across employees but it adds up to a significant extra saving and competitive edge. Secondly, in keeping this example as simple as possible we have ignored a number of other benefits including the fact that people work harder and more effectively when they are happy at work. They don't "clock watch", they operate better as a team. All these additional factors increase productivity and performance. They are however very difficult to quantify and certainly not without an organised an scientific study which is way beyond my capabilities. 

Nevertheless I think it has been possible to demonstrate clearly that there is a quantifiable benefit to having a "good" culture and even on this anecdotal basis its financial benefits are not to be ignored.

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