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What Value Proposition Should You Secure? 

Tony Ulwick | May 6, 2016 333 views No Comments

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Source: Strategyn

Source: Strategyn

A number of years ago we worked with Coloplast’s wound care product team. More specifically, we focused on wound care nurses (the job executors) whose job-to-be-done was “treat a wound.” We used our outcome-based segmentation methodology to reveal a segment of highly underserved nurses, and the findings resulted in a new value proposition that led to double-digit growth in less than six months. How did Coloplast achieve these results? To paraphrase hockey great Wayne Gretzky, Coloplast “skated to where the puck was going to be.”

At the time, all other wound care companies had built their value propositions around some variation of “we help wounds heal faster.” Coloplast realized that talking about speed of healing was akin to skating to where the puck had been. Sure, at some point in the past, wound care nurses had been underserved along that dimension and that value proposition had resonated with them. But those days were long gone. When we investigated for Coloplast, we found a segment of wound care nurses whose top unmet needs had nothing to do with speed of healing. Instead, 10 of their top 15 unmet needs—their desired outcomes—related to “making sure the wound doesn’t get worse.” It turns out that in many wound treatment situations, the patient unwittingly makes the wound worse, and avoiding those complications was a challenge for nurses. Coloplast realized that preventing complications was where the puck was going to be.

Coloplast went to market with its new wound care value proposition: “We prevent complications.” Without changing its products or its pricing—simply by focusing its messaging and sales efforts on nurses’ unmet outcomes—Coloplast achieved double-digit growth.

This is not an isolated incident. Our first success repositioning an existing product line was with Cordis Corporation back in 1995. Cordis experienced a 3-point increase in market share by aligning the strengths of its products with the unmet needs of the interventional cardiologist. In 2014, Arm & Hammer’s Animal Nutrition division realigned its value proposition and achieved a 30%-plus increase in year-to-year revenue.

The secret to a winning value proposition

The unmet needs of today represent the winning value propositions of the future. Knowing what needs are unmet—which desired outcomes are underserved—enables a company to secure a unique and valued competitive position. This is the essence of strategy, and it is best tackled using a jobs-to-be-done approach. To secure a winning value proposition, a company must (1) know where in the job the customer is underserved, (2) secure the value proposition that communicates to customers that their needs can be satisfied, and (3) do everything in its power to satisfy the targeted unmet needs better than its competitors.

The best way to figure out where the customer is underserved is through the application of outcome-based segmentation. It was designed for this purpose. To create a winning value proposition, a company must know why a segment of customers is underserved, along what dimensions they are underserved, and to what degree. Once a company knows those three things, it can define a value proposition in a way that communicates its intent and ability to address all the unmet needs. That last point is important. Coloplast didn’t choose to say “we prevent the bandage from moving,” even though preventing the bandage from moving is one way to help prevent complications. That would have been too narrow a value proposition. Defining the value proposition around a significant number of unmet needs is far more effective and has longevity.

Fulfilling the promise

Once the value proposition is defined, the company must fulfill its promise. First, it must point out to customers ways in which its product or service already addresses the unmet needs it has discovered. Next, it must accelerate development of product and service features in the pipeline that further address the targeted unmet needs. Then it must create or invent new features that address any remaining unmet needs that are within the sphere of its value proposition. Coloplast worked over a period of years to address all the unmet needs associated with preventing complications.

A value proposition defined from a jobs-to-be-done perspective aligns company employees around a common vision. Once they know what part of the job causes problems for the customer, sales, marketing, development, and R&D can join forces to solve those problems and tell the customer about the changes. A value proposition that is tied to unmet needs is integral to a company’s success and a key step in the Outcome-Driven Innovation process.

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