Sunday, May 16, 2010

Getting Real Value from Customer Value Propositions

A 2004 survey by Strativity concluded that 50% of salespeople don’t actually know what features and benefits actually justify the prices of the products and/or services they sell, (D’Aveni, 2007).

The Customer Value Proposition (CVP) allows organisations and their sales people to complete a detailed review of the products and/or services they offer and compare these to their competition. Of course, in order to complete a CVP you must first ensure that you have a detailed understanding of your customer’s requirements and expectations.

A CVP compares your product and/or service offering with the next best alternatives and looks at four distinctive areas;

1. Positive points of difference – which lists the features that are superior to the next best alternatives;
2. Points of parity – which lists features that are comparable with the next best alternatives;
3. Negative points of difference – which lists the features that are inferior to the next best alternatives; and
4. Points of contention – which lists the features where you disagree with your customer about the benefits of these particular features. Where in some cases you may consider them superior to the next best alternatives and your customer disagrees, or just as important where you may consider them inferior to your competition and the customer disagrees.

Developed correctly the CVP gives an organisation a clear picture of how their products and/or services compare to those of their competition. As with all business tools CVP’s are created in a dynamic environment - where you must look beyond the next best competitive alternative and assess all current and potential product offerings that directly impact your market. It’s better to analyse your product and service offerings against all competitors just to make sure that you are not over simplifying the analysis.

When considering benefits it’s important to consider both the tangible and intangible benefits and correctly interpret the customer’s perception of these intangible benefits, including what they are prepared to pay for them. Also, don’t assume what is ‘good’ for the customer today will be ‘good’ for the customer tomorrow.

CVP’s are used to show an existing or potential customer how your product and service offerings are better than the other alternatives and how your product is best for their needs.

Imagine the full potential, both internally and externally, of developing and understanding your CVP’s and how these can be transformed into a very powerful presentation for your existing and potential customers? You will not only show that your organisation understands your customers needs but also how your product and/or service will exceed their requirements. Also you convey, through the depth of knowledge and research, that you are fully aware of the current market and all the alternative offerings.

Finally, remember that “each value proposition must be;
1. Distinctive – must be superior to those of the competition;
2. Measurable – all value propositions should be based on tangible points of difference that can be quantified in monetary terms; and
3. Sustainable – the company must be able to execute their value proposition for a significant period of time. (Anderson, Narus, and van Rossum, 2006, p.98)”

Customer Value Propositions exist in a dynamic world and must be reviewed and developed on a regular basis, so that they continue to add value to your organisation and your customers.


Anderson, J.C., Narus, J.A. and van Rossum, W. (2006). Customer value propositions in business markets. Harvard Business Review, March, p.91-99.

D’Aveni, R.A. (2007). Mapping your competitive position. Harvard Business Review, November, p. 110-120.

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