A previous column outlined approaches to and, more importantly, practical applications of customer segmentation as it relates to the marketing planning process. The essence of the message was this: segmentation is about grouping customers into buckets of similarity to do something useful from a marketing perspective.
This column will focus on developing meaningful value propositions and designing engaging customer experiences to specifically identified segments.
Rigorous marketing planning seeks to answer a series of very logical, sequential questions, starting with understanding market context, moving through segmentation and into sorting out specific value propositions and customer experiences. It culminates in strategies and plans that govern programs or campaigns and their associated tactics.
This in the iterative, marketing planning process model:
Vic Neufeld is the president and CEO of Windsor, Ont.-based Jamieson Laboratories, makers of vitamins and supplements, a company that just turned 90. What stood out in a recent conversation was how unwavering the company has been when it comes to its value proposition.
"We have always been about product innovation and quality," says Mr. Neufeld when asked about the keys to the brand's longevity. "We prove it by being first to market and through our (accessible premium) pricing. In the 1930s we were first to market in Canada with vitamin E, then multivitamins in the '40s, vitamin B in the '50s, and most recently with extracts and dissolvable strips. Our pricing is on average 10-per-cent higher than the competition but that's because we believe in higher quality, all natural inputs, which cost more."
Value proposition and customer experience are two sides of the same coin. One way to think about value proposition is how it is viewed by the customer, the way someone feels about your brand. Customer experience is often thought of as the way a customer feels about themselves as they interact with your brand.
Meaningful value proposition development
Winners always comes to mind as a meaningful value proposition: the latest brand names for up to 60-per-cent off. Everyone understands it. It's powerful.
Developing or refining a value proposition typically answers three core questions:
- Who are you?
- What do you do?
- What makes you special?
That's the Winners model. There are many approaches and techniques that work well in getting to a clear and compelling value proposition. Most organizations use a three-step process:
- Internal competencies review.
- Customer demand and perspective.
- Development and articulation.
Step 1: Internal competencies review. Who are you?
Answering this question should be done by the group responsible for founding or running the company – the partners, the executive team, the owners. Here are some good guiding questions to ask: Why did we get into this business in the first place? How would the world be worse off without us? What is it we are really, truly great at?
Vic Neufeld would say: "We want to be on the right side of human nutrition." The founders of Nantucket Nectars love to say "we are juice guys."
Step 2a: Customer demand and perspective. What do you do?
At this point, customer feedback is important, especially if you have not solicited feedback in a long time. Finding customers in their own environment, and asking them questions about what they like/dislike/want/don't want is a pretty effective way to temperature-check your offering.
Beyond customer input, more guiding questions will get your group to the answer to this: "What do you do?" How do we help address a customer pain point, or fulfill a customer desire? What is the outcome for customers of buying or using our product or service? How are customers better off after using our product?
A book publisher might say: "We write great children's fiction, which tackles diversity issues."
Step 2b: Customer demand and perspective. What makes you special?
You can't answer this question unless you have a good, up-to-date understanding of what your competitors are offering, which requires competitor intelligence.
After finishing the competitor research, more guiding questions will help: Why do or should customers pick us instead of our competitors? What or how do we do things that no one else does? What is the one thing we do that is both unique and compelling to customers?
In our publisher example, the answer here could be: "Our books incorporate public figures and celebrities, which make the stories real for our young readers." Jamieson puts its differentiator right in the tag line: "natural sources."
Step 3: Development and articulation. What does it all mean?
A simple means of articulating the value proposition is to literally put the answers to the three core questions together as an elevator pitch for everyone in the organization, and to have them form the opening paragraph of sales and marketing materials, including the home page of your website.
Tactically, the most important things to keep in mind are related to clarity and brand alignment.
Clarity: resist the urge to use buzz words that will degrade clarity for the sake of cute language, and ensure everyone in the organization is able to understand and communicate the fundamental value proposition. WestJet does a great job baking the value proposition of friendly service into its culture.
Brand alignment: the substance of the value proposition must align with the brand position. For example, if you decide the benefits of your offerings are associated with value, your packaging and pricing should be commensurate. Jamieson promises better results based on its ingredients, and its prices reflect that.
MAY 29: Designing positive customer experiences is about mapping, measuring and maximizing. Look for the column on the Report on Small Business home page.
Special to The Globe and Mail
Mark Healy, P.Eng, MBA, is a partner at Satov Consultants – a management consultancy with practice areas in corporate strategy, customer strategy and operations strategy. Mark's focus areas inside the customer strategy practice include consumer insights, customer experience, innovation and go-to-market strategy. He is a regular speaker and media contributor on topics ranging from marketing to strategy, in telecom, retail and other sectors. Mark is known as much for his penchant for loud socks and a healthy NFL football obsession as he is for his commitment to Ivey and recent Ivey grads. He currently serves as chair of the Ivey Alumni Association board of directors. Mark lives with his wife Charlotte and their bulldog McDuff in Toronto.
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Mark Healy