The Gantry Group Building Business Through Research

Gantry Group Newsletter Issue No. 10, February 2002

It's almost trite to preach such a foundational business concept as "know thy customer". However, what is new in our current market landscape is the ever narrowing, razor-edge focus to which strategic messaging - the value proposition - has been charting. Influenced by CRM and 1-to-1 marketing, companies have established a new marketing mindset focusing on fact-based messages targeted to very specific audiences. Value propositions must speak directly to these highly targeted customers.

This trend is further fueled by the revolutionized economics of electronic communication (websites, email campaigns, etc.) that make it feasible to develop AND deliver custom strategic message platforms for each industry, role group, geography, etc. In doing so, the value proposition can be crafted to literally speak to each target audience's pain points.

Testing your target customers to understand their needs, pain-points, receptivity to your company and to your offering is undeniably the right first step in a new branding initiative - or, in a diagnosis of current brand effectiveness. Arm yourself with information. Before you start in on the task of overhauling your positioning and strategic messaging, why not discover just how effective your marketing has been to date? What about your value proposition resonates with the customer? And what doesn't?

Online testing allows you to efficiently and cost-effectively reach out to your market to discover:

• Market Needs & Pain Points: What are your customers' challenges? What keeps them up at night? How do you help solve their most urgent needs? Or do you need to retarget at a more receptive market opportunity entirely?

• Decision Makers & Influencers: In the end, the whole point of having a winning marketing communication strategy is to turn prospects into customers. A buying decision rarely involves one person at the prospect - it's more often a mix of decision-makers and influencers. The value proposition must speak to each party. Testing lets you understand each key person's buying platform and accommodate them in the market messages.

• Brand Awareness: Does your market know who you are? Do they know what you do? What does your brand stand for? Does the market recognize your firm differently than you wish?

• Competitive Awareness: Does the market recognize your competitor more readily that your company? How are you and your competitors comparatively perceived?

• Key Strategic Messages & Positioning: Do your messages pique the interest of your target market? Or does the market glaze over with monotonous, "heard it all before" disinterest?

• Vendor Selection & Buying Criteria: How do your prospects select a vendor? Within your target market, what are those tangible and intangible attributes that make a prospect choose one company over another? What ROI is meaningful to them? What metrics does your prospect use to measure this ROI?

With this testing complete and the lay of the land in hand, you are ready to move on to the next step - mapping your distinctive competencies against the market's needs.
 
 

What makes you so special! (Distinctive Competencies)

Companies that are successful have developed a compelling set of distinctive competencies that enable them to deliver products/services that customers embrace as valuable. Identifying your distinctive competencies requires a deep understanding of both your customers and the competitive landscape. What makes them distinctive is their unique combination. They enable a company to design, produce, deliver, and service a clearly differentiated solution.

If your value proposition is not resonating with your customers, it's often attributed to promoting distinctive competencies that are either meaningless or unimportant to the target market, or that uniformly "sing out of the same song book" as your competition. The customer does not perceive you as a unique, "stand-out" choice.

Microsoft tells its customers that it has the following distinctive competencies: the knowledge; the human and capital resources; the global distribution; the brand name; and the strategic intention to create the ubiquity necessary to ensure that their products will be the industry standard.

McKinsey, a professional consulting firm, tells its customers that it has the following distinctive competencies: the intellectual capital; the industry and domain expertise; the deepest alumni resource; the most robust knowledge management systems; the brand name; the corporate culture; and the reputation for solving complex business problems.

Isolating distinctive competencies is absolutely critical to making the prospects "short list", particularly when your firm's competencies fill an unmet need or unresolved pain.
 
 

So What's in it For Me? (The Benefits)

Your value proposition must communicate to your customers the benefits of owning and using your products and services. Those benefits can be delivered to the customer in any number of ways. They can be functional benefits in that they offer all the functionality of competing products as well as some additional functional benefits that are not considered standard in the industry such as extended warrantees and 7/24 call center support.

The benefits can also be emotional. These can be very powerful and differentiating, and almost impossible for a competitor to copy. Emotional benefits are described as both intrinsic and extrinsic. An intrinsic benefit makes the customer feel better about owning and using your product. She sleeps better at night. An extrinsic benefit makes the customer feel good about expressing to others that he owns and uses your product or service. This is often described as the privileges of ownership.

"No one ever got fired for buying IBM". Is IBM really that much better in delivering functional benefits than its competitors? Maybe yes, maybe no. However, it is clearly successful in delivering an intrinsic emotional benefit.

A Pentium chip, is a Pentium chip, is a Pentium chip, unless, of course that chip is made by Intel. Historically, Intel has been successful in commanding a price premium for a product that must conform to a suite of features set by the industry. The power of the emotional benefit is clear. Customers feel better owning a Pentium chip made by Intel than a Pentium chip made by a competitor like AMD.

However, most importantly today, companies are defining their benefits in terms of direct, quantitative business process cost savings, increase in productivity, or increase in business. In these soft economic times, the mantra at virtually all organizations seems to be 'Show me the ROI'. Corporate executives are shelving or simply passing on projects that cannot show a demonstrable return to the company. Money is tight and buyers' calculators are poised and ready.

So give your customers a strong financial reason to buy. Here's some anonymous industry examples of strategic messaging that demonstrates ROI:

• Each CRM module paid for itself in 10 to 15 months.
• Customer service and satisfaction increased an average of 21 percent.
• Employee productivity increased across all users of the system.
• The bank saw double digit increases in assets under its management.
• Unique site visitors increased 50% month over month.
• Site Browser to Buyer ratio increased 25% using personalized 1-to-1 marketing technology.
• Call center call load decreased 30% due to improved self-help site effectiveness.
• Site visitors received relevant information 95% using the new search technology.
• Email marketing initiatives are 5 times more effective than traditional direct mail.
• Online primary research delivers result at half the cost, one-tenth the time, and with five times the response rate.

Market testing will reveal the metrics that are closest to the hearts of your prospects. Then conduct an ROI study to prove how your offering can make a significant bottom-line impact.
 
 

So you're different… just like everybody else! (Competitive Differentiation)

Finally, your value proposition must describe how you are different from your competitors. Competitors' strategies and competitive behaviors are often a challenge for the customer to monitor and understand. Competitors enter and exit the market. Some competitors offer substitutes for the products and services your customer is currently buying and using. Benefit claims are often inflated. Comparison pricing is often difficult and misleading.

Competitors differentiate themselves on features, functional benefits, emotional benefits, and cost. These points of differentiation need to be prioritized. Customers drive the prioritization process by identifying what is meaningful and relevant to them. This process presents an opportunity for your company to analyze the changing landscape and select a position in which you can leverage your distinctive competencies and create value for your customer.

How competitors differentiate in the retail market is well understood and experienced by the consumer. Tiffany is symbolized by the egg-shell blue box that enhances the extrinsic emotional benefits; Nordstrom by outstanding customer service which reinforces the intrinsic emotional benefits; Sears by trusted brands such as Craftsman with full service and life-time warrantees; and Wal-Mart by being the low cost provider.

However, in the technology sector, differentiation can much more difficult and demanding. It's easy to create a value proposition that is indistinguishable from the competition. For example, the following concocted positioning statement below may feel familiar to you...

"We are the world's leading management and technology services organization, bringing deep domain knowledge and breath of experience to today's global enterprise. We offer our customers a full service, one-stop-shop solution. Strategy and experience-based design. Deep technology expertise and broad implementation skills. Global distributed delivery. A fixed-time, fixed-price approach. We bring all these together to rapidly and reliably deliver the solutions and the value required at the intersection of advanced technology and the enterprise."

It is difficult for prospects to find important takeaways in such statements, let alone separate your firm from the pack. Do your prospect's homework for them. First test your market to detail their needs and buying criteria. Then tell them exactly how your firm differs from the competition in the areas that are important to them. In doing this you will increase the likelihood of making the short list and shortening your sales cycle.
 
 

Crafting the Message

Your new knowledge regarding your customers, your distinctive competencies, the benefits of owning and using your products and services, and the competitive analysis will define your market position. The challenge is to incorporate this knowledge into a crisp value proposition that is both meaningful and relevant to your customers.

Employing both qualitative and quantitative research with customers in selected offline and online environments would test these initial value propositions. The results from the customer-focused testing will inform the iterative process. The enhanced and strengthened value propositions should be retested with customers, using offline and online testing environments, as appropriate. Once again, the results of this second, validating research are incorporated into a further refined value proposition.
 
 

Proven Methodology

The following process diagram illustrates an effective, straightforward roadmap to creating an improved marketing communication strategy.

Step 2: Applying discoveries from Step 1, and additional secondary research about the market, a detailed Market Profile can be developed about your prospects.

Step 3: A good communications package relies upon an accurate and honest assessment of your offering. Obviously promoting strengths and de-emphasizing shortcomings is key, but unfortunately this doesn't always happen. Benchmarking your offering for features, performance, ease of use, follow-through of service, etc. vis-à-vis is mandatory. This is the heart of your strategic roadmap - you can only reach goals if you can pinpoint where you currently are. Blending this corporate and offering situation analysis with the market knowledge from Step 1 will allow you to assess and quantify the impact of your offering within the installed base - in a manner that is meaningful to the target market.

Step 4: You now have the complete "big picture"! You understand your market's needs and how they buy. You know whom you are up against and how to compete. You have matched your company's organizational and offering strengths to the market's buying criteria and pain points. You have quantified what you bring to the table and communicated your ROI-grounded value proposition. A compelling brand, positioning and messaging package can now be crafted.

Step 5: Before you commit your marketing budget to the new market communications package, it's important to test your new strategic with your target market. Online surveys and online focus groups are quick, accurate and affordable methods to reach the target market without geographic limitations. Using these testing techniques, you now have the luxury of testing multiple brand strategies, positioning statements, etc. to hone and optimize the final marketing product. This additional investment can mean the difference between spending limited resources on a flawed marketing message, and "getting it right" the first time.
 
 

Reaping the Rewards

A winning marketing communications package can make all the difference in evolving your firm from being a faceless member of the competitive pack or being a distinguished market player. Communicating clear value yields increased closed business with shortened sales cycles. Whether your firm is entering new markets or wishes more success in its current market, it may be time to align your market messages with the needs of the next economy.
 

About Gantry Group: Founded in 1997 and headquartered in Concord, MA, we are a full-service, custom market research and advisory firm dedicated to helping companies cost-effectively accelerate the successful market adoption of their products and services - online and offline.

The Gantry Group has been helping companies design winning marketing communication packages through the application of its proven brand strategy, market analysis and market testing practices. Contact us today to see how we can ensure your firm communicates your unique ROI value proposition to your marketplace.
 

The Gantry Group, LLC 30 Monument Square, Suite 135  Concord MA 01742

Phone: 978-371-7557 Fax:  978-287-0043 Email: info@gantrygroup.com Web: www.gantrygroup.com

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