The Value Proposition
INPUT
By Peter Janis
W
hether you offer a product or
service, the same rule applies:
To be successful, you have
to create a unique range of
offerings that will set your
company apart from the competition. This is
known as the value proposition.
To begin, ask yourself this simple question:
‘Why do people buy?’ In other words, what mo-
tivates a person to buy one product or service
over another?
There are hundreds of reasons that people
buy. The most common answer I get when I ask
this question is “price.” I always respond with:
“Are people looking for a lowest price on a pair
of jeans, or are they looking for the lowest price
on a pair of Levi's jeans?”
My point here is that price is rarely the only
motivator. In this case, the Levi's name carries
a lot of weight – a quality brand that has been
around for over 100 years.
This does not mean that price is not a factor.
For instance, when selling a commodity, price is
often the primary motivator. So, if you are sell-
ing pork bellies or wheat, you are going to be
forced to compete in a price-sensitive environ-
ment. The win (profit) will have to come from
efficiencies gained in production and delivery.
Differentiation
What do you do when you offer a product or
service where there are many competitors?
How do you go about differentiating yourself?
A few weeks ago, I was chatting with my elec-
trician and he mentioned that he was about to
put some work into enhancing his website. I
asked him: “What are you going to do to attract
customers?” In other words, “What will make
your website different or a destination?”
This got me thinking… Last summer, I de-
cided to fix the irrigation system for my lawns
and gardens and had a specialist over to see
what could be done. He looked at the electrical
connection under the dock where the previous
pump was and told me the electrical system was
both not working and extremely dangerous. The
previous owner used interior metal electrical
boxes and then connected a 220-V line to power
the pump. All of this was only about 6 in. above
the waterline and adjacent to the beach area
that was used for swimming. A potential disaster.
I asked him if he had an electrician that
could do the work. He said yes, but after making
a phone call, was told that his electrician was
too busy and that I would have to find someone
else to fix it before he could attempt a repair.
So, I had my electrician, Aaron, a guy that did
some work for me previously, solve the problem.
Aaron did a marvelous job on rewiring the dock-
side electrical outlets and encased them all in
waterproof housings.
This spurred on a thought: Instead of say-
ing he was a general electrician, I suggested
that Aaron could differentiate his company by
promoting specialty services such as water-
related electrical installations. I told him that
he could always have a tab on the website
that promoted general electrical work, but by
identifying specialty services, he would stand
out from his competition and when someone
is searching for an electrician to connect a hot-
tub or sauna, his company would stand out as
being a specialist that would do things right
and make sure the installation is safe!
New Opportunities
Market disrupters also open up doors for op-
portunity. The electric car immediately comes
to mind. Most houses are not equipped with
proper or accessible power for charging
batteries. By simply looking around, observ-
ing what is happening in the market, and
investing in some “blue sky time” to think
things through, you can often come up with
new business opportunities that can lead to
growth and profitability.
I suggested that Aaron could call irrigation
companies and other water-related companies
to let them know that if their regular electrician
is too busy to handle a job, he would be pleased
to step in. By creating a list of niche products or
services, you are also creating a list of business
opportunities from which to draw upon.
This brings to point another reason people
buy: If a buyer is happy with a current supplier,
he or she will rarely make a change unless the
regular supplier screws up. You can sometimes
sway a buyer if you have a product or service
that is significantly better for the same price
or as good for a lot less money. Even more to
the point, if they have an immediate need and
the regular supplier is unable to fulfill it, the
buyer may try you out. Do a good job and your
company may find a permanent place on the
buyer’s speed dial!
Put It in Practice
So how does one go about figuring out the
differentiators that make up the value propo-
sition? Start with a list of “reasons to buy” that
will motivate a potential customer and then
put them across a graph whereby you can
compare your offerings to your competitors'.
On the left, “grade” the importance of a par-
ticular “reason to buy” for your customer base.
For instance, if you are an online retailer, this
could include selection, low-cost delivery, and
maybe a no-questions-asked return policy.
Just be honest with yourself. There is no point
promoting low price if your price is the same
as the other guy’s. If you are a sound rental
company, you may have a better staff with
more experience, better or newer equipment,
or maybe you have handled big accounts
that bring you extra credibility. Once you have
created your value proposition, you need to
message it out to your client base and let them
know why you are a better choice. This is your
opportunity to brag!
When we were developing the Radial DI
boxes, we looked at competitors and realized
that they mostly offered a one-size-fits-all ap-
proach. By adding features such as a protective
book-end design, stereo-to-mono mix function,
the ability to lift the ground without losing
phantom power and reverting to a battery, and
by painting our boxes blue and green, we stood
out. Techs would notice our boxes on stages and
eventually recommend them to their clients. By
adding musicians, engineers, and technicians to
our artist roster, the brand gained a higher level
of approval and eventually trust. This got Radial
on riders, in music stores, and the rest is history!
Formerly the president and CEO of Radial Engineer-
ing Ltd., Peter Janis has been in the Canadian
music industry for over 40 years, working in retail,
distribution, and manufacturing. Peter now offers
consulting services with his firm Exit-Plan, where
he assists business owners in increasing their sales
and enhancing the attractiveness of their business
in preparation for retirement. For more information,
visit www.exit-plan.ca.
PROFESSIONAL SOUND 9