The intermediary value proposition
During the Glacier Life Investments Summit experts delved into some of the intricacies of an intermediary value proposition.
Anton Swanepoel, FAIS compliance and practice management expert, author, and trainer discussed how value propositions have transformed over time, what an intermediary value proposition should look like and how to differentiate it from other intermediaries.
A compelling value proposition
Quoting Isaac Jeffries, Swanepoel said, “At the heart of every strong business model is a compelling value proposition.”
Why does your value proposition matter? “Because it is what keeps you in business, separates you from the herd and makes you unique. Without a competitive advantage, price becomes your only differentiator and when that happens, you will be no more than a commodity. There are businesses all over the world that thrive without having to compete on price. They offer something that is far more important than competing for the lowest possible price. They focus on creating value and their clients are happy to pay for the privilege,” he added.
More important than price
Tom Reilly, the author of Value-Added Selling, found in their BSP research that there are 10 things that customers believe are more important than price, namely:
- Quality and performance – this speaks to brand and reputation;
- Customer service – this refers to client service;
- Knowledgeable salespeople – this implies that advisers know their clients and they know their products;
- Product availability – this refers to competitive products;
- Supplier stands behind what it sells – this refers to accountability;
- Supplier’s ease of doing business – doing business must be effective and efficient;
- Salesperson follow-through on promises – this implies that advisers are diligent and they deliver on their promises;
- Trustworthiness of the salesperson – trust is everything;
- Product durability – this may not apply to advice and intermediary services; and
- Salesperson accessibility[1] - advisers and intermediaries must be accessible.
Swanepoel pointed out that a value proposition is part of a business’s overall marketing strategy and getting your value proposition right should be a key part of your focus. “Unfortunately, there are so many businesses that get it wrong and if you ask a hundred different advisers what a value proposition is, you will get a hundred different answers.”
From the outset it will serve you well to consider that, adding value is not about what a business owner thinks is important.[2] In our world, Swanepoel said, the client defines value. Ultimately, your value proposition(s) must answer the following questions:
- Why do your clients buy from you?
- What motivates people to choose you, to choose your products (and/or services) over the hundreds of alternatives?
- What makes your company, and your products, better than the rest?[3]
Your value proposition will ultimately determine whether you will attract new clients, whether your existing clients will continue to do business with you and refer more clients to you – or not. For a new business, in particular, getting your value proposition right is a must.[4] However, with the effects of COVID, the subsequent changing priorities of clients and advancements in technology, well-established businesses will do well to rejuvenate their current value proposition.
What is so special about your service?
“Your value proposition deserves a lot of attention simply because it is fundamental to the success of your business. Also, it is important to understand that your value proposition does not consist of just one thing. It is the sum-total of a few key parts that work together to create a valued client experience,” said Swanepoel.
At the core of a successful business strategy, Swanepoel mentioned that there is a carefully BREAK crafted value proposition, which ultimately defines what a company delivers to its clients. Despite their widely recognized importance, there is, however, little agreement on what exactly value propositions are.
A value proposition goes far beyond your offering. Value propositions are the ultimate answer for why customers engage in a business relationship with one company as opposed to another—customers choose offerings for which they perceive a higher value. This claim suggests that market leaders gain their position not just by having a better product or a superior marketing strategy, but by delivering a superior value proposition.[5] Simply put, the difference between value propositions and offerings is that the former answers what customers value and why, whilst the latter describes how value is delivered by the company. Note that value propositions depend on speci?c offerings, but not the other way around.[6]
Components of a value proposition
A value proposition refers to the value a company promises to deliver to customers should they choose to buy their product. It tells clients what the company stands for, what they do, how they deliver their service, and why it deserves their business. The value proposition is not just about the services you offer and the products you sell, no. It is that "why" behind everything, a much deeper reason. It is the "cause" that is driving your business.[7]
A value proposition statement is a clear, compelling, and credible expression of the experience that a customer will receive from a supplier’s measurably value-creating offering. It is not a description of what your organisation does for a customer. It articulates the essence of a business, defining exactly what it fully intends to make happen in the customer’s life.[8]
- It is the value experience that you deliver.[9]
- It is what clients perceive to be important.[10]
- The value experience is much more specific to the needs and circumstances of prospects and clients.[11]
Swanepoel said that in order to articulate your value proposition you need to understand why you do what you do, who your clients are, what they need and seek, why they are not happy with their existing solutions, what your solution is, the features it offers and how it serves those needs.
“The underlying components of your value proposition are your offering, the benefits of your offering to the client, your service model per client segment, what makes you unique (so that you stand out), whether your value proposition offers value for money and the client experience when engaging with you, whilst establishing a trusted relationship. A rejuvenated (refreshed, reviewed, and renewed) value proposition will incorporate new client priorities and changing service delivery methods, with specific reference to digital platforms as your value proposition ultimately comes down to your overall client experience in the engagement process,” he concluded.
Writer’s Thoughts:
In this rapidly changing environment we find ourselves in, where customer preferences and behaviors are changing, it is true that your value proposition is fundamental to the success of your business. Do you believe your value proposition ultimately determines whether you will attract new clients, or whether your existing clients will continue to do business with you and refer more clients? Please comment below, interact with us on Twitter at @fanews_online or email me your thoughts myra@fanews.co.za
[1] Tom Reilly, Value-Added Selling, McGraw-Hill Books, 2010 p 20
[2] Lee Rossini and Johann Maree: Business Management for Financial Planners, JUTA & Co. Ltd, p113
[3] What is a Value Proposition? (Plus 8 Modern Examples) (2022) (shopify.co.za)
[4] How To Determine Your Value Proposition | RSM (rsmconnect.com)
[5] (PDF) An Ontological Analysis of Value Propositions (researchgate.net)
[6] (PDF) An Ontological Analysis of Value Propositions (researchgate.net)
[7] Step-By-Step Guide to Writing a Unique Value Proposition [2022 Examples] (310creative.com)
[8] C. Barnes, H. Blake, D. Pinder, Creating and delivering your value proposition, PPPP: Kogan Page Limited 2009, p. 22
[9] C. Barnes, H. Blake, D. Pinder, Creating and delivering your value proposition, PPPP: Kogan Page Limited 2009, p. 7
[10] Lee Rossini and Johann Maree: Business Management for Financial Planners, JUTA & Co. Ltd, p113
[11] C. Barnes, H. Blake, D. Pinder, Creating and delivering your value proposition, PPPP: Kogan Page Limited 2009, p. 26
