Value Propositions Exist at All Levels!

Recently I was sharing my start-up experience with someone I connected with through Slack. They were asking about how to engage and grow a community and I have felt that in one of my previous start-ups we did that quite well and was one of the strengths of our business model. Unfortunately for us, the value proposition for the product itself wasn’t compelling enough for “cheque-signers” to sign on the dotted line and thus we had to wrap up our venture.

At the core of our strategy to grow a community around our product was to be genuine by engaging them in varying activities and to provide educational (not “salesy”) material. Activities included training, conferences, user group talks, webinars etc. and we provided a lot of material in the form of blog posts, case studies, presentation slides, books etc.

After explaining our experience and both the successes and failures we endured, my friend then explained that he had connected with various groups and found people and groups understood his value proposition. The issue he was faced with was keeping them engaged in the community forums. After some further reflection about this and our experiences, it was then I realised that something that is implicitly assumed, but not explcitly said, is that there are value propositions at every level our business and all of these need to be considered. This may not be a huge revelation for some, but as it’s very much an assumption that we do this, we sometimes forget to identify our audiences and their drivers.

Meeting the Needs of Champions, Failing the Needs of Everyone Else

In the business I described above, our ability to actively engage and rally a small, but devoted, community of people around the techniques we used was one of our strengths. What we failed at was meeting the needs of the other parties involved. We didn’t have drivers that were compelling enough for management or other end users. Our champions were usually only a very small part of an organisation and as our product required a great devotion to be properly implemented, we faced an uphill battle as our strategy (whether we realised it at the time or not) was mainly focused on the needs of these champions.

In hindsight, by adopting this kind of strategy we were building a business on a “wing and a prayer”. We were only appealing to a select group of users and we had to hope that they had the courage and the title to be able to enact change in the organisation. In other words, we had a value proposition that was compelling for a number of individuals but not compelling enough for an organisation to take the steps necessary to change.

Meeting the Needs of Consumers, Failing the Needs of Distribution Channels

My first real attempt at a product company was more as the technical founder of a psychometric. The psychologists I worked with had already developed and proven the science and were familiar with the space commercially. My role was mainly to provide technical skills and a little business advice. Unfortunately this venture failed to gain traction and although I regularly joke with my ex-business partner (the product endeavour dissolved, the friendship thankfully didn’t) on HIS failings as a business man, the truth is that only now am I able to articulate the problems that, at the time, I could only explain as being a “gut feeling”.

The standard business model under which most psychometric are marketed, as explained by my ex-business partner, is that the psychometric company will provide a certification course to consultants who then deliver the psychometric testing and results to clients. For every psychometric test delivered, the consultant pays a royalty to the owner of the psychometric’s IP and takes a cut for themselves. My ex-business partner had intended to use this exact same method as it appeared to be working for other large psychometric companies and in addition to that he had managed to build strong relationships with a number of local management training facilities to be able to market to consultants.

What actually happened is that rather than the consultants actively selling the psychometric to clients, as my ex-business partner had hoped, the consultants typically get work from clients as a result of the certifications they have. As the psychometric we were selling had no marketing done beyond what was communicated to consultants, the actual consumers of the psychometric and its reports never knew to even request the psychometric from the consultant. Further to that, the delivery of the psychometric and its results is quite an onerous task for the consultant. Unfortunately there was a lot of preparation and after service work required in delivering the psychometric and its results properly to consumers so consultants would rather opt for faster and more popular psychometrics.

Although the organisations that have made use of the psychometric find it’s reporting features to be extremely useful, unfortunately the product has failed to gain much traction. The really big failure here is that although the value proposition for the consumer is strong, the value proposition for those involved in the distribution channel were not as great. Also failing to communicate appropriately to potential consumers the value of the product meant that it was like having the fastest car on the track but failing to fill it with fuel.

There is Never Just ONE Value Proposition

The important lesson in all of these stories is that we need to be aware of the drivers of all those who may be important to our marketing strategy. When your nose is to the grind stone, it’s so easy to overlook the importance different players could have to our “game”. Of course we’re human and mistakes and oversights are inevitable but, in my experience, when something doesn’t appear to be working quite like you expect it, it means maybe you need to revisit the basics and see if there is something you’re missing. I’m still learning to apply this right now, so I’ll let you know if it works out for me. đŸ™‚

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