This is just a thought, a tip, not something you’re supposed to do or you have to do.  But it might help. The idea of value-based marketing can help you figure out what to do to take your core strategy into specific activities to reach your customers.

  1. It starts with what the experts call a value proposition. In its simplest forms that is benefit offered minus price charged. Price is relative. So an automaker might offer a more comfortable car at a price premium. Or a safer car or a faster car. A national fast food chain probably offers the value of convenience and reliability, probably at a slight price premium (at least when compared to the weaker chains). A prestigious local restaurant, on the other hand, is offering a completely different set of benefits (luxury, elegance, prestige, for example) at a marked price premium. A graphic designer is probably selling benefits related to communication and advertising, not just drawings.

  2. Then you communicate the value proposition to your customers. The restaurants communicate with customers using their location (drive-through facility, perhaps, or a playground for kids), their menu, and also decor (bright colors for one, fancy table dressings and white tablecloths for another) and signage and lots of other messages. What do you think about a mosty-crab restaurant that plays loud music and has peanut shells covering the floor? And of course there’s the more obvious advertising, collaterals, websites, and what employees say, and do, and how they are dressed. For example, if a computer store’s business proposition has to do with reliable service for small businesses, peace of mind, and long-term relationships, then it probably shouldn’t be taking out full-page newspaper advertisements promising the lowest prices in town on brand-name hardware. It probably should communicate its proposition with sales literature that emphasizes how the computer store will become a strategic ally of its clients. It might also think twice about how it handles overdue bills from customers, who might really be holding out for more service or better support. Look at specific business activities.
  3. None of this works if you don’t deliver on the promise. The expensive restaurant needs to deliver good food well, with good service. The fast-food restaurant needs to deliver food quickly. The automaker claiming safety, speed, reliability, or whatever, has to deliver on those claims.

Where all of this becomes particularly interesting is when what you do doesn’t line up with what you say. Or what you promise isn’t what you deliver. I worked with a computer store that promised reliability and peace of mind to small-business customers but didn’t deliver until it finally revamped its business plan to include more service training, more installation, white delivery vans, and the promise not to cut prices to compete with every box-pushing office superstore.

And the value proposition shows up in all functional areas of the business, not just the sales pitch. For example, do the people who collect the bills know that you are trying to offer your customers superior service? How about the people who receive returns at the customer service counter?

Value-based marketing should be included in the action plan, the activities, most of which are listed on the milestones table. It’s a way to give some logic to the actual sales and marketing and administration and related everyday business activities.

Tim BerryTim Berry

Tim Berry is the founder and chairman of Palo Alto Software and Follow him on Twitter @Timberry.