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Customer Behavior   URGENT - Need Help Fast!  
 
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How Often Do I Change My Value Propostion?
Posted By: mkendall on 2/3/2005 2:25 PM (CST) 250 Points
I have identified a value proposition for my company that I think is very compelling. It has all of the elements of a good marketing proposition as learned on this site- State the problem; offer a solution; give references and give a reason to buy. It’s not getting sales. Question: When should I change it?

Posted by: SteveByrneBranding Member Response
2/3/2005 4:22 PM (CST)
Hi mkendall,

what is your new value proposition? how did you implement the new proposition? How long have you given it to determine it isn't getting sales?

The more info you provide, the better able the KHEr’s will be to give you sound input.

- Steve
 
Posted by: mkendall Author Response
2/3/2005 4:46 PM (CST)
Answer to Steve's Question-

Essentially- I am offering a CRM solution to small and medium-sized solution- web-based with customizable features, at a reasonable price. The benefits of CRM are well known and seemingly plausible to most business people- so I don’t have much of a problem with the problem solution.

I have implemented my strategy using direct mail to send out brochures to companies from a mailing list I purchased. I am a small company with a small budget and work as the lead salesperson.

I’ve done some follow-up with little avail-
 
Posted by: Peter (henna gaijin) Member Response
2/3/2005 5:05 PM (CST)
In theory, you could/should have multiple value propositions based on who the target audience is.

Within the sales cycle for CRM at a company, you will have multiple audiences - the user, IT support, upper management/finance, etc. The value proposition for each should be different. the user wants to know how they will benefit from this, IT wants to know how easy it will be to install and maintain, and upper management wants to know how your product will save the company money. You need a value proposition crafted for each target.

In general, CRM sales may be quite a bit more involved than just sending a direct mail and the having a single sales person follow up. last I heard, the enterprise software industry had sales cycles that were running 9 months plus. Perhaps it could be a little less for the SME market, but it likely will still be a very involved sales process.
 
Posted by: D4Demand Member Response
2/3/2005 5:10 PM (CST)
The benefits of CRM are NOT well known. It is Greek to the small business man.

Go to your chamber of Commerce and see if you can offer a breakfast seminar on CRM for small companies. TRy the Rotary club or other associations.

I will lay you odds that your brochure addresses the probelm as having to do with managing the process. the real problem small biz owners have is having enough TIME and PEOPLE to do what they are doing now.

Your solution phrases should emphasizing less paperwork with better information. CRM is data input intensive. EVery stinking piece of information has to be keyed into a stinking computer. The samll business man has CRM IN HIS HEAD. So you must convince hime that his PEOPLE need to have all the info that is in his head, without coming to ask him all the time.

There is your solution. "Make what you know about your customers available to everyone in your company 24 hours per day. Never miss an order or a problem. Eliminate festering customer problems."

Now these are solutions a small business man can relate to. It is not about his customer, it's about HIM.
 
Posted by: SteveByrneBranding Member Response
2/3/2005 7:13 PM (CST)
Good input so far.

I’m not feeling the “very compelling” proposition with “web-based customizable features at a reasonable price.” Particularly in a marketplace where there are scores of competitors with variations of the same proposition – and some have the advantage of being known brands.

Also, what is a reasonable price? Is your price in the middle of the pack? You want your prospect to think more about investment than price. Sure price is a factor, but I’m guessing the CRM category is more about saving time (which is saving money) and that a product that pays for itself in 12 months rather than years is a good value even if it was premium priced.

Which brings us back to “customizable features” (and their primary benefits) and customer service. As D4Demand pointed out, the SME executive may know the term CRM but probably not much more. And since much of the press on CRM and it’s ROI has been negative, what’s the SME to think about making this investment. Probably they will be resistant to sales efforts.

The strategy I recommend is segmentation. From your experience is there a vertical or segment that you know really well. To illustrate, I’ll use the legal vertical, which is composed of law firms and corporate legal departments. Let’s go with law firms because-

- there are many SME law firms
- they are easy to identify
- lots of media choices
- new to marketing/customer services
- unique business environments
- many professional associations (including the Legal Marketing Association)
- and they really require hands-on service.

So, perhaps a value proposition develops from “uniquely customizable for small law firms with great service.” Tighter focus, less competition and you have a reasonable chance of becoming branded over time.

Just an example, the question is -- what marketing segment gives you an edge?

Switching gears to your marketing roll out, as Peter advised there are sales cycles and target crafted messaging issues to be addressed.

Sending a brochure to the right targeted list with the right target message will help create sales. Following up with a sales call that asks if the target saw the information helps a great deal. But offer structuring is the key to success. Sending a cover letter that offers -- a free 90 day trail or ? gives you a marketing focus, gives the prospect an opportunity to say yes and makes it much easier to follow up by phone. (don’t forget to test offers, search this site and Google for DM process and tips)

Also consider –

Press releases (no budget? Try PRWeb.com, it can help your SEO program)
Search Engine Optimization or SEO (of course you have to have a web site)
Email version of your direct mail efforts


In short (too late for that) don’t bite off more than you can chew. Choose a segment where you can be successful. Stay close to the target, really understand their needs for education, service and customization – then deliver. If you out grow the segment, GREAT!! go after another one.

Much More could be discussed from above, but hope this helps,

- Steve
 
Posted by: mkendall Author Response
2/3/2005 9:31 PM (CST)
Wow- you guys are great! Lots to keep me up at night.

All points are well taken.

With all the technology choices available to business, it’s no wonder we are not thrown out our ears. I know- CRM has taken its hits, I thought the same thing- not another data input nightmare to hold down business.

Here is the deal. In my opinion, owners, employees, whomever need to keep the information moving- information that is static is worthless. Look at the same information day after day and it will tell you the same thing.

Use CRM or whatever technology is available- but keep the information moving. I guarantee your competitor will rearrange the puzzle and come up with the very thing that will put you out of business.

But as other have said- most people have their CRM in their heads. So as I am finding out it is a hard sale-

My reasonable price is no secret, I am offering is a quality product installed with a day of training for as many as we can fit into a room- for under $4000.00- you own the software. Within a couple of days, you have at least a different look at your data- the information is moving again.

We can share with Outlook Excel, Word- you know the routine. And we can minimize the data entry by allowing simple emails to be sent to a server- they will be parsed the message will insert into the database- people know mail- so why not allow this as an conduit to the system-

SteveB offered the following

The strategy I recommend is segmentation. From your experience is there a vertical or segment that you know really well. To illustrate, I’ll use the legal vertical, which is composed of law firms and corporate legal departments. Let’s go with law firms because-

The only vertical I know is the small IT shops- since that my business- maybe I should be looking at the trees and stay out of the forest for a while? Will that work?

D4Demand offered good info on conveying the benefits in an understandable way- without tech-speak. In addition, I don’t think he likes to do data entry!

Peter (henna gaijin) pointed out the realities of a long sales cycle- I start spending my money a little more wisely!

In conclusion, believe it or not- I’m feeling pretty good about the possibilities- you see- you got the information at my company moving again! And I am entering it into my CRM system as we speak.
 
Posted by: mkendall Author Response
2/4/2005 10:22 AM (CST)
Have we taken this to its logical conclusion?

After a night's rest, I came up with the following. What is the probability of this value proposition being successful?

My value proposition refined to match what I THINK I am hearing-

My company is offering a CRM Customer Relationship Management System to any business who wants one- just for the asking.

The system is a well built .net Open source solution- which means you can make changes to the system to meet your needs- subject to the open source license. No cost to you.

My company can help you do the following tasks for a fee:

Install the software on your servers or help you with a hosting company
Provide training on the software
Provide documentation
Provide Customization to your specifications
Train your developers on the code base.
Provide management consultancy in operations management.

If you have the staff, time and money to do these tasks yourself- then go ahead. My bill to you will be $0.00.
 
Posted by: NuCoPro Member Response
2/4/2005 11:31 AM (CST)
To offer a somwhat contraian viewpoint, I think you are targeting the wrong market and charging way too little for your product/service.

From what you've said about your product and the EXTENSIVE service you are offering bundled with it, your fee should be at least $25k. You are going to kill yourself trying to sell this at $4k, to people who are very leary of using it.

Go back a few steps in the process and reexamine who it is you want to sell to. My suspicion is that you should be targeting companies of > $50M. but I bet you're trying to sell to $2M companies.
 
Posted by: thinkmor Member Response
2/4/2005 12:37 PM (CST)
Hi Mkendall

In addition to your target audience being off centre somewhat, I'd say your value proposition is not VALUABLE enough to customers for them to understand simply.

If you are a technical geek fine, but good value propositions are understandable by everyone. E.g. Volvo's value proposition includes safety, roominess, durability, styling along with a price that seems fair in terms of the mix of benefits.

CRM, in my opinion, is NOT moving information but utilising information so I can keep customers happy and build long term relationships so both customers and us a business win together - exchanging value. Demonstrating value to your customers and their end customers is key.

Don't focus on what your CRM system does or is technically but WHAT benefit(s) it can potentially deliver to your customers and theirs.

Have you sold any of these CRM sytems yet?

If I was you, I'd start talking to prospects and find out what they hate about CRM systems and how they can be improved. Do what you can to bridge the gap between what you have currently and what customers need and you'll sell them - guaranteed!

Hope this helps.


Zahid Adil
 
Posted by: Roxana Member Response
2/4/2005 3:20 PM (CST)
I have worked with CRM systems selling a wide range of services from consulting in choosing a solution to completely outsourcing client relations.
We obtained lead generation from:
- seminars (alone or in cooperation with publicity agencies and CRM software producers)
- fairs and conferences
- cold calls on in-house built lists (on various criteria - size of the entreprises, field of activity). Small entreprises are usually not interested - they can manage without or don't have the money. Large entreprises go for brand solutions (SAP, Siebel,..) or already have implemented CRM. Medium entreprises are the best. If they are growing even better.
Increased awareness can be obtained with advertorials, sponsorship, giveaways, leaflets, brochures. One of our competitors offered a free online company phone book, but there is room for a lot of ideas.
6-9 months sales cycle is only an average - it can take more than a year or less than 1 month. That is why you need to have a persistent and professional account management. In the first phase we offered free consulting services - problems identification, comparison between different solutions, customization, etc. It made a lot of prospects come to us.
We searched the local market and found out that:
- CRM systems are not widely known - everybody knows something, but not all. They imagine the system can do more, or they can implement it without software just with philosophy.
- CRM systems do not always give clear results (sorry!) - positive ROI, high productivity or client satisfaction...
- there is wide range of appeals for CRM implementations - every bell rings for a different thing.
Sales approach should start with the question what do you expect from CRM system because everybody expects a different result. Usually, IT managers are implementors while sales and marketing managers and CEOs hold the key to the buying decision.
- there is an increased need for personalized solutions: helpdesks, call centers, online stores, field sales, SMS campaigns... It helps if you can adjust the solution to fit all the needs.
From what you say there is nothing wrong with your strategy, but your materials can still be at fault: maybe their language is not clear (too technical or not enough technical), they use the wrong appeal, they don't show the results ("show them the money"), they don't inspire credibility, don't prove your professionalism. Do not try to do everything in your first letter (problem, solution, reason to buy)- just get their attention and permission to visit them and ask questions important for the sales cycle.
Getting back to what you asked first: change your value proposition until it gives results. Change it gradually and test it extensively. Send 10 letters instead of 100 and analyse the impact until you find the winning strategy.
 
Posted by: mgoodman Member Response
2/4/2005 4:05 PM (CST)
Changing your value proposition is something you should do only after VERY serious consideration, and only after the original/current one has been proven to be ineffective.

Even if it was ill-conceived to begin with, if it's working leave it alone.

Most companies/brands never change their value proposition. A few companies change it when new technology comes along, or after a merger/acquisition.

Is there a way you can position your new idea as being additive to or supportive of the existing value proposition?
 
Posted by: ASVP/ChrisB Member Response
2/4/2005 4:29 PM (CST)
If your value proposition truly frames the value in the products and services you offer in terms the customers in the target segment would use themselves you should not need to change it. Ever.

Never, that is, unless you change one of the factors that made it the value proposition in the first place, i.e. the product or service, the value in it, to the target segment, or if you change the target segment.

I think you may be making some wrong assumptions underpinning your marketing strategy, rather than your VP...

First, most SMEs do not understand the value in CRM. Most are suspicious, and have heard horror stories about LMEs undertaking multi-million dollar CRM implementations from the big names (like S...) and obtaining no benefit, no ROI whatever. SMEs are very suspicious about CRM. So if your Marketing demonstrates your CRM is both affordable and trustworthy on a number of fronts, that might help.

Second, LMEs are just as suspicious of expensive CRM implementations, so a more reasonably priced option may persuade them to take a chance with you.

I support Gary (Vevolution)'s view you are targeting the wrong segments.

I would be aiming to sell to LMEs not SMEs with a more expensively priced product around the $25-$50k mark. Build a track record with LMEs. Get known, get brand credibility. Write case studies based on actual implementations. Get some great reference sites.

Then, by all means offer a scaled-down version to LMEs at $4k out of the box if you still think it's worthwhile.

FWIW, my experience is that SMEs take far, far more supporting than LMEs, for much less revenue.

Hope this helps.

ChrisB
 
Posted by: SteveByrneBranding Accepted Answer
2/4/2005 7:05 PM (CST)
Chrisb makes some good points (as usual), but I have to suggest that going after LME’s puts you in competition with some well branded competitors with resources that far exceed what you have currently. See CRM TODAY Profiled Companies
http://www.crm2day.com/directory/ab_profiles/ab_profiles-A.php


You want to go after what the CRM market is likely to allow you to claim and own. Your value proposition should address what is in the minds of the target – and yes, it should be good for many years. In others words credibility is critical to your value proposition. You have indicated the IT market (or some segment of it) may be a good match for you. I suggest that you pursue this avenue and think value proposition from the viewpoint of IT professionals. Since you have expressed some existing knowledge of this group, start asking some questions. Get feedback, and then see if you can narrow your segment to an especially attractive segment of IT for your solution – hint, this probably will address the extra service needs of SME.

I do agree with others who suggest you may be able to increase your pricing. Again, find out. Talk with the target, see where they think price points should be based on their expectation of what you will deliver, then test before committing to pricing.

CRM is a lot of real estate, better to stake a claim for what you can own than chase what the big guys are going after.

Hope this helps and best of luck,

- Steve
 
Posted by: mkendall Author Response
2/5/2005 9:23 AM (CST)
Very Helpful- And I appreciate all the good advice.
 


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