Every company needs to offer a value proposition of some sort to its potential customers. It needs to tell them they will get something excellent in terms of its quality, quantity or both, in order for people to willingly part with their hard-earned cash. This is applicable in both business-to-consumer and business-to-business situations.
Of course, the world never stays still and in most cases, value proposition innovation is vital to ensure that you are getting ahead. It may be that if your firm is simply producing the same things all the time because that is what customers want – such as a popular confectionary that never goes out of fashion – you can stand still. But precious few have that luxury.
Thanks in particular to the impact of technology, the goods and services most enterprises offer will change over time; just look at what car makers, computer companies, telecoms firms and others have provided and how that has changed. Similarly, retailers and service providers can offer new things such as internet access to communicate or buy items online 24/7.
However, to truly stand out, your innovation should take one step further and make some aspect of what you offer unique. A truly unique value proposition, sometimes known as a unique selling proposition or unique selling point, will enable you to offer something extra that nobody else does, potentially increasing your share of the market as a result.
What this amounts to can vary from company to company. For instance, over in the UK the Co-operative Bank, a small fish in a big pond of financial services, sought to tap in to concerns among some consumers about how banks would often use customers’ money to help fund activities many would consider unethical, such as the arms trade or environmentally destructive activities.
The result was its Ethical Policy, launched in 1992 with customer consent – those with accounts are periodically polled to ensure their support on various issues – which ensured the bank would only choose to do business with those who fitted with these values. Thus the value was not strictly monetary for customers, but it gave them something they appreciated in other ways.
Other developments may be more directly connected to the goods or services provided. Harvard Business School gave the example of Apple creating the iPad, a product nobody knew they wanted or needed until it came along.
The key, Harvard noted, is to start with the customers and decide what needs are going to be served. This could include segmentation, the process of deciding which part of the wider customer base might be prioritised (after all, a new product or service may not appeal to everyone). This consideration is followed by working out what needs to meet, then what price is right.
Innovating in this way can bring a wide range of benefits. It can create the first mover benefit of being the first to come up with a new product, service or attribute, with the reputational boost and increase in customer loyalty that can arise from this.
Of course, first movers can eventually be overtaken as competitors seek to improve on someone else’s invention. But if you have been innovative enough to produce a unique value proposition to start with, this approach can then be used to enhance it yourself.