In a business world that often feels too transactional, we are reminded of Walter Dunn – a friend and mentor to many of us during our days with Coca-Cola. Walter was a giant of a man, in every sense, who both walked amongst industry leaders and shared his friendship and wisdom with all. He understood the essential power of relationships between people – the personal and professional value exchange between a company’s products and services and the customers they serve.
We learned the timeless truth that the quality of our customer brand promise was at the heart of protecting share, price, and margin in the intensely competitive consumer products space. This principle still rings true as industries face continued margin pressures and are compelled to rethink their customer value proposition – from what they sell, to how they sell, and how they deliver on the promise.
The centerpiece of a winning commercial strategy is the design and construction of the promise itself – a value-added and differentiated bundle of products & services; or said another way… brands & capabilities. When done right, products and services companies can elevate their competitive advantage through the development of a distinctive insights-based customer value proposition (CVP) that protects share, helps command a price premium versus the competition, strengthens business partnerships, and even unlocks growth.
Benefits of CVP
A well-constructed CVP defines how a company creates value for its customers by leveraging its unique bundle of brands and capabilities in an ownable way. The approach ensures the entire organization focuses on addressing both consumer and customer marketplace opportunities in a holistic end-to-end manner. The CVP offers other benefits, as well:
· Informs development of company, brand, and go-to-market strategies,
· Drives prioritization, coordination, and alignment of resources across functions,
· Provides a path to both brand and customer-relevant selling stories,
· Helps form better solutions for customers and end-consumers alike,
· Enables stronger customer partnerships, and
· Magnifies the value of a company’s brands and capabilities.
Moreover, the CVP aligns the entire organization, not only Sales & Marketing, to deliver solutions that are relevant for consumers, users, customers, and buyers alike. Said differently, alignment is not just a benefit of this effort, it is the central concept. The aim of any CVP redesign is to “organize for the outcome” to enhance customer value creation.
We have found that just as leading brands invest enormously to build their brands with consumers, best-in-class suppliers also invest in the branding of their go-to-market approach with customers. In other words, building a distinctive CVP requires a disciplined methodology comprised of the following: understanding customer needs and expectations, capability benchmarking, customer brand promise development, and proposition enablement.
Voice of the Customer
Grounding your CVP development relies on a comprehensive understanding of customer needs and expectations. It starts with understanding foundational requirements – what are the table stakes that a supplier must deliver on to earn the right to play and stay? Key characteristics such as product quality, product guarantees, as well as product supply, and order lead time might be examples of the cost of entry.
Earning the right to advance beyond transactional status necessitates understanding customer expectations of their more strategic suppliers – what are the highest value creation opportunities for customers? Key traits such as insights, innovation, and collaboration are characteristic of higher-order requirements that separate good and great suppliers.
Finally, it is essential to understand how you are performing against these customer-identified needs, expectations, and opportunities. Gathering a representative sample of high-value and high-growth customers for this input is key to developing a balanced perspective. Knowing how you benchmark versus customer expectations and your competitors will inform priorities in addressing gaps.
Take Inventory of Thyself
Equally important to customer understanding is assessing how your capabilities stack up and create value for your customers. Self-assessment can be dangerous if it lacks adequate benchmarks and honesty. But if done right a clear picture of both foundational and distinctive capabilities emerges and sheds light on how well you deliver with respect to basic customer needs and more strategic opportunities as you strive to earn a place at the planning table.
The range of commercial capabilities that warrant review is diverse: Brand & Channel Planning, Customer Planning & Management, Product Management, Innovation & R&D Strategy, Data & Insights Capabilities, Workflow Optimization, Customer Service & Support, Brand Marketing, Customer Marketing, Category Management, Education & Thought Leadership.
Recognizing that not all customers value all capabilities equally, it is important to understand your gaps and the relative ROI on the capabilities stack through the lens of high-value and high-growth customer segments.
Building a Right-Sized CVP
Developing a clear articulation of your compelling customer value proposition starts by defining how your business creates value for your customers. Knowing how your evolved customer brand promise – your products, services, and capabilities – impacts the top line and bottom line for end-users is central to quantifying what it is worth.
With a clear understanding of customer needs and existing capabilities, the next critical step in the CVP journey is identifying and prioritizing the commercial capabilities most valued by your customers and required to deliver the value proposition. The creation of a capabilities roadmap that visualizes the build is helpful in forming a consensus for the needed investments. To be sure, closing certain capability gaps is a quick fix requiring minimal budget, while others necessitate more extensive resource investments including OPEX and CAPEX.
This work brings to life the compelling and branded customer promise that differentiates.
CVP Enablement and Execution
Incorporating a well-planned approach for driving awareness, application, and adoption is essential to standing up a new customer positioning both internally and in the trade. Creating a complete plan for building awareness and understanding of the new value proposition requires more than messaging. Doing it right involves upskilling and creating new muscle memory, inclusive of tracking and socializing best practices and wins. Finally, the successful adoption of a robust CVP is about developing the agility to evolve the go-to-market strategy as new opportunities for customer value creation emerge over time.