The value proposition is the defining moment of any business, not the product or the service you offer. But it is important to realize that it is not of importance what you write in or think up for your business plan but what customers perceive to be your value. And there can be a huge mismatch.
The classic business plan is a plan of promises. On paper the value proposition almost always sounds promising but in reality the customers have quite often a different perception of the firm, of its products or services. There is a mismatch between value proposition and value perception, the perception gap:
Why: Simply put!
- you do not get the message across to your customers since your distribution and marketing channels are too weak or
- you do not fulfill the value proposition you offer with your business model you actually have.
The Perception Gap
In most cases, managers will say that the first reason that they just don’t get their message over to the customer is the main cause why they cannot close the perception gap. So in their belief they spent more money on communication and sales and try to persuade potential customers that they offer the best value.
This is the typical behavior of the past where big marketing spending was having a huge impact on customer’s adaption of a new product or services. The rules was: Your business model might be mediocre but when you push your brand message long and heavily enough your potential customers finally will buy your product. If you grab enough attention.
Unfortunately, it is not the first reason. The second reason is probably true in most cases. You got a problem in your business model. Your value architecture and revenue model does not fulfill what you describe in your value proposition. You got a mismatch between your value proposition and your customers’ value perception. You just do not deliver the value you propose.
So instead of just increasing marketing spending you should carefully analyze where you have a mismatch, were you have the perception gap and then close it.
Another Business Model Bites the Dust
During a recent GDI seminar on social media a Swiss manager complained about bad comments on the web about his firm. He asked how his firm could avoid being so exposed to criticism. A manager of amazon just answered: “If the complain is justified just make your product better.”
I can second the guy from Amazon. If you have a perception gap close it with a better business model but not just with one-way push communication. Build your whole business model around the value proposition where all components support your value proposition.
The value proposition is not a marketing term but your mission. It guides the experience you create for your customers. In German we use the word “durchgängig” to describe a perfect customer experience that is supported by all components of a business model. To create such a “durchgängiges” or consistent customer experience all components of the business model have to support the value proposition without any disharmony.The business model has to work like a Swiss clock. This is the art of business modelling! It is not a one time management activity but a continuous process to achieve perfection.
If you do not do it, your business model will be another business model that bites the dust like Blogbuster, Karstadt, like Dell or other bad business models. Better be prepared and close the perception gap!