Value Propositions & New Products
When companies introduce new products or services to the market, they frequently fall victim to the same weak value proposition problems. A study on new product launches by Siebel found that executives overwhelming blamed weak value propositions (75%) as the key factor in not achieving success with the new offering.
Several years ago I worked with a company that introduced a new digital system into the printing market. It worked in conjunction with another company’s product. This company felt that the primary value of their offering was in its extraordinary color matching capabilities that were far superior to anything on the market.
However, sales weren’t taking off as expected. I was asked to help with a relaunch. In the process, I interviewed a number of customers. One was big into measurement – they had all the numbers.
By using this new product, they were able to:
- Cut the staff in one area by 33% and still handle the same amount of work.
- Redeploy valuable workers to other areas of their company. (Finding qualified employees was a major issue in their industry.)
- Reduce project turnaround time by days, creating a significant competitive advantage.
- Decrease the number of customer changes at a savings of R2000 for each one.
- Balance out their workflow, enabling them to delay purchases of extremely pricey equipment and reduce overtime expenses.
This was my client’s true value proposition. But they weren’t aware of it because they had never looked at their product beyond its attributes. Great color was nice, but it didn’t sell. Customers needed tangible business results to justify their expenditures.
What’s the solution?
Prior to introducing new products or services, look at the value from the customer’s perspective. If your organization conducts beta tests or trials prior to a full rollout, make sure you don’t just focus on working out the bugs.
Instead, ask customers about the value of the capabilities they get with the new offering. Don’t settle for simplistic responses such as, “It speeds up our process” or “It’s compatible with our legacy systems.”
Ask questions such as:
- What does that mean? Why is that valuable to you?
- How does that help? What is the real benefit to your organization?
- What does it eliminate? What’s the value of that?
- What does the faster speed mean to you? How else does it affect your organization?
- What impact does it have in other areas in your company?
- What’s the benefit of the compatibility to your legacy systems?
- Can you help me quantify the pay-off you get from these capabilities?
When you ask questions like these, you get a much better understanding of the true value proposition of your new offering. The more you know about the customer’s perspective, the stronger your value proposition. And, the stronger your value proposition is, the faster you’ll see sales results.
Next week is the final in this amazing series. Stay tuned!