The value proposition: what are we really adding...
Paula Kensington
The value proposition: what are we really adding?
Do you ever get the feeling the word value is used so liberally these days that it has lost its value? We’re constantly being told what ‘value for money’ we’re getting when we make purchases; that a service provided is ‘good value’; or that we need to ‘value add’ in our own workplaces.
Maybe it’s time to check in with what we really mean by value and whether we really are adding it to what we do. How do we think about and measure it? What is the timing of value?
You could argue value is the factor that prompts someone to pay for something you create or offer. But I’d suggest it’s more than that. The fact somebody buys your product or service doesn’t necessarily mean they think it’s good value.
What is value?
For me, adding value means offering something above and beyond ‘the expected’, and that leaves your customer feeling they got more than what they paid for. This often involves offering something different from (and better than) what others are doing.
This takes courage, since pushing the boundaries in this way often means pushing ourselves out of our comfort zones. It may mean taking a risk by departing from the tried-and-true and being brave enough to step ahead of the pack.
It may also mean thinking more broadly about what constitutes value – that is, more than just a financial gain, bonus or discount. Value can be intangible – something not immediately visible. For instance, maybe the experience you gained and the lessons you learned were more valuable than the result on paper.
How do we measure value?
How value is measured may depend on who is doing the measuring and the personal values they bring to the transaction.
But I believe true value is a two-way result – and, paradoxically, one that promises more than it delivers. It has been said that both parties in a business transaction should feel satisfied with the outcome but also be left with a little niggling feeling they could have got more.
What is the timing of value?
I’d suggest value is not a static thing and that it changes over time. Expectations heighten over time, and people’s own values (and, consequently, what they consider important in a product or service) change. So what might have been considered good value in the past might not pass the ‘sniff test’ today.
The timing of value is important because it helps us to chart expected returns over a certain period. Perhaps the easiest way to think of this is in business, where we record and measure value over different time periods: an immediate return occurs within 12 months; a longer-term return is recorded beyond a year’s time. The timing of this value should be factored into your RoI calculations and business strategy or pivot plans.
Making value count
Apart from considering your own value-based decisions, you also need to consider how your service or product responds to your client’s decision-making process. For example, when I talk about investing in self- or team-development, the value equation is: how will the cost of this investment deliver value far greater than the cost of losing customers or revenue because of bad staff morale or poor service delivery?
When presenting to your clients or your boss (if, say, you are negotiating a pay review), use the RoV (return on value) as an input to the calculation. Consider:
· Your value to the business – how your contribution affects revenue year on year
· How your value will elevate your positioning and gain traction or market share
· How your value-add has resulted in significant improvements in the company’s financial performance
Always think through what saving or benefit your service or product delivers to the client or boss. Try putting yourself in the other party’s position. Your ‘sell’ will be easier if your language shows deep understanding of your value and why it’s important to the other person.
