01 - value proposition course - session 1 - introduction to value proposition_bb_pc0
TRANSCRIPT
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Value Proposition DevelopmentSession 1 What is a Value Proposition?
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Introduction
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Dr. Flint McGlaughlin Director, MECLABS Group
Flint McGlaughlin is the Director of MECLABS Group. The organization
has partnered with key market leaders including The New York Times,
Microsoft Corporation, and Reuters Group.
Dr. McGlaughlin also serves as the Director of Enterprise Research at
the Transforming Business Institute, University of Cambridge (UK) and
as a Trustee for Westminster Theological Centre. Dr. McGlaughlin
originally studied Philosophy and Theology at the University of
Londons Specialist Jesuit College.
Today, his primary research is focused on enterprise as transformative
agent. His work has won multiple awards and has been quoted inmore than 13,000 online and offline sources.
INTRODUCTION
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MECLABS is a science lab that conducts R&D in sales and marketing.
We conduct rigorous scientific experiments with research partners from all
industries to help leaders optimize the financial performance of their sales and
marketing funnels.
MECLABS was the first Internet-based research lab to conduct
experiments in optimizing the conversion rate of sales and marketingprocesses.
1990 Preliminary Research Begins
1997 Research Program Established
2001 First Research Report Published
2002 Testing of Research Partnership Model Begins
2003 Offer Response Optimization Theory Validated
2006 Patent Filings for Research Findings (10 Heuristics)
INTRODUCTION
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INTRODUCTION
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INTRODUCTION
1,300+ major experiments
Over 1 bi llion emails tested
10,000 sales-paths tested
500,000 decision-maker interviews
5 mill ion phone calls
100+ conferences/clinics
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We optimize the financial performanceof the sales and marketing funnel
MECLABS Sciences Group
Conversion
Group
Leads
Group
Technology
Group
Training
Group
Strategy
Group
Applied ResearchPrimary Research
Agency
Group
INTRODUCTION
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STUDENT ACTIVITY
Before we start this course, take a moment
and write down the value proposition of
your company
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MarketingExperiments conductedan incentivizedsurvey to test howeasy it is to find a truly effectivevalue proposition.
The rules were simple: send us abusiness plan, and articulate thevalue proposition on a 5x7 indexcard.
We received almost 400 entries infour weeks. Many were from someof the top business schools in the
U.S. Even more were from existing,profitable businesses looking togrow.
AN EXPERIMENT: VALUE PROPOSITION SURVEY
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0 - No real value proposition.
1 - Limited value to a small market. There is extensive competition and/or few barriers to entry.
2 - Substantial value to a medium-sized market. There is limited competition and/or significant
barriers to entry.
3 - A product or service with strong product differentiation, but little competitive protection.
4 - A unique product or service that is highly valuable to a large market, and strong competitive
protection and/or extensive barriers to entry. This may take the form of a registered patent
or limited access to product components.
5 - A unique product or service that is highly valuable to a large market, and exclusive or near-
exclusive control of essential product components. This may also include a registered
patent.
Every submission was graded as objectively as the research question would allow
by a group within our team using the following five-point scale:
AN EXPERIMENT: VALUE PROPOSITION SURVEY
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Results: Out of 275 plans with value propositions of some kind, there were only
six (2%) that scored a "4." No companies scored a "5." The vast majority (90%) of
companies scored a "2" or below.
Rank Total %
0 No real value proposition 120 30%1 Limited value to a small market 22 6%
2 Substantial value to a medium-sized market 215 54%
3 Strong unique value, little competitive protection 32 8%
4 Strong unique value, extensive competitive barriers to entry 6 2%
5 Strong unique value, exclusive control of product rights 0 0%
AN EXPERIMENT: VALUE PROPOSITION SURVEY
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No
48%Yes
52%
Source: 2012 MarketingSherpa Website Optimization Benchmark Survey
Methodology: Fielded April 2012, N=547
Survey Question: Are you
confident that each
member of your
marketing team can
clearly and succinctly
state your company (or
product) value
proposition?
2012 SURVEY DATA
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Survey Question: Has
your organization tested
your value proposition(s)?
2012 SURVEY DATA
No
71%
Yes
29%
Source: 2012 MarketingSherpa Website Optimization Benchmark Survey
Methodology: Fielded April 2012, N=1,156
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INTERACTIVE QUIZ
Can you find the value proposition on the
following pages??
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COMMON EXAMPLES: AT&T (B2C)
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COMMON EXAMPLES: HP (B2B)
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COMMON EXAMPLES: BOSTON HERALD (SUBSCRIPTION)
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COURSE FOCUS
How can we conceptualize a simple, yet powerful,
paradigm for crafting value propositions?
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COURSE FOCUS
Session 1: What is a Value Proposition?In this session, you will learn the underlying theory of a value proposition framework.
Session 2: What Determines the Force of a Value Proposition?
In this session, you will learn how to measure and adjust the four factors that determine the forceof a value proposition.
Session 3: How to Craft your Value PropositionIn this session, you will learn a step-by-step process for crafting the essential value proposition
argument.
Session 4: How to Apply your Value PropositionIn this session, you will learn how to infuse your value proposition into every element of your
marketing collateral.
In four key sessions, we will cover the definition of value proposition, how to
properly craft a value proposition, and then express it effectively to your customers:
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We must understand the meaning of the termvalue proposition
Point 1
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Common Responses: Whats your value proposition?
We empower your software decisions.
I don't sell products and services, I sell results; my guarantee.
We help mid-life women find their passion and purpose.
We are the leading technology provider.
Get found online.
This site has what the person is looking to find.
CONFUSIONOVERTHETERM VALUEPROPOSITION
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Landing Page Optimization
Ongoing literature review of:
More than 1,100
academic articles
20 popular authors
including:
Starch
Hopkins
Reeves
Kotler
Porter
Lanning
Review spanning from
1890s to present
Session 2 Understanding Value Proposition
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Landing Page OptimizationSession 2 Understanding Value Proposition
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Landing Page OptimizationSession 2 Understanding Value Proposition
Business Software Suite
#1 On-Demand. 6459+ World Clients
Award-Winning Solution. Free Trial
www.XXXXXXXXXX.com/Business
54%Conversion
21%Conversion
97%Conversion
109%Conversion
31%Conversion
124%Conversion
201%Conversion
29%Conversion
15%Conversion
100%Conversion
21%Conversion137%
Conversion
63%Conversion
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Landing Page Optimization
So what is a functional
understanding of the term ValueProposition?
Session 2 Understanding Value Proposition
The answer to this question another question
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If I am your ideal prospect, why should I buy from
you rather than any of your competitors?
WHATISAVALUEPROPOSITION?
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UNDERSTANDINGTHEROLEOFAVALUEPROPOSITION
Key Principles
1. The answer to the question, What is your value proposition?
can only be discovered by answering yet another question: If I
am your ideal prospect, why should I buy from you rather than
any of your competitors?
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Value Proposition Question: If I am your ideal prospect, why should Ibuy from you rather than your competitors?
1. You are fundamentally answering a first-person question posed in the mind of
your customers. It always implies a because answer.
2. A value proposition focuses on a specific customer segment. This requires you to
consider whom you will not serve and the associated tradeoffs.
3. A value proposition is an ultimate reason the reason why; it is the culmination of
a careful argument supported by evidentials.
4. A value proposition must differentiate you from your competitors. In at least one
way, you must have an only factor.
WHATISAVALUEPROPOSITION?
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STUDENT ACTIVITY
How would you answer the question, If I am your
ideal prospect, why should I buy from you rather
than your competitors?
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We must understand the fundamental role of thevalue proposition
Point 2
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Key Principles
1. The answer to the question, What is a value proposition? can
only be discovered by answering yet another question: If I am
your ideal prospect, why should I buy from you rather than any
of your competitors?
2. The value proposition is the fundamental force powering your
prospects up the sales funnel.
UNDERSTANDINGTHEROLEOFAVALUEPROPOSITION
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g=9.8
1m/s2
1. The funnel is often presented as
one potentially useful analogy for
marketing. It is in fact, the
primary analogy. All marketing
should influence a decision.
2. The funnel analogy distorts
reality. People are not falling into
your funnel, they are falling out.
The funnel must be inverted.
3. People dont travel down the
center of the funnel. People areclimbing up the sides.
THREEFLAWSINTHEFUNNELANALOGY
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(Mi)YES
(Ma)YESY
ValuePropositio
n
Business Software Suite
#1 On-Demand. 6459+ World C lients
Award-Winning Solution. Free Trial
www.XXXXXXXXXX.com/BusinessPPC Ad
Landing Page
Sales Call
THE INVERTED SALES FUNNEL
(Mi)YES
(Mi)YES
(Mi)YES
(Mi)YES
(Mi)YES
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We need to understand the relationship between thecore and the derivative value propositions
Point 3
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HOWDOESTHEMESSAGINGCONNECT?
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HOWDOTHESEDIFFERENTDIVISIONSLINK?
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KEY QUESTION
How do we reconcile all these different value
proposition applications?
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1. The value proposition must be framed with customer logic rather
than company logic.
Key Principles
UNDERSTANDINGCORE/DERIVATIVEVALUEPROPOSITIONS
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CUSTOMERLOGICVS. COMPANYLOGIC
Marketer MarketValue
Proposition
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1. The value proposition must be framed with customer logic rather
than company logic.
2. Customer logic demands an obvious connection between the
company, its various products, and its different prospects.
Key Principles
UNDERSTANDINGCORE/DERIVATIVEVALUEPROPOSITIONS
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1
3
2
Question: If I am [PROSPECT A], why should I buy
from you rather than any of your competitors?
Question: If I am your ideal prospect, why should I
buy from you rather than any of your competitors?
Question: If I am [PROSPECT A], why should I
buy this product rather than any other product?
Question: If I am [PROSPECT A], why should I
click this PPC ad rather than any other PPC ad?
Prospect B
PRODUCT
#3
PRODUCT
#4
PRODUCT#1
PRODUCT
#2PRODUCT
#3
PRODUCT
#4
PRODUCT
#2
PRODUCT
#3
PRODUCT
#4
Primary
Value
Proposition
Conversion steps
associated with a
specific product
PRODUCT
#2
The Value Proposition Spectrum
PROSPECT-LEVEL
PROCESS-LEVEL
PRODUCT
#1PRODUCT
#1
PRODUCT-LEVEL
THE VALUE PROPOSITION SPECTRUM
Key Principles
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Primary Value Proposition: If I am your ideal prospect, why should I
buy from you rather than any of your competitors?
Fundamental Question: If I am [a particular prospect] why should I
[take this action] rather than [this/these other action(s)]?
Primary Value Proposition: If I am your ideal prospectwhy should I
buy from yourather than (buy from) any of your competitors ?
[a particular prospect]
[this other action][take this action]
THE PHILOSOPHICAL FOUNDATION
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Prospect-Level: If I am a college student, why should I buy from you ratherthan any of your competitors?
[a particular prospect]
[this other action]
[take this action]
Product-Level: If I am a college student, whyshould I buy this mp3 playerrather than any other mp3 player?
[a particular prospect]
[this other action]
[take this action]
Process-Level: If I am a college student, why should I click this mp3 player adrather than any other mp3 player ad?
[a particular prospect]
[this other action]
[take this action]
EXAMPLEDERIVATIVEVALUEPROPOSITIONS
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THE VALUE PROPOSITION SPECTRUM
1
3
2
Question: If I am [PROSPECT A], why should I buy
from you rather than any of your competitors?
Question: If I am your ideal prospect, why should I
buy from you rather than any of your competitors?
Question: If I am [PROSPECT A], why should I
buy this product rather than any other product?
Question: If I am [PROSPECT A], why should I
click this PPC ad rather than any other PPC ad?
Prospect B
PRODUCT
#3
PRODUCT
#4
PRODUCT
#1
PRODUCT
#2PRODUCT
#3
PRODUCT
#4
PRODUCT
#2
PRODUCT#3
PRODUCT
#4
Primary
Value
Proposition
Conversion steps
associated with a
specific product
PRODUCT
#2
The Value Proposition Spectrum
PROSPECT-LEVEL
PROCESS-LEVEL
PRODUCT
#1PRODUCT
#1
PRODUCT-LEVEL
/
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1. The value proposition must be framed with customer logic rather
than company logic.
2. Customer logic demands an obvious connection between the
company, its various products, and its different prospects.
3. While there is a connection, derivative value propositions are so
interlinked they will often overlap.
Key Principles
UNDERSTANDINGCORE/DERIVATIVEVALUEPROPOSITIONS
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Identify at least one way (for
each derivative level) that this
page communicates its
derivative value propositions.
AUDIENCE ACTIVITY
Find the following:
1. A Prospect-levelVP
2. A Product-levelVP
3. A Process-levelVP
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Product-level
AUDIENCE ACTIVITY
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A A
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Notice how the
product-level,
prospect-level, and
process-level value
proposition overlap
at the call-to-action.
AUDIENCE ACTIVITY
Email templates
designed to appeal to
different segmentsCall-to-action emphasis boththe product-level (free trial)
and the process-level (get
started) value propositions.
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Key Principles
K P S 1
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KEY PRINCIPLES SESSION 1
Key Principles
1. The answer to the question, What is your value proposition?
can only be discovered by answering yet another question: If I
am your ideal prospect, why should I buy from you rather than
any of your competitors?
1. You are fundamentally answering a first-person question posed in the mind of your
customers. It always implies a because answer.
2. A value proposition focuses on a specific customer segment. This requires you to
consider whom you will not serve and the associated tradeoffs.
3. A value proposition is an ultimate reason the reason why; it is the culmination ofa careful argument supported by evidentials.
4. A value proposition must differentiate you from your competitors. In at least one
way, you must have an only factor.
K P S 1
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1. The value proposition is the
fundamental force powering your
prospects up the sales funnel.
2. The value proposition must be
framed with customer logic ratherthan company logic.
3. Customer logic demands an obvious
connection between the company,
its various products, and its different
prospects.
4. While there is a connection,
derivative value propositions are so
interlinked they will often overlap.
(Mi)YES
(Ma)YESY
ValueProposition
(Mi)YES
(Mi)YES
(Mi)YES
(Mi)YES
(Mi)YES
Key Principles
KEY PRINCIPLES SESSION 1
K P S 1
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KEY PRINCIPLES SESSION 1
1
3
2
Question: If I am [PROSPECT A], why should I buy
from you rather than any of your competitors?
Question: If I am your ideal prospect, why should I
buy from you rather than any of your competitors?
Question: If I am [PROSPECT A], why should Ibuy this product rather than any other product?
Question: If I am [PROSPECT A], why should I
click this PPC ad rather than any other PPC ad?
Prospect B
PRODUCT
#3
PRODUCT
#4
PRODUCT
#1
PRODUCT
#2PRODUCT
#3
PRODUCT
#4
PRODUCT
#2
PRODUCT
#3
PRODUCT
#4
Primary
Value
Proposition
Conversion steps
associated with a
specific product
PRODUCT
#2
The Value Proposition Spectrum
PROSPECT-LEVEL
PROCESS-LEVEL
PRODUCT
#1PRODUCT
#1
PRODUCT-LEVEL
Key Principles
EXAMPLE DERIVATIVE VALUE PROPOSITIONS
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Prospect-Level: If I am a college student, why should I buy from you rather
than any of your competitors?
[a particular prospect]
[this other action]
[take this action]
Product-Level: If I am a college student, whyshould I buy this mp3 playerrather than any other mp3 player?
[a particular prospect]
[this other action]
[take this action]
Process-Level: If I am a college student, why should I click this mp3 player ad
rather than any other mp3 player ad?
[a particular prospect]
[this other action]
[take this action]
EXAMPLE DERIVATIVE VALUE PROPOSITIONS
Example of Derivatives
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Value Proposition DevelopmentSession 1 What is a Value Proposition?