Customer Value Proposition: The most important part is the customer

Summary: Putting the customer in customer value proposition

For customer value propositions, it’s obvious that the ‘customer’ is the cornerstone of success, right? Deeply understanding your audience helps you create offers that resonate with their needs. With insights from existing data and primary research (predominantly customer interviews), you’ll uncover underlying motivations and emotions influencing their choices, crafting customer value propositions that not only address surface-level requirements but speak to their core issues.

If you want a quick refresher on the 3 C’s of proposition, of which customer is always the first, check out this article: https://stratinn.co.uk/Innsights/creating-a-unique-value-proposition-the-3-cs

Introduction:

Developing a compelling customer value proposition is crucial for any business looking to stand out in a crowded market. The journey begins with understanding your customers – their needs, pain points, and decision-making processes.

It’s not unusual for us to hear of companies and teams developing their value proposition in a workshop based on individual opinions or developing them solely with pre-existing data. This presents some significant risk to successfully developing their proposition. Although opinions of what the customer is feeling are often ‘mostly’ correct, they never paint the full picture and whilst using existing data might feel like it’s focused on the customer, it has rarely been collected with the development of a proposition in mind.

In this article we’ll dive into the art of gathering and analysing customer insights to craft a proposition that truly resonates with them. We’ll explore the importance of building from existing data rather than relying on it, conducting primary research, and speaking directly to your ideal customers to get their true perspectives.

By following these steps, you’ll be well-equipped to create a value proposition that not only meets customer needs but also differentiates your offering in the marketplace. Let’s get beyond the functional messages and features you build to develop a proposition that grabs attention.

Your starting point: The customer… duh!

Starting with the customer, it’s likely you won’t be starting from scratch. The first step is to gather all the primary and secondary insights you have on your customers. Most organisations have a bank of previous research ready to harvest and analyse. This could include data from:

• Customer surveys
• NPS (Net Promoter Score) feedback
• Live chat transcripts.

With this data accessible, it might be tempting to rely on it alone to accelerate the process. While such insights are valuable, they might not always be directly actionable for your proposition. It is usually data that has been collected for a wide range of purposes and from a variety of internal and external audiences. Don’t rely on it alone.

The key is to assess each piece and see which bits are relevant to articulating your proposition (remember to use the wider 3 C’s as a lens on what’s important or not). Don’t get us started on how much un-actionable data is collected on the premise of ‘know your customer’…anyway, that’s for another article!

Even if the data feels robust and comprehensive, we can’t emphasise enough the importance of conducting primary research specifically oriented around your proposition. This is the only way to capture customer perspectives directly and hear what they say for yourself. The value is in digging that bit deeper and exploring areas that surface- level questions in a survey will not tap into.

One more thing. Try not to palm your interviews off to a researcher or agency, you or the team developing your proposition need to conduct the interviews. The level of understanding you get engaging with a customer directly is invaluable. If you have an external organisation (like Stratinn) supporting you, ensure that the team designing the proposition are holding the interviews and again, not palming it off on ‘lower-cost’ resource (we see it happen all the time).

Recommended reading: https://stratinn.co.uk/Innsights/aligning-story-and-strategy-in-business

Speak to the right people

Before diving into setting up interviews, you need to be clear about who you want to speak to. The sexy, in-vogue language here is defining your ‘Ideal Customer Profile’ (ICP). This is a crucial step to make sure you are focusing your efforts on the most relevant customer segments. You only want to be gathering insight from the people you are aiming to appeal to. Get this wrong and the insight becomes useless (sorry but it’s true).

“Be aware, this can be quite an involved process.”

The first step is to consider the ‘level’ in the organisation you are developing your proposition for. If it’s for a specific product or small business unit then a tightly focused customer group is required and being able to run 5-10 interviews where a strong set of common themes come through is needed. Whereas a group-wide or brand proposition, means you’re likely to have a wider range of customer types and needs as you’ll have a range of products, services and business units. Keep this in mind when selecting your target audience, the more disparate the needs the larger the number of customers you will have to speak to.

For some, this is easy. For others, it’s less clear. For example, when working with a Marine Specialty insurer in the UK, their target customers were ‘brokers of Specialty Marine insurance’. A pretty well-defined group of people to target and speak to, though still not without complication as you’ll find different product specialisms (cargo, hull, etc) and buying behaviours (wholesale vs. marine).

On the other hand, when working with a construction advisory professional services firm, it was less clear. They had an offering with multiple service lines that could be applied in many industries, with many different organisations, and for many different people within those organisations. If you’re in this boat, you’ll likely need to do a bit more work to analyse different customers and prioritise which group(s) you want to target first.

This guide won’t go into detail on how to do this (one for another guide) but here are a few things to consider:

• Strength and variation of customer needs in each segment (the wider the variation in needs the more likely you are to have to make decisions on focus)
• Strength of competition
• Strength of existing relationships/ accessibility to customer
• Addressability by you and what you do
• Factors/trends impacting the market size and growth of each segment.

Be aware, this can be quite an involved process. The effort required will depend on the volume of different market/customer opportunities open to you as well as the degree of certainty you (or those in your organisation) want before moving forward.

Speaking to customers

At this stage, we suggest trying to engage with 7-10 customers through in-depth, c. 1- 1.5 hour long interviews. This will allow enough time to unearth their needs and pain points beyond the obvious. In preparation, you will need to develop a discussion guide which breaks down into the following key sections:

• Intro and objectives of the interview – like with any good interview practice, get them comfortable and talking about themselves.
• Understand needs – ask them to explain the top factors they tend to look for in a supplier like you. Dive into the pains they think suppliers like you could solve. A good way to do this is to frame the question in a key decision-making moment. For example, “When you were considering which supplier to place new business with, what were the factors you considered (and why)?”
  • Tip: In preparation, you may want to use knowledge from existing insight or desk research to create a hypothesised list of needs. You can use these to prompt and probe the conversation if they do not reference them initially.
  • WARNING: When prompting, ensure you tag insights as prompted insights, separate to unprompted. These should have a lower weighting in your insight base as you’re leading the discussion.
• Evaluation of strengths and weaknesses – If you’re speaking to existing customers, ask them to compare your offerings to competitors. This provides insight into your market standing and allows you to understand who stands out and why. A key part of the work involved is comparing what customers think you’re strong and weak at, compared to what your team think.
• Evaluation and insight on competitors – For potential customers or customers using you and others, understanding their current choices of suppliers will offer you valuable competitive intelligence. This is particularly useful in B2B markets characterised by opaque transactions and lengthy sales cycles. Get their opinions, positive and negative, from the interviews but also try to tease out what ‘position’ they hold in the customer’s mind. For example, X company might be their go-to when price is really key, or Y might be their go to when they want to ensure a great service experience.
• Prioritisation of needs – Time to revisit their needs and get them to do a quick prioritisation. There are a couple of ways to do this but for both options, firstly you will want to playback the needs and show them visually. The first option you can use is simply to get them to rank the needs from most to least important. The second option (and we have found it preferable) is to get them to allocate a need to either a MOTIVATING need bucket (a need that influences the buying decision) or a HYGEINE need bucket (a need that must be addressed by suppliers and if absent, will discount a supplier but the interviewee doesn’t use it to drive a final decision).
  • Tip – if time is tight, this can be an exercise you send them after the interview via a survey or over email.
• Close with a magic wand – it is helpful to close the interview with a question that gets the interviewee to pull out one critical piece of insight for you. This is where the magic wand question comes in. It gets the interviewee to identify the one thing they wish to see you, or other suppliers, deliver that would make their lives significantly better. Or you can frame it as the one thing that if a supplier did it, would make that supplier stand out.

“We aren’t saying you need to deploy a full 5 whys exploration of every response you get. (we tend to steer away from generic consulting BS frameworks like that)”

Recording

This might go without saying, but it’s always best to capture a recording of the interview (do ensure you have permission, ideally in writing, and you have been clear to the participant how their information will be used) so you can refer back to the recording or transcription if required.

Curiosity beats structure

Unfortunately, interview success doesn’t automatically happen because you have a good structure. It comes through covering the obvious (quickly) and then digging into the underlying reasons behind them. We aren’t saying you need to deploy a full 5 whys exploration of every response you get (we tend to steer away from generic consulting BS frameworks like that) but it’s curiosity that allows you to uncover the little nuggets others aren’t seeing or paying attention to. It’s the way to explore how the people in your customer organisations really FEEL about something not simply providing an unemotional ‘professional opinion’. It’s these things that will provide you with the basis from which to create a more interesting and resonant proposition to your target audience. It’s focusing on these things that help you become more distinctive and standout from the same old messages you probably see from your competition.

Tip: it helps to run the interviews with 2 interviewers. It shares the load but also increases the opportunity for picking up on and exploring different areas of discussion.

Are 10 interviews enough?

Qualitative interviews are more about depth and specifics over statistical robustness and breadth. So, the number of interviews doesn’t have to be vast but it will require some judgement.

Take stock once you have held the first 5-7 interviews

If you have a tightly defined target customer, you should at this stage be hearing the same themes cropping up again and again. For example, you might have heard from 5 interviewees that X,Y,Z are the are key needs or considerations in the decision-making process when deciding on a new supplier. This would be evidence of an emerging customer insights.

If this is the case, spending lots more time running interviews will yield very little, though if you have the time then it rarely hurts to go to 10-15. Sometimes interview #13 delivers a surprising insight not mentioned before. Not always but it does happen.

However, if there is still a wide range of views or new insights coming through after 10 interviews, you really do want to consider a few more. Either that or it might suggest the target customer set you have chosen is too broad and there are too many differences in the people you are speaking to. Review the insights coming out, see if there are clusters and potentially focus on a more specific group.

For example, one piece of work saw clear differences in opinions between retail and wholesale brokers. Both were commercial insurers in a Speciality line of business but the need areas and things that were important to them were significantly different. This required a rethink on the sample we had, and who we were ultimately developing the proposition for.

Recommended reading: https://stratinn.co.uk/Innsights/why-b2b-is-more-emotional-than-b2c

Extracting the insights

Coding and theming allow you to go from long-form transcription to an organised and ranked set of insights. Although structured, the thinking required is not formulaic and requires interpretation and judgement. However, you can typically follow a 4-step process:

1. Initial review: shortly after the interview, engage with the other interviewer to discuss the key high level themes you felt came out. Don’t dig into specifics, just the overarching themes. Read the transcript if helpful.
2. Coding: read through all the transcripts in detail, capturing the specific topics that came up. We tend to capture these in a Miro online whiteboard but you can use whatever tool you like. (Although Miro is pretty darn good!)
3. Theming: look across the coded topics and start to cluster common themes. This may require a bit of lateral thinking as to how clustered you make them. The key is to end up with a shorter list, ranked by the number of interviews it was mentioned in, whether it was prompted or un-prompted and how strongly the need or opinion was held.
4. Review themes: reviewing and re-clustering themes is always good advice, get a second opinion on whether your clusters make sense given the coding above.

Conclusion

The process of developing a strong customer value proposition is both an art and a science. It requires a deep understanding of your customers, meticulous data collection, and insightful analysis.

By following the steps outlined in this article – from leveraging existing data to conducting in-depth interviews and extracting meaningful insights – you’ll be well-positioned to create a proposition that truly resonates with your target audience.

Remember, the key lies in curiosity, digging deeper than surface-level responses, and uncovering the emotional drivers behind customer decisions. With this approach, you’ll not only meet customer needs but also create a distinctive offering that sets you apart from the competition.

Should you want a full, in-depth guide to developing propositions from end-to-end, get our free (no email) guide: https://stratinn.co.uk/how-to-craft-a-compelling-customer-proposition-guide-download