Why is it that big companies tend to keep their customers at arm’s length? Instead of taking suggestions, a lot of times companies get cocky and decide what their customers want instead of asking what their customers want. This can create major problems, as we’ve seen before.

On the other hand, there are some companies making great strides to not only connect with their customers, but to involve their customers.

One perfect example of this is My Starbucks Idea, an online forum where Starbucks customers can suggest ways to improve their “Starbucks experience,” as the company likes to say. Starbucks then lists all the ideas that come from their customers. Even if you don’t submit an idea, you have the sense that Starbucks cares.

The same goes for Keurig. Here is another company that is catering to the customer, with great results. Last week, I talked about the I³ qualities apparent in Keurig’s single-cup brewer. Since this company is an intriguing case (and since not much has been written up about them yet on the blogosphere), I wanted to spend one more week looking at Keurig’s next innovation – or, I should say, innovations – keeping in mind that all of these innovations came from customer suggestions.

• Larger Brewer: One of Keurig’s weaknesses is size. Currently, you can only brew, at most, 12 oz. at a time. For someone who tends to order “Venti” sizes, or for someone who merely wants to fill their travel mug with one K-cup, this is a problem. Not to worry, says Keurig, who is rumored to be working on a brewer to accommodate.
   
• Strong Alliances: Keurig recently announced a partnership with Starbucks and Dunkin Donuts. This is a win/win for Keurig as well as for these companies – customers who only drink DD/Starbucks coffee can now enjoy it in K-cup form, thereby increasing business for both parties. In fact, Starbucks CEO Howard Schultz revealed that “more than 80 percent of current Starbucks customers in the U.S. do not yet own a single-cup brewer,” so this allegiance is bound to bring strong business to Keurig (as well as make Starbucks customers very happy).
   
• Environmentally-Friendly: In my last post, I brought up the troubling thought about the amount of waste generated, throwing out all those K-cups. What you may not know is that Keurig has already come up with a solution. They’ve introduced a product called My K-Cup – letting people reuse a single pod with the coffee of their choice – which especially makes their greener customers happy.
   
• Other Instant Beverage Ideas: Keurig has already branched out into the hot chocolate and hot apple cider realm, so what’s next on the docket? Here’s just a few for starters: lattes, cappuccinos, soup, Airborne, and yes, even infant formula. It’s as if the list keeps going. Soon the question will no longer be:
  “WHAT can I get in a K-cup?” — but — “What CAN’T I get in a K-cup?”

So what does Keurig – and all of their innovation – teach those of us who are not in the coffee business? Keurig teaches us that to truly be an I³ business, you must continue to go full-speed-ahead into your market, while never losing focus of your customer base. Keurig and Starbucks teach us that it’s not enough to acknowledge the customer, but to involve the customer.

This seems like a no-brainer, but I’m still amazed at how many companies take their customers’ suggestions for granted. Keurig (and Starbucks, for that matter) has made it their business to give their customers what they want, and it’s paid off. Big time.

• What else do you think we can learn from this ever-growing, ever-innovating world of coffee?
• Have you seen a payoff in your company by listening to your customers’ requests?
• Have you ever been on the other side – have you suggested something to a company, to see them follow through? How did this affect your relationship to the company?
• How are you involving your customers in the trajectory of your business?

It just dawned on me the other day: the Keurig coffee system is everywhere. In my home, in my office, in my clients’ offices, at the gas station, in the convenience store, at the mall – everywhere! It seems that wherever I am, I can look up and see a Keurig single-cup brewing station beckoning me to brew a cup.

Perhaps you’ve experienced this phenomenon. Maybe you could even look up from your computer right this second to glance at a Keurig coffee maker (it wouldn’t surprise me).

But what I want to know is: When did all this happen? When did a seemingly niche-market coffee maker become ubiquitous?

Sometimes in the business world, an idea is so well-anticipated that it’s an instant smash (most anything by Apple, for instance). Other times, you have a product that’s more of a “stealth hit.” The Keurig is just such a stealth hit – slowly creeping its way into our lives and suddenly ruling the coffee world. That’s not hyperbole, either. I truly believe that the Keurig is redefining how we consume coffee, and this is something to pay attention to (especially if you’re selling coffee).

Think about it. Surveys tells us that 73% of coffee in the US is made at home. That’s not news. And Starbucks has thrived in spite of this. However, consumers want what they want, the way they want it, inexpensively – and they want their coffee fast! In hard economic times, superfluous trips to Starbucks are the first to go. Keurig couldn’t have stealthily cornered the market at a better time.

Still not convinced? While in-home coffee maker sales have grown only 1% annually over the last 7-10 years, 2010 total revenue for Keurig brewers hit $330.8 million – a 67% gain over 2009. Developed in 1998, these single-cup coffee systems are now in 7% of households (and this doesn’t include all those offices with these coffee makers – 200,000 office installations in 2010 alone). This is incredible growth for a product introduced 15 years ago!

In fact, Keurig (which, it should be noted, was bought out by Green Mountain Coffee Company in 2006) is staking such a claim on the coffee industry that even Dunkin Donuts and Starbucks are producing K-cups for the brewers. That’s right – the coffee giants are teaming up with the little guy – who, by all accounts, doesn’t appear to be so little any more.

This type of success begs the obvious question:
What did Keurig do right?

That’s actually easier to answer than you might think. You see, Keurig is a near-perfect example of an I³ Value Proposition in action (see related post), and therein lies its success:

• The Keurig is Innovative: The Keurig entrepreneurs took a few simple ideas – that every cup of coffee should be fresh, and that everyone should choose what type of coffee they want, whenever they want – and made it happen in a clearly innovative way. The innovation was in the engineering to make these objectives easily attainable.
   
• The Keurig is Indispensable: With 2.5 million Keurig beverages made each day, I think we can safely conclude that the K-cup is indispensable to its owners – a part of their everyday lives.
   
• The Keurig is Inspirational: Keurig has come up with the type of product that consumers (and business professionals) are consistently interested in – even after using it day in and day out. I can easily marvel out loud at a Keurig in action, in any office – and have those around me join in. This is after we’ve all seen it do its thing hundreds of times. It’s still a “wow!”

So what’s next? We know they’ve made a great product, as well as countless great cups of coffee – but what will this niche coffee giant come up with next? Also – isn’t there an environmental concern with all those K-cups?

More thoughts on that next time…

Meanwhile:

• Is Keurig just dominating in-home coffee maker sales – or will it begin to impact Starbucks and other destination shops?
• How else do you think Keurig has changed the coffee business in the last ten years?
• Do you use a single-cup brewing system at home or at the office?
• What other “I³” ideas do you see cornering their markets?

It’s pretty obvious that using Twitter is a smart customer service tactic. In mere moments, your company can connect one-on-one with your customer – solving their problems and building their trust. Twitter can be an invaluable humanization tool for your disposal, if you know how to use it.

In a recent interview with Seer Interactive CEO Wil Reynolds, he tells of his personal customer service disaster story with a large and popular airline. When he needed help on the check-in website, Reynolds sent a tweet to their customer service handle on Twitter. As he awaited a response, he noticed that many others were tweeting with similar concerns. Instead of responding to countless customer concerns, the customer service Twitter account only responded to celebrity Star Jones. Immediately, what this airline communicated to their customers was that they weren’t important. It didn’t matter how many thousands of miles Reynolds had flown with them; he wasn’t a “celebrity”, and so he didn’t matter to them.

Don’t let this scenario happen to your company. Before you decide to take your customer service to Twitter, here are five guidelines to consider:

1. Make it a Policy: Don’t just assume people know how to act online. Before you throw an employee out into the live and interactive world-wide-web, make sure you have a policy on their conduct, and the way they represent your company.
    
2. Make Hours Apparent: Only respond to tweets within the confines of your business hours, and make sure your hours are explicitly shown on your Twitter profile page. If you inform your customer when you are and aren’t there, they won’t feel ignored when you don’t answer right away. It also protects your company from seeming cold (by not responding) or inconsistent (by sometimes-but-not-always responding at 8 pm).
    
3. Make It Real: Automated responses don’t cut it. The customers are too savvy for that, and they won’t grow to trust your brand through automated responses. Educate your employees so that they know exactly how to respond – in word and in deed.
    
4. Make the Responses Happen: Make sure you have enough people working on the account in order to respond to every customer concern – no matter if they’ve used your company once, a thousand times, or if they are (or aren’t) a celebrity. As Reynolds points out, if your employee is only able to respond to one out of three tweets, it’s time to hire more people. Every tweet directed “@” you must be answered, or it’s not worth doing.
    
5. Make It Actionable: Ensure that your employees can respond in actionable ways. It’s not enough to simply say, “I’m sorry that’s not working.” You have to take it to the next level and be able to say, “I’m sorry that’s not working; here’s what we’re going to do for you.”

A company that is engaging with people and helping them solve their problems is seen as a company that people trust and want to use. Your customers become your personal advocates. The reputation you build through social media interaction has a payoff.

How have you seen social media (and Twitter in particular) hurt or help a business?

Are you currently using a social media platform to address customer service needs?

Wil Reynolds is Founder and CEO of Seer Interactive, a leading SEO and search marketing firm in Philadelphia.

Over the past 11 years, Wil Reynolds has dedicated himself to doing two things well: driving traffic to sites from search engines and analyzing the impact that traffic has on the bottom line of companies. Wil’s career began at a web marketing agency in 1999, where he spearheaded the SEO strategies for companies that included Barnes & Noble, Disney, Harman Kardon, Debeers, Doubleclick, Hotjobs, and Mercedes Benz USA (to name a few). Although the internet bubble burst, Wil’s passion for web marketing has always been strong. Wil founded SEER Interactive in 2002.

We’re all familiar with this story.

A business is at the top of its game, makes a trajectory-decision based on an assumption, and subsequently misses the mark. In this case, the business is Netflix, the assumption was about its customer base, and – as we all witnessed (and were perhaps, as Netflix customers, privy to the news via e-mail) – Netflix missed the mark.

A year ago, if anyone had said that within the span of one month, Netflix would lose 800,000 customers and its stock would plummet, that person would have been laughed out of the “society of business punditry.” Netflix was the game-changer of how people consumed movies – arguably responsible for the closure of Blockbuster Videos around the country, as well as much of the Internet’s traffic. There was basically no current competition for Netflix; the business was at the top, gaining two-plus million new customers every quarter. Things were golden, until…

…until a haphazard blog post announced a price hike of 60%.
…until CEO Reed Hastings issued a disarmingly casual “I-messed-up” e-mail.
…until they decided to split the service into two different services
     (instant streaming staying as Netflix, and “Qwikster” for DVDs by mail).
…until they retracted that decision.

Netflix had a good business model. They had loyal customers. They had happy stockholders.

What went wrong?

First: Netflix made an assumption about their customer base, and this assumption was egregiously incorrect. They assumed that their customers were passionate enough about Netflix to stick by the business – that no matter what, these customers wanted their movies and would continue to use Netflix’s services. Although Netflix was right about their customers being passionate, they didn’t realize the passion would be railed against the company itself. In response to a price hike and change of services, Netflix’s customer base passionately informed the company of their disappointment and disapproval, and 800,000 of them jumped ship.

Second: Netflix employed poor communication and execution of the changes in service. Whether or not the new business model was good or necessary is one thing, but the way Netflix both announced and unveiled the changes fell short of their game. The announcement of changes first came through a seemingly slap-it-together blog post late at night, which sent the Internet ablaze in fury. Then Reed Hastings sent out an e-mail one might expect from a college buddy rather than the CEO of a company.

Finally, they retracted their decisions within a month of the first announcement. In the meantime, amidst all of these embarrassing communication flubs, the Qwikster website was not ready when the service launched, and the Twitter account was already in use by a drug-using teenager with foul language. All in all, the launch was sloppy. It seemed uncoordinated – like a last-minute decision gone awry.

We could spend all day disputing and defending the good and the bad and the ugly of Netflix’s recent business decisions, but I’m more interested in discussing the implications every business can take from this situation.

So what can we learn here?

What we can learn is that when you’re on top – when you’ve positioned yourself as a leader in your market, even if its just your local market – each decision must be well thought out (and hopefully the right one).

In the fast changing business world of today, it’s sometimes necessary to make drastic changes to a working business model. But before you are ready to go to the presses (or your customers) with these changes, make sure the model is carefully thought through in minute detail. Not analysis paralysis – but at least a thorough vetting with trusted voices. You have to at least try to do everything right or don’t do it at all.

If you are going to make business decisions based on assumptions, make sure they are the right assumptions. Validate them. Test them. Make sure you have the data to back it up before you go ahead and change your business model.

Once you have your facts in place, make sure you communicate well to all affected stakeholders. When you’ve amassed a loyal customer base, you need to keep them by respecting them, and respect comes through how you communicate. When all of these factors are set in place, ensure that your new business model is ready to launch from all sides of the company. You can’t cut corners – the market is too demanding and too connected for that.

Bottom Line:

• Your branding strategy should focus on what you want people to think, feel, and remember when they look at your product or service.
• Branding is about presenting your organization and offering consistently, and getting people excited about it, both internally and externally.
• Take into account who else is messaging to your market, and how your target customers think, then translate that understanding into your design.

When an entrepreneurial team designs a new logo, or sees their new brochure or website for the first time, it’s incredibly exciting. It creates tremendous energy as they face the market, because they feel like they can walk through walls with the power of that brand.

As powerful as that excitement is, it’s only a small part of the purpose of branding. Internally, branding is meant to make sure that everyone in your organization represents, articulates, discusses, and presents your product in a consistent way. If it’s exciting for your internal team, that motivation is an added bonus!

The more obvious and more important part of branding, of course, is the external purpose – presenting a cohesive and consistent message to the right prospects about what your product or service stands for, and what it promises to do. Branding is not just a look and feel, although it uses look and feel, and it’s not just words, although it uses words. It is actually something more along the lines of an emergent property of the collective whole. It’s hard to put your finger on it, but it’s when people refer to things as “That’s cool!” or “That really makes me feel like this is worth a lot of money.”

It’s highly unlikely that many of the purses being sold today for $5,000 or $10,000 are actually worth that, if you broke it down on a bill-of-materials basis. In fact, they may be worth far less – orders of magnitude less. Yet, those high-end brands are able to garner those kind of returns, because they create an overall sense of luxury. In a sense, the consumer of those kinds of luxury products actually wants to be sold the idea behind that luxury product, not just the utility of the product itself. After all, a nylon satchel could serve the function of a $10,000 purse for about $9,990 less!

Your branding strategy has to take into account a couple of key elements. One is what is it you want people to think about, to feel, or to remember when they look at your product or service as it’s represented. (Notice, this does apply to services. Accenture, PWC, Bain, and other major consulting firms that are pure service players, absolutely pay attention to branding – while of course, physical products such as Nike and Coca-Cola clearly have written the book on branding.)

So, branding strategy has to be focused on objectives first. What makes it a strategy is thinking about how you are going to go about making that feeling or thought happen in the mind of your target market.

The 3 Principles of Branding Strategy are:

Principle 1: Position to Win

For that, you need to know how your goal or desired position fits within the competitive space that you exist in. It would be very hard to compete with Nike in sneakers with an alternative to “Just Do It,” something along the lines of “Make it Happen.” It would be seen as a pretty shameless copycat, and have no power at all, even though in and of itself, it might be just as valid as “Just Do It” – but it does not exist in a vacuum, and consumers, especially, would note the attempt to rip off Nike.

Principle 2: Know Your Audience

The other part is understanding how your constituent audience thinks. If you’re selling to conservative financial services organizations, and you decide to use psychedelic colors and a mascot that looks like Shaggy from Scooby Doo, that may be very creative – it may even win awards – but it will likely not be at all effective, as it becomes too much of an “other” to your target audience. Although it is distinct, it’s distinctly strange to them.

In other words, branding strategy takes into account who else is messaging to your market, as well as who your market is, and then especially how you perceive them to process information and offers, and things of the nature of what you’re offering them.

Principle 3: Design Matters

Finally, we enter the world of design. If you’ve been working your offering concept statement and your value proposition, and you understand why it’s I³ (Innovative, Indispensable, and Inspirational), then turning this into a brand becomes a lot easier, because you’ve made declarations and strategic decisions about what your offering is, who it’s for, and why it should matter to them. Now, applying design acumen and copy writing can become very effective tools to translate the message you’ve already established into powerful and consistent branding.

What’s a 1 Pager?

A “1 Pager,” also known as a cut sheet or a data sheet, is a [not surprisingly] single page of basic information about your company and product, that is usually sent in advance of, or “left behind” after a sales call.

The reason it’s important is not so much because anyone ever reads it. Nicely printed collateral in a sharp looking folder doesn’t really matter much anymore – most of your prospects will probably get their info from your website instead.

So what’s the point?

Developing the 1 Pager, more than other collateral, lets you capture your value proposition and the supporting details, while limiting you to the front and back of a single slice of paper. The challenge – and the value – of the 1 Pager is in narrowing down what you want to say to fit on one piece of paper.

As I’ve talked about in an earlier post, “Simplify for Understanding,” a lot of the time, less really is more. Jerry Seinfeld joked he could spend hours getting a punchline from 8 words to 5 words. It’s easier to write 10 pages than one really good page, because it forces you to be tight and succinct on what you want to say.

The real power is not in the 1 Pager, but in “zeroing in” on the essence of your message, without all the extra words, cutting straight to the bottom line.

Crafting a 1 Pager

The format of a 1 Pager is up to you or whomever designs your marketing collateral, but the structure should be something like:

• Company name and logo
• Tagline
• Your one or two sentence Value Prop statement, which is really a modified version of your Offering Concept Statement, adapted for use outside of your organization
• Features and benefits of your offering, to your prospective customer
• Some sort of proof statement – not a full blown case study, but a quote or example from a past/current customer
• Some sort of chart emphasizing your value proposition in I³ terms – what’s new about your offering, how it’s truly useful to your prospect, and what’s exciting about it for them.

You might end up with a 1 Pager that is actually a powerful piece of collateral, that you want to use as the basis for your website, in training your salespeople, and so on… but the real value is not in the document itself. The real value is in the process of nailing down what you really want your prospects to know – focusing and simplifying that message until it’s “short and sweet,” and being able to communicate that message efficiently and effectively.

Today’s guest post is from thought leader, André Taylor. André is an award-winning business leader and one of today’s most dynamic voices on the subject of personal and business success. He’s a dynamic speaker and the founder of several successful and interesting businesses. He also counsels and coaches growing companies and the entrepreneurs behind them to help them flourish.

Here’s the point. Successful people are always working on projects that will make them more successful long term. By diligently working on these projects, often with no progress apparent to others, they create seemingly out of nowhere, even more success.

Unsuccessful people are always working on things they must “get out of the way” today. They are always in “maintenance mode” doing things that consume time, money, and energy but do not create anything of long-term value and significance.

Successful people INVEST their time. Unsucessful people “use up” their time, and sometimes describe what they do as “KILLING TIME.” When you INVEST your time you’ll have more time later. When you KILL time there is no return. How do you INVEST your time?

1. Think 3-5 years out. That old question: “Where do you want to be in 5 years?” is not just for interviews. Really, where do you want to be?
2. Decide that you will build ASSETS. Whatever work you do, think about it as creating value. How do you make something of lasting value EVERY day?
3. When you’re trying to determine if what you’re doing will have long-term value ask yourself if the outcome is in one of these three categories:
   CASH – CONTENT – CONNECTIONS

If you notice, the word CONSUME is not in that equation. Yes, you want to enjoy the outcome of your work but I find that so many people have such a Consumer Mentality that they cannot think in terms of long-term investment, diligence and ASSET CREATION.

The most important thing you can do in your life is to BUILD… not just BUY. It’s to leverage your TALENT, not just your TOOLS. It’s to create WEALTH, not just WORK.

So take a closer look at what is on your plate and if it doesn’t NOURISH you long term, SCRAP IT. That’s the discipline of those who FLOURISH!

5 Reasons Why Social Media is a Fad and Not Relevant for my Business.

Social Media is a fad. It’s something that will go away soon. It clearly is not going to be all that it’s being presented to be by the press and the pundits who want to promote it as something new and important.

Social media clearly does not apply to my business. This is true for the following five reasons:

1. It really doesn’t matter what people say about my company on the web. The only people who care about finding recommendations via the web are people who have too much time on their hands, and are not likely to be my real customers.
2. Being plugged in to social media can only give me an inaccurate view of my competitors. In fact, it will often mislead me, in terms of thinking they are more important or relevant, or being talked about more than they really are.
3. Social media is a real “time sink”– an almost total waste of time. I can’t “tweet,” update Facebook, update LinkedIn, participate in discussion groups, and still run my business effectively. After all, it’s not like that really impacts my customers.
4. I have a website, literature, and brochures. My sales teams do a more than adequate job of communicating why my products and services matter to my customers, and I believe my customers really make their evaluation based on those materials, not through social media.
5. I’ll always be able to catch up later… even if it is a real, significant trend in the way companies communicate with prospects and customers. I’ll just hire the right consultants and apply the right techniques then. After all, what can it hurt me to be a year or two late on something, if I have the budget to just throw at it later on?

If you read the above, and it sounded like what you’ve been thinking about, be prepared for your cheese to get stolen out from under you.

First of all, it’s important to remember that Social Media, and the proper use of it, is self-reinforcing. What this means is that the sooner you start and the more (of the right things) you do, the stronger your position vis-à-vis your competitors. You can’t suddenly create an active conversation around things that you could listen to and learn from your customers, and things you want your customers to listen to and learn about you – from scratch, overnight. It takes time.

Social Media for business is more like a farmer planting seeds, tending the field, and reaping the harvest than going shopping at Acme.

Top strategists have noted that social media is different from everything else in at least three key dimensions:

1. It’s bi-directional – and it’s not just communication that is bi-directional, it’s also bi-directional in terms of determining what happens in the conversation. “Listeners” or the other participants have as much to say about what happens as the people who might be sponsoring the venue.
2. It takes longer to gestate, but…
3. It also connects deeper with people in their passions – the things that really matter to them.

So does your business connect with your best prospects and customers on a dimension that really matters to them?

That’s really the question, and social media and the variety of tools, technique, approaches, and strategies available to businesses of all sizes afford a new opportunity to connect with your audience, in a deeper way and on a different timeline than traditional marketing and advertising.

Ignore at your own peril.

7 Steps for Converting Your Knowledge and Brain Power into a Real Business

It’s no secret that over the last several years, business has been increasingly tough, and in many ways, it has been arguably tougher on middle management than on any other group of workers.

Now, that’s not to minimize the plight of the working class or blue collar workers whose jobs are being outsourced, but middle managers – who were told to invest heavily in their educations, to commit to building a carefully crafted resume over a 10 or 20 year career arc, and to live like that was something they could sustain with appropriate salaries – now find themselves out of work, unhirable, and with a lifestyle that’s just too darn expensive for the kind of, “I’ll do anything to provide for my family”-kind of work that might be available to them.

Before you think, “Don’t cry me a river for somebody who was making six figures and now has to take a job as a manager at Home Depot,” the reality is that there has been a set of implicit promises in that person’s life. As I’ve written about before (see, “The Reluctant Entrepreneur”), what has transpired is that many of these folks have now decided that they need to hang out their shingle. They are realizing they have a lot of intellectual capital that is valuable to many different organizations, but as a consultant vs. an employee.

The challenge is that they end up, all too often, being a “smart guy or gal for hire,” and have not made the transition to owning a business. They have brain equity, but any business they create, especially one eponymously named, is hard to make valuable, other than as a vehicle for marketing their brains on a by-the-drink basis.

For some, that’s just fine. They’re doing fine and they’ve replaced the income they had before. They have a reputation of some kind in the market, and that works for them. For others, this consulting/brain-for-hire space is intended to be a temporary situation – whether that’s wishful thinking or not – and is a way to earn income until their next “real job” shows up.

However, for those who realize that working for a series of employers that can RIF you in at will – and for whom loyalty does not assure you of one more day of work than your employer requires – they realize that having their own business could be a very meaningful, and in fact necessary step in their lives.

So, here are 7 steps that someone who wants to move from brain equity to brand equity should undertake:

1. Commit to being in business. Now, this is far different from committing to selling your time – it’s the idea that you actually want to have a business. That business could take many different forms, but you want to leverage your knowledge, your industry contacts, your expertise, and you want to put it inside a business that can scale and grow, and become meaningful apart from your hourly availability.
2. Write it down. Actually start documenting some of your best ideas. Don’t worry about your writing skill or PowerPoint finesse – just grab a yellow pad and start jotting down some thoughts, starting with some broad categories.
   1. What are the areas of expertise that people know you for? This is different than a resume exercise – it’s really getting into the specifics of what you know. Doodle on that, and work on it over time.
   2. Come up with a couple of pictures that show how you look at the world in your area of expertise, whether that’s manufacturing, marketing, operations, HR, whatever it is.
   3. Think of a couple of best practice areas where you help other people. Think about the things that people call you about, saying, “Larry, I’d like to know how to [fill in the blank].” If you’re the person who gets the call, and your name is Larry, think about what that question is, and the type of advice you give. Start documenting what you do.
3. Identify advocates. Think about the people who have made that call, and have appreciated your advice. These are friends and advocates – people who want you to succeed and who respect what you do. This is different than a significant other or family member who is cheering you on, but may not know your area of expertise or if you’re any good at it. This is talking about people that actually know that you are good at what you do, and are actually willing to be help you.
4. Identify other people who can help you do what you do. That is, fellow experts or other firms you’ve worked with. These are the resources that you could bring together to add value for customers.
5. Think about the different services that you could offer your advocates. Using your network of friends and other resources, and the knowledge that you’re documenting, what exactly could you offer them? Think in terms of packages, things that have a defined beginning, middle, and end.
6. Narrow it down. Look of that list of things you could offer, and just “meditate” on it for a while. Which of those things are you most passionate about? Which are things that excite you? Come up with five or six things you could do, and then decide which two or three you’d most like to do. Then – with your advocates and friends from the prior step in mind – think of the one or two things they would most like to receive.

So now you’ve committing to having a business. You’re starting to document what you know, who’s a friend or advocate, and what resources are available to you. You’ve thought about what you could do, which of those things you are most excited about, and which things your likely-best initial audience would be most excited about.

Which brings me to point 7:

7. Now you can begin the work of developing a value proposition thought process around those one or two key offerings. For our purposes, the essence of a value prop is the intersection of your value creation strategy, your value capture strategy, and your value communication strategies. That is to say:
   1. what you’re going to do for them that is valuable to them (how it would actually pay off for them, make money for them, or benefit them),
   2. how you’re going to get paid (what others have charged for similar things, or what you think you could charge for it)
   3. and how you can put words, pictures, and ideas around it, so that you actually have the beginnings of brand identity – a real company that exists beyond your hourly availability.

These steps take you from being a general-purpose “big brain-for-hire”, and moves you into being an expert firm – offering very specific value to a very specific audience, and leveraging a wide range of resources that are bigger than yourself.

If you’ve done all these 7 steps, you would have translated your brain equity into genuine brand equity – corporate value, company value – for you and your future customer.

When you think about your competition, you most likely think of other companies with similar offerings to yours. These are your direct competitors, but they are certainly not your only competitors.

A more complete view of “who else” and “what else” is vying for your target customers’ attention (and budget dollars) requires that we look at alternatives – other ways to solve the same problem you solve.

Let’s look at competition earlier this decade in the Sales Force Automation and CRM space. Companies that equipped sales professionals with leather planners and filing systems or Palm Pilots (remember them?), integrating information through Microsoft Outlook, were looking to improve their sales force productivity. They were using alternatives to Salesforce.com or Oracle/Siebel’s CRM software.

They were addressing the same general problem of keeping track of customers, but not necessarily solving the problem in the same manner (or even as effectively) as Siebel or Salesforce.com.

Overlooking this point is a frequent source of much pain, for market planners and sales teams alike.

Before your offering existed, it is highly unlikely that your market was simply not addressing their need in some other way. Companies were doing bookkeeping long before and even during the advent of back-office computing. Many markets would show similar adoption behavior regarding new processes, systems, and product acceptance.

Often, when examining a competitive landscape, it is too easy to simply look at obvious peer group competitors. This often leads to making a case as to why your particular product offering is better, faster, or cheaper.

Imagine you were trying to talk your grandmother into getting an iPhone, discussing its relative merits over Android or a Blackberry… and she points across the room and says, “What do I need a new phone for? I’ve got one right over there on the wall!”

Companies often lose sight of the larger issue – the possibility that your prospects already have a way of doing things in a way they perceive as better or at least “not broken.”

You are not just competing against others offering similar products or services; you’re competing against every other way to “get it done,” possibly including the toughest competitor of all, “The way we’ve always done it.”

If so, what is your compelling story for change and transformation? What is your message to the marketplace – the message that counters the “status quo?”

What is your “You should switch now!” value proposition?

Buyers are, after all, only human.

By their nature, humans do not always make rational decisions.

Their buying decisions are no different. Not only are not not always rational – they don’t even repeat the same decision with certainty.

Pricing is a critical component of your product, service or business’ Value Proposition. And good pricing strategies must take into account the psychological effect a given price has in the customers’ mind. A price is not just seen as the amount a brand wants in exchange for their product. Prices are relational. That is, they are related to your product, to customer expectations of features and value, and even to customers’ perceptions of themselves.

Within every product category there are pricing anchors. These are prices for services the buying public is conditioned to accept as reasonable and expected for a given category. To go above those anchor price points your product needs to have significant value added features which resonate with the buyer’s sense of value. In other words, bumping your price up to the next price range in the category, buyers expect your product to have certain features. If they conclude your product doesn’t meet that higher expectation, their disappointment is startling.

Buyers who pay a bumped up price, higher then the expected “anchor,” may not be buying your stated feature package. They may be buying based on their perception of themselves, “I can afford better than the cheapest model.” In other words, overbuying to ensure quality, hoping to lengthen the time before needing to replace their purchase (“I bought the Sony because it’s more reliable than the Vizio” – although both could be the exact same TV!)

If you chose to go with a bumped up price, set the price so it’s clear that it’s an upgrade from the anchor. When a price is only slightly higher than anchor pricing, buyers’ perception may be that you are “just slightly better than,”  or even “just more expensive than” – and not truly an upgrade from the low-price alternative. And of course you must deliver quality that fits hat perceived position. Your product must rise to meet buyer expectations.

One of the most common and obvious other pricing strategies is charm pricing – setting prices slightly below a round number, such as $29.99 vs $30. There is a proven rationale for this, even for luxury brands – it works! Consumers rationally know $29.99 is $30, but their perception is that the price is in the $20-$29 range rather than the $30-$40 range. Therefore, they perceive the price as lower.

• What anchor price exist in your product niche?
• What bump price points exist and what feature expectations do buyers have at those price points?
• Does your price point end in 9? If not, why?

Hello everyone,

I just wanted to share a few things that have been happening within Value Prop and with this blog.

First of all, we’ve been busy and I’ve been slammed (haven’t we all?). That’s a good thing, given everything that’s happening in the market. But it has taken my “eye off the ball” of this blog.

Our oldest is going off to college and we still have a HS Junior and second grader to go! (no – none of these in the photo are ours )

AND…We’ve also been working on a significant revamp in the way Value Prop delivers its own “Value Prop”.

What does that even mean? Well, we’ve been working on a project codenamed “MVP”, that will change the way marketers in all kinds of companies design and launch their strategic marketing initiatives. Yeah, its that big an idea and our team is thrilled to be working on it.

Second, and connected to the first, we’ve been working on an entire suite of “consumable” content and services around this singular idea:

A Value Proposition is the intersection of your Value Creation, Capture and Communication Strategies.

Of course, Michael Porter’s done a great job describing and defining Value Creation and Capture and the Value Chain. What we’re adding to the conversation is a somewhat simpler construct that takes into account the messaging or Communication elements of a marketing/business model.

That is, pulling it all together for any given product, service or business.

Anyway… the bottom line is that there will be lots of stuff happening around Value Prop in the next weeks and months, including a renewed commitment to this blog.

Please let me know of anything you’d like to see covered in this area or any ideas and suggestions. They are all greatly appreciated.

Best,
Jose

By the time you launch a new product or service in a given market, you have already [hopefully] devoted a good deal of thought and research to identifying your ideal customer and their needs, developing your offering to meet those needs, and shaping your value proposition to inform them of this solution. However, there are usually some subtleties, and occasionally more significant factors, that only reveal themselves in a real-life “road test.”

Once you introduce your product, the core customers it attracts may be different from what you expected. Examine this opportunity, perhaps adapting and taking advantage of new customers that become another – or even – your primary market.

LEGO, the well-known children’s building block company, has found a successful niche in the model-building marketplace for older children. While selling toy kits, they found that they were in fact selling permanent models for hobbyists, so Lego expanded on this notion and now offers a website that encourages users to customize and design their own Lego models. This focus not only expanded their market base, but also created an online community that garnered more enthusiasm for the products.

This may be an opportunity to stake out your own brand new product category, as suggested by Joe Calloway in Becoming a Category of One. Calloway suggests that the answer to combating the crowded marketplace is to create your own product category, ensuring that your company is the only one who can do what you say you do. Easy to conceptualize – much harder to execute.

If you think you may have stumbled on an opportunity to “create” a market – to be the first entrant into a particular field, begin by reviewing your company’s non-standard successes. Look at the times your customers have asked you to customize solutions or create entirely new products. These customer requests are, by definition, unmet market needs, but how much of the particular unmet need is both repeatable and indicative of a larger market?

There is always the risk that you will end up mistaking a single customer request as a completely new market need. This is likely a result of mutual ignorance: both you and your customer are unaware that there are vendors who can successfully satisfy the “unmet need” – a fact which would become all-too-apparent if your firm rolled out a new offering without first understanding the target market as completely as practical or possible. (You can mitigate this risk with due diligence and appropriate market research.)

In short, the non-standard request may be a new and lucrative opportunity. Whatever the case may be, focus on your value proposition. How will it be relevant to a particular customer in a specific market context? In what group or groups do these customers lie? Identify the best fit with the highest probability of success, and put your new hypothesis into action. Most of all, continually sanity-check all your assumptions.