It’s no secret that the U.S. economy experienced a traumatic shock as the result of mandatory business closings and stay at home orders that were implemented to stem the spread of COVID-19. In April, retail sales fell 14.7% compared to March, and the unemployment rate also reached 14.7%, the highest rate since the Great Depression of the 1930’s.
Recent economic data suggests that the bottom of the COVID-19 recession may have occurred in April. For example, June retail sales were $524.3 billion, up by 7.5% over May, and up by 21.3% over April. And the June unemployment was 11.1%, still at recession levels, but down significantly from the April high.
It’s also clear that the pandemic is far from over. During the past few weeks, the number of COVID-19 cases has increased dramatically in a number of states, and in response, several state and local governments have reinstated some mandatory business closings and imposed other restrictions. These actions raise questions about the pace of the economic recovery over the next few months.
The most likely scenario is that the U.S. economy will be “convalescing” through the rest of 2020. It won’t make a quick recovery to pre-pandemic health, but it will show continued, if uneven, improvement. Under these circumstances, business conditions in the second half of this year are likely to remain challenging. Revenues will be unpredictable for many companies, and the uncertainty will make business leaders more risk averse than usual.
To win business in this environment, many companies will need to “retool” their customer value proposition(s). The economic repercussions of the pandemic have altered the needs and priorities of many of your existing and potential customers. Therefore, value propositions that were compelling before the pandemic may be less appealing today and for the next several months.
The Basics Haven’t Changed
While COVID-19 may require value propositions to be reengineered, it has not changed the attributes that make a value proposition compelling or the process that should be used to develop value propositions that will resonate with prospective buyers. So let’s review a few of the fundamental principles of customer value propositions.
The diagram at the beginning of this post depicts the basic value proposition framework. It shows that all value propositions involve the interplay of three factors – the needs and priorities of prospective buyers, the strengths of your competitors’ offerings, and the strengths of your company’s offerings.
The diagram also shows where winning, toss-up, and losing value propositions are typically found in the framework, and the following table compares the attributes of strong, so-so, and weak value propositions.
Winners – Your strongest value propositions will exist when the strengths of your offering match the high-priority needs of your prospective buyers, and when your offering is clearly superior to the offerings of your competitors (relative to those high-priority needs).
Losers – Your value propositions will be weak if they focus on attributes of your offering that are inferior to the attributes of your competitors’ offerings, or if they aren’t aligned with the high-priority needs of your prospective buyers.
Toss-Ups – In a three circle Venn diagram, the “sweet spot” is usually where all three circles overlap. But that isn’t the case here. If your value propositions focus on features of your offering that are just equivalent to what your competitors are offering, you won’t have a competitive advantage. You will win some deals and lose some deals, and whether you win or lose will likely depend on price.
To develop value propositions that will be compelling during the COVID-19 economic recovery, the most important step is to identify how the pandemic is affecting the business operations of your customers and prospects right now, and how it is likely to impact them over the next few months.
The next step is to identify the attributes of your offering that meet those immediate needs. And lastly, focus on the attributes of your offering that make them superior to your competitors’ offerings at meeting those immediate buyer needs.