If you had just ten words to describe why people should do business with your financial institution, what would they be? Do these words differentiate your financial institution from all others? If so, that could be your value proposition.
A value proposition is a clear statement of the tangible results a consumer gets from using your products or services. It is a promise of value your financial institution will deliver and the consumer’s belief of the value they will experience. An effective value proposition will convince a potential consumer that your particular products or services will add more value or solve a problem better than your competitors. It is a statement that will differentiate your financial institution from the competition. A value proposition answers the question, “Why should I buy from you?” The more specific your value proposition is, the more effective it is.
M&Ms once used the classic value proposition, “The milk chocolate melts in your mouth, not in your hands.” Notice that chocolate is mentioned, but it’s not what makes the brand unique. Being able to eat the chocolate without making a mess is the differentiator. Fed Ex once used, “when your package absolutely, positively has to get there overnight.” Again, the service is mentioned, but the differentiator is reliability. Both of these value propositions state tangible results, offer some type of solution and differentiate their respective companies from the competition.
A value proposition also provides strategic direction and keeps an organization focused. It defines whether you are competing on price, product or something else and it defines your target market. Those things help determine core competencies, business processes and even culture. Those things should be considered when crafting a value proposition.
A value proposition is not something your board or executive team determines in a 30-minute meeting. It should be crafted after input from employees, members/customers and potential consumers. It should be crafted after you organization takes a good, hard look at what is doing right and doing better than your competition. It should take into account both the user experience and human experience and should steer away from features and benefits.
For more in-depth information about the worth of a value proposition, read the January 2013 issue of my monthly newsletter. It includes information on how to craft your value proposition, demonstrates what a value proposition looks like and gives examples from other financial institutions who have already gone through the process.