Thursday, January 15, 2004

Unique Value Points (UVPs) 

Part 2: A fresh look at the next generation sales pitch.

2004 is staring us in the face. Customers are now –more than ever- the kings of demand, and as a result markets have fragmented to the point where each individual customer is now a target segment, whose needs, characteristics and demographics are almost absolutely unique. In order to understand and satisfy these specific characteristics, organizations need to create value for and with their customers. We are no longer happy simply shopping at the local Supermarket, we demand loyalty cards and home delivery. Third world garment factories are no longer happy stitching garments for international fashion brands, they demand intellectual share in the design and creation of new product lines and a new level of involvement, in the value chain. IBM’s on demand strategy, has ‘utilitized’ IT infrastructure, to where server processing power can now be turned on whenever necessary and customers can pay for IT infrastructure depending on how much they use, just like a domestic electricity bill. Utilization fosters a long-term relationship with the vendor and sets a platform for real CRM. All these are examples where the VALUE created in the form of relationships and mass customization is now more important than the actual benefits of the product. The selling pitch has changed.

We operate in a commercial engine, where supply chain management is no longer a support activity. It is every activity. Technology has lent to interoperability, organizations are connected, and so are our customers. This means greater buying power, greater information, greater variety. Customers are increasingly dealing with us because of the VALUE we give them, not because we have something different to sell them. They purchase an IBM, not a PC, they purchase an Emirates travel experience, not an airline ticket. The contemporary USPs are now ineffective. In open markets, where competition is intense and accurate, saying that you can deliver faster, cheaper and in better quality is no longer enough. As these words are uttered, a factory in a corner of Shanghai is getting ready to deliver the same product even cheaper, even faster and at even better quality. So what now?

It is imperative that organizations of today and tomorrow define themselves and their products not by their product’s unique selling points but rather by the unique value that the organization itself and their products together create for their customers. Selling points, like quality, speed and cost can be replicated, reengineered and bettered almost instantly, value cannot, as it based on culture, interaction, energy and relationships. The better and stronger your value differentiators, the harder it will be for competition to out do you. I have coined these value differentiators as an organizations Unique Value Points.

“Hogwash! UVPs? Delivering value to our customers? that’s old news!”. True. UVPs maybe implemented in some form or other in strategic announcements like an organization’s “Value Statement”, or “Value Propositions” but the unfortunate reality is that in most cases these statements are a little more than a plaque at your reception desk. UVPs are a step more operational. Unique Value Planning is the marketing management process of identifying the unique value points that make a difference when you interact with your customer. The task is to develop a UVP sales pitch that the sales team can then take to market.

The questions to answer are “How has my organization increased the value of my customer? Is my customer a better company overall because they deal with me? Only if the answer is a unanimous ‘yes’ can you consider yourself a “valuable” partner. The next step is to drill down and identify the unique value that you are able to create for your customer. This will include your “Moments of Truth”, your account management, your customer communication skills and the way in which you create and manage these relationships? These are your UVPs.

In a market environment where the David’s are out maneuvering Goliath’s, and where the rules of the game have changed, organizations that do not implement the mechanisms to create and manage their UVPs will sooner or later find themselves six feet under.

Some may feel that the concept is immature and irrational. To these critics I ask you to do me but one thing. Take a moment to look deep into your organizations and isolate the single most critical factor that differentiates your business from the competition. If this single factor is not the value that your people and processes generate through their interactions with internal and external stakeholders, and the value that these interactions place in the customer buying process, then I stand corrected.

Oscar Wilde may have been right when he said that “today people know the price of everything and the value of nothing” and 150 years later many organizations still operate on a similar premise. This trend however is close to its end. Tomorrow’s organizations better be ready.

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