Essentials of a Sound Value Proposition

What's the point of having a value proposition and how should it be framed?

There are very clear signs of the decline in the vertically integrated business model. This model has been dominated for a long time by financial institutions with large marketing budgets and cookie-cutter value propositions. But more and more advisers are now moving to independent practice environments and there is an upsurge in self-licensing. Those who are making the transition need to think critically about what value proposition they can create to ensure practice viability. Even those who remain aligned to institutionally owned licensees should carefully consider their value proposition

In order to do this, I'd like you to imagine for a moment how the following scenarios would play out for your practice.

Scenario #1

You’ve been looking forward to attending the local chamber of commerce dinner in your region for a number of weeks. That’s because you think you have a great opportunity to snare a few new clients to help achieve your growth targets. As you prepare to sit at the dinner table, you notice from the neatly organised name tags that you’ll be sitting next to the owner of the largest business in your area - someone that’s presently not a client. Your mind and heartbeat begin to race as you ponder the enormity of the opportunity to impress this prospect and you begin to think about how you’ll introduce yourself and your practice and how you can ‘engineer’ an opportunity to continue the discussion at a future date.

Next thing you know, the business owner approaches to take their seat next to you and you extend your hand to greet her. She then asks “and what do you do?”. How would you respond?

Scenario #2

A local medical specialist is growing quite anxious about preparing himself for retirement. He has about 5-6 years left as a practitioner, but thinks the time is fast approaching to find a suitable financial adviser that will understand his needs and can help him make the transition he desires. As part of his search, and unbeknowns to you, he undertakes a thorough review of the web sites of a number of local financial planning practices to see if any stand out as obvious candidates to be shortlisted for due diligence and detailed discussions.

He finally gets to your practice's web site and mentally ask himeslf “how is this adviser different to all the others?” and “what unique value can they offer me that will meet my needs?”. As your virtual spokesperson, would your web site convince them to short-list you and your practice?

Scenario #3

The owner of a large and successful local business approaches a friend (who just happens to be one of your longstanding clients). He wants to get some advice about what your practice is like and whether they would recommend you. Unhappy with his existing adviser, he hopes to get some clear insights about your business and whether it's a ‘good fit’ for his needs. How do you think your client would differentiate your practice in that discussion?

These are all perfectly normal scenarios that you and your practice could face any day of the week. In fact, they probably play out across the country many thousands of times every week.

Why would a new client use your services rather than those of another practice? And why would an existing client continue to use your services? Of the various factors that could influence your responses, I believe it has a lot to do with your value proposition; something that can be difficult to understand and apply in the real world.

A compelling value proposition can mean the difference between your practice becoming super successful and barely surviving. That’s why I thought it would be useful to provide you with some guidance about how to craft a sound value proposition, how to communicate it effectively to your ideal clients and help you stand out from your competitors in all the right ways.

Some Definitions

There are lots of definitions around including this one from Wikipedia “A value proposition is a promise of value to be delivered and acknowledged and a belief from the customer that value will be delivered and experienced. A value proposition can apply to an entire organization, or parts thereof, or customer accounts, or products or services.”

Or this one from Investopedia “A business or marketing statement that summarizes why a consumer should buy a product or use a service. This statement should convince a potential consumer that one particular product or service will add more value or better solve a problem than other similar offerings.”

Whatever definition you prefer, here are the common elements you should focus on:

1) an explanation of the benefits your business offers

2) whom it offers those benefits to; and

3) why your business is uniquely better than anyone else.

The Dangers of a Non-existent (or Bad) Value Proposition

A winning value proposition convinces your ideal clients that your practice can solve their problems better than anyone else. Think of it as an ‘economic wall’ that separates your practice from competitors. On the other hand, failing to use a value proposition makes your practice blend in with all the others and would-be clients are left to compare businesses based on the prices charged for services. I’m pretty sure the last thing you want to do is compete on price.

Let’s face it, your practice doesn’t have the brand recognition of Google, Apple, Coca-Cola or Red Bull, so it’s up to you to give busy, time-poor prospective clients great reasons to pay attention to you. Failing to use a sound value proposition robs you of one of the most effective tools to do just that.

By doing what many businesses are unwilling or unable to do, you can avoid blending in with your competitors and engaging in price wars. You can achieve that by packaging up the most compelling reasons why your ideal clients should choose you and articulating that message in a concise value proposition.

Three Simple Steps To Creating and Refining the Best Value Proposition for Your Practice

If you’re struggling to create a successful value proposition, you can follow this three-step roadmap to put your best foot forward and win more clients.

Step 1: Understand Your Target Clients

One of the most common mistakes practices make when crafting a value proposition is trying to appeal to everyone who visits their website. The result is a weak value proposition that ends up appealing to no one. Catering to everyone backfires because visitors don’t feel like the services being offered are made for them and simply look like same old same old. But remember there’s always a competitor offering a better fit for their unique situation.

Identify Your Ideal Client

The first step to creating a winning value proposition is to identify your ideal client and find out what makes them tick. This gives you a solid foundation to tailor your value proposition to focus on benefits that group of clients would find the most important.

What motivates your ideal clients might be very different from what motivates the majority of the population. And that’s OK, as long as you know what those motivations are and how to leverage them.

You won’t see Rolls-Royce's marketing focused on fuel efficiency. That benefit is much more important from the perspective of a budget-conscious VW buyer. But most Rolls-Royce owners wouldn’t give it any thought; they’re more concerned with the craftsmanship of the cars and the prestige of owning one.

The best approach to truly understand your target clients is to pick 10-20 of your existing clients and interview/survey them so you can shed light on the unique value your business creates for them.

Jobs To Be Done

Rather than think of your clients in terms of specific services they might use or industries or geographies they occupy, try to think of clients' needs as ‘jobs to be done’. This will have a profound impact on how you define your target clients and put you way ahead of 99% of practices attempting to attract new clients.

Your clients don’t think in terms of customer demographics, industry focus or service characteristics. They simply have a job to be done and want to ‘hire’ the best service to do it. This means you need to understand the jobs that arise in clients’ lives for which your services may be hired. Here are a few questions you need to ask in order to identify the jobs your clients are seeking to get done:

• What functional jobs are you helping your clients get done? (e.g. perform or complete a specific task, solve a specific problem)
• What social jobs are you helping your clients get done? (e.g. trying to look good amongst their peers, gain power or status)
• What emotional jobs are you helping your clients get done? (e.g. feel good about themselves, feel empowered)
• What basic needs are you helping your clients satisfy (e.g.physical well-being, meaning)

Step 2: Develop Your Value Proposition

Once you’ve identified your ideal clients and their jobs to be done, it’s time to develop a value proposition that is meaningful to them.

In the context of your web site, the value proposition is usually a block of text (a headline, sub-headline and one paragraph of text) with a visual (photo, hero shot, graphics). There is no one right way to go about it, but I suggest you start with the following formula:

• Headline. In 1 short sentence, what is the end-benefit you’re offering? You can mention the service and/or the client. This is the attention grabber.
• Sub-headline or a 2-3 sentence paragraph. A specific explanation of what you do/offer, for whom and why is it useful.
• 3 bullet points. List the key benefits or features.
• Visual. Images communicate much faster than words. Show the service (if possible), the hero shot or an image reinforcing your main message.

Answer Four Critical Questions

Despite what some businesses may believe, a value proposition is more than just a slogan or a tagline. A solid value proposition answers these four critical questions:

• What services is your practice offering?
• What are the end-benefits of using them?
• Who is your target client for these services?
• What makes your offering unique and different?

Go to some other business web sites and you’ll notice they’re leaving one or more of these questions unanswered. They leave it up to visitors to fill in the blanks. But what usually happens is that visitors hit the back button and turn to that business's competitors—people who may do a better job of presenting compelling value propositions.

Essential Elements

You need to encapsulate the following elements to achieve a great value proposition:

• Clarity is essential - it’s easy to understand. The better you can distill your answers to the four questions into their most basic forms (and the faster you can do it), the more powerful your value proposition.
• It communicates the concrete results a client will get from buying and using your services.
• It says how it’s different or better than the competitor’s offer.
• It avoids hype (e.g. ‘never seen before amazing miracle service’), superlatives (e.g. ‘best’) and business jargon (e.g. ‘value-added interactions’).
• It can be read and understood in about 5 seconds.

As noted earlier, a key role for the value proposition is to set you apart from the competition. Many clients will check out 4-5 different service providers before they decide, so you need to make sure your offering stands out. This requires deep self-reflection and discussion on your part or possibly engaging with an expert who can guide or coach you throughout the process.

If you can’t find anything unique, then you better create something. But make sure the unique part is what clients actually care about (see earlier comments about understanding your target clients and jobs to be done). There are numerous articles to be found online that may help you find a theme or an angle for your value proposition.

The key thing to remember is that you don’t need to be unique in the whole world, just in the client’s mind because sales are closed in the client’s mind, not out in the marketplace among the competition.

Step 3: Maximise Credibility and Minimise Perceived Risk

I’ve been past plenty of coffee shops that had signs claiming they served the world’s best coffee. They made me smile for a second but did I believe the hype? Absolutely not!

Value propositions, even if they’re exceptionally well crafted to appeal to your ideal clients, aren’t effective if they’re nothing more than marketing hype. They have to be relevant and credible to have the greatest impact on the success of your client acquisition strategy.

You’ve done most of the hard work once you’ve identified your ideal clients and their jobs to be done and created a value proposition that aligns with their motivations. But please take some time to make sure your value proposition is believable and will separate you from your competitors.

Maximise Credibility

The best way to make your value proposition more credible in the eyes of your target clients is with a combination of, firstly, strengthening your claims and, secondly, minimising the prospective client's perceived risk.

You can strengthen your claims by:

1. Focusing on what you can prove. No one believes you're selling the "best coffee in the world" but people might believe you're selling the "4 times Coffee World winner for Sydney's best coffee". If they don't, they can look it up.
2. Leveraging social proof (safety in numbers). One the easiest ways to reassure prospective clients that you're offering something uniquely valuable is to display the number of clients you've already helped. Or provide survey results based on things prospective clients care about such as trust, value for money, satisfaction, etc.
3. Be specific. People are much more willing to believe specific claims over general ones.
4. Testimonials from happy clients. Prospective clients will trust unbiased client reviews more than your sales copy. But please don't fall into the trap of trying to 'game' ratings sites to get all 5 star ratings - no one believes that every adviser is perfect!

Minimise Perceived Risk

You can minimise your client's perceived risk by:

1. Guaranteeing client satisfaction or a specific result. Guarantees eliminate one of the biggest obstacles that keep clients from doing business with you - the fear of financial loss.
2. Offering a fee free period. This gives prospective clients the opportunity to test your service without any obligations. And it shows tremendous confidence on your part because you stand behind what you’re offering.
3. Making it easy to get out of contracts or ongoing obligations. Offering clients a way out if their situation changes gives them the peace of mind they need to pull the trigger now.

I hope this article has helped you understand how critical a sound value proposition is to the future success of your practice and how you can create and refine a winning value proposition in three simple steps. What's been your biggest challenge when formulating a value proposition?

Dr Ray McHale is CEO and Co-founder of MyNextAdvice, a SaaS platform that empowers curious advice businesses to measure and act on their clients' experience to drive success.

www.mynextadvice.com.au