Technology Providers Need To Craft Unique Value Proposition: Gartner

Providers that compete in mature markets with highly undifferentiated offers and capabilities are especially challenged with articulating a unique value proposition, according to Gartner. Gartner analysts identified a three-step process to help providers uncover the unique attributes of their value proposition, helping them differentiate with qualities that belong to them.

“Most value propositions fail to stand out in the market because they lead with the corporate ego or the provider’s product or service features, rather than the value of the business outcome the customer can achieve with the provider’s solution,” said Richard Fouts, research director at Gartner. “Many marketers construct value propositions in the style of tag lines or marketing slogans. These attempts do not fit the definition of a true value proposition. Moreover, they miss out on opportunities to communicate competitive uniqueness or superiority.”

In 2008 Gartner surveyed over 600 IT buyers, asking them to identify both the strengths and the weaknesses of marketing and sales efforts across all types of technology providers.

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“More than half the respondents said the biggest weakness or shortcoming in IT sales and marketing efforts is the lack of a quantified value proposition,” Fouts said. “The survey data also showed that, on average, buyers are 2.5 times more likely to buy products if a vendor is able to effectively quantify its value proposition.”

Even vendors that sell innovative approaches in emerging markets are not freed from the challenges of constructing a value proposition.

“In an age of podcasts, micro blogs such as Twitter, social networks such as Facebook and MySpace, and other social media, there’s more market noise than ever, making it more important to have a value proposition that rises above the noise,” Fouts said.

Gartner has created a framework that will expand the marketer’s thinking about the value proposition to include value, capabilities and customer experience (including that delivered during the pre-sale phase) to help their organisation rise above the market noise.

“Often the best way to get a better understanding of a concept is to break it down,” Fouts said. “Project managers are especially good at this. They’ve learned to deconstruct big problems into smaller, more manageable chunks of work before integrating the results into the larger end solution.”

Gartner recommends that marketing executives undertake a three-step process to construct a quantifiable, unique value proposition to move their organisations above the market noise. These steps include:

Step 1: Analyse value from a price/ performance perspective.

Even if a vendor shies away from price/ performance in its marketing, it’s the first place most buyers begin their purchase process. Many vendors are often surprised to see that over the years, the functionality and features they provide have failed to keep up with competitors. In fact, challengers will often offer richer product capabilities at similar, or even lower prices, to bring attention to their higher, more distinct value, making price/ performance analysis an important first step in the value proposition exercise.

Step 2: Analyse your business proposition.

Marketing executives must determine how their way of doing business adds value. For example, how do they compete in terms of service, their financial proposal for doing business, or customer experience? They must think ‘before and after the sale’ to get a broad view of how they extend value with customer experience.

Step 3: Put ‘value’ and ‘proposition’ together.

Put the results of the above two exercises together. By putting the results of the above two exercises together, and by quantifying the business outcome and experience that a customer can only get from a specific provider, marketers get much closer to constructing a value proposition that only they deliver.