If you are getting ready to launch a new product, prepare for price changes or redesign your offer ahead of competition move, then read on.
Companies spend a crazy amount of resources developing and bringing products to the market. Only to be met with cool reception when they don’t meet customer expectations. Or fierce competition when they do!
However, the good news is that there are tools available today to identify, design, quantify and capture value throughout the entire value funnel. Before even launching! Ensuring that you don’t leave any value on the table or for your competitors.
The Value Funnel model breaks the value model into 4 distinct phases allowing customer centricity to drive your business goals.
Value Comprehension
Value Comprehension is the starting point for a great Value Funnel. This is all about understanding your customer needs. But I mean really understanding them. If you want to be customer centric, then you first have to identify your customers. This goes way deeper than just naming a market cluster like “mid-income urban males”. You have to emphasize. Start by putting yourself in their shoes to figure out how they behave and, in their minds, to understand how they think. A great tool in this phase is to develop a Customer Persona. Customer Persona are not difficult to develop (and you can check out these tools). The most critical aspect though is that you need to validate any assumptions!
Value Creation
Finally, you are ready to start figuring out customer needs which is the second phase of the Value Funnel. The most intuitive approach I have found to date is the Value Proposition Canvas from Strategyzer. Start by focusing on what to customer is trying to achieve. Behind this primary goal there will be a multiple of tasks that need to occur for the goal to be fulfilled. Then, go a level deeper, and determine what elements could prevent these tasks from happening. These are pain points. At the same time, figure out how success would look like for the customer. These positive outcomes are the gains.
Watch out though, this simplicity though hides a rigorous process. The ability of understanding the big picture of the customer life (instead of micro focusing on the product usage for example). As well as the ability to distinguish “facts” from “assumptions” will determine success.
It’s only at this stage that you flip back to your offer. Determine what features provide what benefits. Which of these benefits relieve some pains or create gains? Those are the ones you add into the value proposition basket. The others? Well if they neither relieve pains nor create gains, then why do you even offer them?
Your basket may be full enough to drive a compelling value proposition. If so, move onto the next phase.
If not, you have underhand all the insights you need to strengthen the value proposition. How can you resolve some additional unmet pains or gains by designing new services? Quick incremental innovations will plug the leaks in the Value Funnel.
Value Communication
If your customers don’t understand how your offer creates value, don’t blame them. Don’t blame the messenger, blame your messaging.
Great value communication has 2 essential ingredients. The most important component, the glue that holds the entire messaging together, is: emotion. Volumes of research has confirmed that emotions are the basis of our primary decision-making. Rational thoughts are just an afterthought justification. Hence the importance of capturing emotional insights during the first two phases.
Secondly all tangible components of your value proposition need to be quantified. According to Malcolm MacDonald only 5% of business quantify value propositions. So don’t be surprised if this is a leak in your Value Funnel. You are not alone.
Above all, the key to quantifying the tangible elements of the value proposition is in-depth understanding of your customer business model. This will allow you to frame the value created in metrics that really matter to your customer.
The magic sauce to great messaging? A combination of emotional triggers and rational and quantified justifications.
Value Capture
This is the often the forgotten phase of the Value Funnel. Great value capture does need validation. The validation of messaging but also the various tangible and quantified elements of the value proposition. Value capturing is all about identifying the price point where value is shared equitably between your customer and your company. This analytical validation needs to be supported by market research.
One of the reasons people tend to skip this phase is due to the outdated perception of cumbersome, expensive and lengthy market research studies.
The good news is that this research will be extremely focused on what truly needs to be validated. Combined with some innovative platforms that offer sophisticated but affordable pricing quantification research, this can be turned around in matter of weeks instead of months.
Whether you are in the B2C or B2B, this is an essential step if you want to drive margins by optimizing pricing to share value between you and the customer.
Frankly, considering the huge payoffs in plugging the capture leaks in the Value Funnel, there just is no excuse for not doing so.
Value Funnel: Next Steps
If you cannot answer all these 4 questions with a resounding “Yes”, then you have some leaks in your Value Funnel:
- Is what you are selling really creating value for your customers?
- Are you losing customers to the competition?
- Is your value proposition quantified? Have you identified the emotional triggers?
- Have you optimized your pricing to share value equitably with your customers?
Learn more today on how Santa Marketing’s Value Funnel can make you more customer centricity while achieving your business goals.