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12 Mar
Contrast this with the approach many companies have taken which is simply to transfer their existing proposition to the online environment. The worst manifestation of this is the simple ‘brochureware’ sites which offer little more than an introduction to “who we are, what we do and where to find us” or sometimes simply “these are our products – take them or leave them”. This approach fails to take advantage of the unique properties of the online media such as its immediacy, interactivity and depth of content that is only limited by imagination and resource.
Once an OVP has been defined, then e-marketers then need to work hard to clearly communicate this proposition online and offline. Furthermore, as for any proposition, they need to evaluate how well it resonates with its audiences and revise it accordingly. So, part of proposition development is identification of powerful messages to convey the proposition. Using both offline and offline communications to build usage of online channels will be ineffectual if the messaging is the all-too-common “Visit our web site @ www.company.com” or “Sign-up for our e-newsletter”!
This article starts with current thinking on developing customer value propositions for brands and then describes the characteristics of a strong online value proposition and explores approaches to define and refine the OVP.
Note: In WNIM Issue 29, we introduced my top ten corporate issues of e-marketing ( http://www.wnim.com/archive/issue2804/emarketing.htm). In this e-newsletter and subsequent e-newsletters, we will explore some of these issues in more detail.
Development of a clear customer value proposition is now an integral part of customer-centric marketing, customer-relationship management and branding. A conventional view of the value proposition is provided by Knox et al. (2003) in their review of approaches to customer relationship management. They say a value proposition is:
“an offer defined in terms of the target customers, the benefits offered to these customers, and the price charged relative to the competition.”
Similarly, Rayport and Jaworski (2004) suggest that construction of a value proposition requires consideration of (1) Target segments, (2) Focal customer benefits, (3) Resources to deliver the benefits package in a superior manner to competitors. However, branding advocates believe that the value proposition is more than the sum of product features, prices and benefits. They argue that it also encompasses the totality of the experience that the customer has when selecting, purchasing and using the product. We will see that these customer experiences and also service quality are very important online. For example, Molineux (2002) states that:
“the value proposition describes the total customer experience with the firm and in its alliance partners over time, rather than [being limited to] that communicated at the point of sale”.
Similarly, Smith and Wheeler (2002) consider that designing what they refer to as a ‘branded customer experience’ is vital to delivering an effective value proposition. They also stress the importance of “developing a profound understanding of the customer’s experience”. The watch word here, is profound – they suggest that detailed research must determine the nature of value which drive buying and loyalty behaviour:
From this rapid review of the fundamentals of customer value propositions, we can summarise the following success factors for developing an effective online value proposition:
1. The offer forming the OVP is developed specifically for different target customer segments.
2. The OVP is not limited to the customer experience on-site but involves how it links to other channels as part of a multi-channel buying process
3. The product or service offer and experience that form the OVP must be based on in-depth research of which factors govern purchase and loyalty behaviour and refined according to actual experience of the OVP by customers.
From our review of the essence of customer value propositions, we can suggest that the issues to be considered when formulating an online value proposition should include:
To summarise, the ‘Online Value Proposition’ or OVP should:
Varianini and Vaturi (2000) conducted a review of failures in B2C dot-com retailers in order to highlight lessons that can be learned. They believe that many of the problems have resulted from a failure to apply established marketing orientation approaches including definition and communication of a clear value proposition. They summarise their guidelines as follows:
“First identify customer needs and define a distinctive value proposition that will meet them, at a profit. The value proposition must then be delivered throught the right product and service and the right channels and it must be communicated consistently. The ultimate aim is to build a strong, long-lasting brand that delivers value to the company marketing it”.
Similarly, Agrawal et al. (2001) suggest that the success of leading e-commerce companies is often due to matching value propositions to segments successfully.
Having a clear online value proposition has several benefits:
A further practical reason for developing an OVP is that customers expect it! Research reported by Jakob Nielsen shows that new visitors to a site, particularly of a company they are unfamiliar with, will seek out a tagline or graphic that explains what the site can offer (WIFM – or What’s in It For Me). Users decide quickly (often within a few seconds whether to stay or leave a site and the tagline is a large part of this). Indeed, in 2003 for UK financial services provider egg, their tagline was ‘egg: what’s in it for me?’
If follows from our exploration of what comprises a value proposition, that to create a successful online value proposition, marketers must understand specific characteristics of online channels and the benefits they offer to customers. To help formulate the OVP we need to consider the special characteristics of the Internet and its online services as perceived by customers using them. A simple mnemonic is provided by these “Six C s” which have been used in varying combinations since the Internet has become a channel to market:
As well as text-based content which is king for business-to-business there is also interactive content which is king for consumer sites and particularly brands. Consumer FMCG brands now use the web to deliver what they term as ‘Digital assets’ which support offline branding campaign. For example, 2004 New Media Age winner Dare in it’s creative for Lynx used online games, screensavers, viral e-mails, video clips and soundtracks to extend the brand experience from applying deodorant to interacting with the brand for 1.4 million unique users. (http://www.newmediazero.com/awards04/category.aspx?cat=advertising). Connections to content on other sites is important for many sites since links to relevant resources on other destination sites can improve the customer experience on the referring (original site).
Note, the 7Cs of Rayport and Jaworki (2003) provides a similar framework of Context, Content, Community, Customisation, Communication, Connection and Commerce.
At alternative, more classical method of reviewing how the proposition can be extended online is to consider how the marketing mix can be varied online. For example in the content of the above list:
“Customer service is a critical success factor in any retail business, but it’s absolutely critical online”
Fulfillment is critical for online retail sites, but for all sites there are other aspects of customer service that are important to all companies with an online presence – not just retailers. These include response times to e-mail or phone enquires and the availability (percentage of time site is up and running) and download performance of sites. It often seems as if sometimes these parts of the experience are underestimated. Services such as Site Confidence (http://www.siteconfidence.co.uk/company/benchmarks/sector.php) show that there is a large variance between the fastest and the slowest sites, but users will tend to compare their satisfaction with their current site against the fastest.
Some examples of companies who have developed a successful online value proposition are described by Smith and Wheeler (2002) who they place in the context of their ‘Branded Customer Experience’:
1. Consistent…reliable and trustworthy delivery of the customer experience across channels. Example: First Direct.
2. Intentional…using new mediums to create new value.
Example: Tesco.com.
3. Differentiated…uniquely offering a customer experience that is different from the ones that competitors offer.
Example: Egg.
4. Valuable…creating new value in different ways.
Examples: BBC.com and Smarterkids.com
It seems that many OVPs are “one size fits all” i.e. on the web site or offline communications it is the same messaging and content for all. Although this may be appropriate for smaller organisations, it is a missed opportunity for larger organisations. Here are some examples of approaches that companies have used to develop different propositions for different audiences.
For E-commerce sites, site owners needs to provide sufficient details to overcome reluctance to buy. An excellent summary of messsages to explain these online retail propositions are presented in the Online retail checkout report from E-consultancy.
“1. The Product proposition – what is the product (details, colour, size etc.), what does it look like (product images), what is its availability and what are other similar and related products (up-sells and cross-sells)?
2. The Price proposition – how much does it cost, including VAT and delivery charges, available offers (e.g. Buy 2 save 10% / add ?15 to your basket and get free delivery), are any vouchers or promotional codes available?
3. The Delivery proposition – when will it be delivered, how much does delivery cost, which carriers are used, what delivery options are available (e.g. how to obtain free / faster / cheaper shipping), what are the delivery terms and conditions, the returns policy, guarantees and gift options (e.g. wrap, message, don’t indicate price with delivery)?
4. The Payment proposition – how can payment be made, what advice, information and reassurance is available on the payment process (privacy, security, data protection, guarantees etc), how can the company be contacted (to engender trust)?
5. The Registration proposition – is registration required, is registration offered and if so, what are the benefits of registering?”
A practical design approach to developing detailed customer-centric propositions for different audiences is the customer scenario design approach. This concept was popularised by Patricia Seybold (Seybold, 2001), but was based on earlier task-based approaches used for designing web site usability (see for example van Duyne et al. (2002) for a description). This concept involves creating personas or thumbnails for different audience members and then to describe their tasks or experiences they are looking for when visiting a web site. For example, for a music publisher such as Boosey & Hawkes, two of the personas and a scenario for each might be as follows:
Persona 1:
George is a 45 year old violin teacher who has used the Internet for less than a year. He accesses the Internet from home over a dial-up connection. He has never purchased online before, preferring to place orders by phone.
Scenario A:
He is looking to purchase sheet music suitable for beginners.
Persona 2:
Georgina is a 29 year old ad exec who has been using the Internet for 5 years
Scenario B:
She wants to research music suitable for a new sports car advert before licensing or purchasing the chosen track. She has used a search engine to arrive at the site and is not familiar with the company.
Content and services to support each persona in their tasks can then be developed. The scenarios can then be used to test the effectiveness of new designs in focus groups.
A related approach is the Egg diagram approach of Rayport and Jaworski (2004). They suggest companies can benchmark their online proposition against competitors by filling an egg diagram that shows content available to support Pre-purchase (Problem recognition, Information search, evaluation of the alternatives), Purchase and Post-purchase (Satisfaction, Loyalty).
At its simplest, the OVP can be communicated with a simple tag line which is prominent on the home page and in offline communications accompanying the URL. The tagline should simply explain the essence of what is provided by a brand online. Some of the best taglines have been developed by the startup companies, for example:
Of course, graphics, features and benefits lists and the content itself all can help communicate the OVP.
The Citibank design (www.citibank.com) uses a range of techniques to illustrate its core proposition and OVP. The main messages are:
Look for a product or service; Learn about a financial product; Find a location.
Different OVPs can be developed for different products or different segments.
For Citibank UK, the OVP for its Internet banking service is: “Bank whenever you want, from wherever you are Citibank Internet Banking gives you the freedom and flexibility to manage your day-to-day finances. It’s secure, convenient and very easy to use”.
In his Alertbox ‘Tagline Blues: What’s the Site About?’
http://www.useit.com/alertbox/20010722.html Jakob Nielsen suggests:
‘To assess whether your homepage communicates effectively to visitors in the crucial first 10 seconds, follow two simple guidelines:
First, collect the taglines from your own site and your three strongest competitors. Print them in a bulleted list without identifying the company names. Ask yourself whether you can tell which company does what. More important, ask a handful of people outside your company the same question.
Second, look at how you present the company in the main copy on the home page. Rewrite the text to say exactly the opposite. Would any company ever say that? If not, you’re not saying much with your copy, either.’
http://www.useit.com/alertbox/20010722.html
But the communication of the OVP should not end with the tag-line. More detailed explanations of the benefits of using the OVP can be communicated:
First-time users of web sites commonly turn to the About Us, Contact Us and Help sections, so these are popular pages where it is important to detail the OVP through listing features and benefits.
In offline communications too, the OVP can be explained in more depth to encourage usage of the channel. Product catalogues from holiday home companies or computer manufacturers often use at least one page to showcase the OVP. Banks may use communications in branch, phone or by direct mail to explain the OVP thus reinforcing the messaging across media.
At the start of the article I suggested the need for continuous refinement of the OVP and ongoing checks that it is delivering the right experience. Financial services brands such as Egg, IF and Deutsch Bank have rolling surveys where tens of thousands of consumers are surveyed through e-mail each month. Tesco.com send out an e-mail survey immediately after the first online shop to check consumers are happy with the experience, and in so doing, improve the experience further. Even having a simple feedback button can help alert the brand owner to problems with the site. IF receives hundreds of comments a month through an online feedback box, so that recurring issues can be acted upon. Hygiene factors such as site performance and availability should also be monitored and controlled through service level agreements with a hosting provider. One of the main metrics Amazon use to assess practical problems with their OVP delivery is revenue per minute. For the 2003 revenue of $5.7 billion I estimate this means that the alarm bells start ringing in the Amazon operations control centre when this KPI falls below $10,000 per minute!
Written: June 2004, Updated July 2007
Agrawal, V., Arjona, V. and Lemmens, R. (2001) E-performance: the path to rational exuberance. Mckinsey Quarterly, No 1. 31-43.
van Duyne, D., Landay, J. Hong, J. (2001) The Design of Sites. Patterns, Principles, and Processes for Crafting a Customer-Centered Web Experience. Addison-Wesley, Reading, MA.
Knox, S., Maklan, S., Payne, A., Peppard, J. and Ryals, L. (2003) Customer Relationship Management: Perspectives from the Marketplace. Butterworth Heineman, Oxford, UK.
Molineux, P. (2002) Exploiting CRM. Connecting with customers. Hodder & Stoughton, London, UK.
Nielsen (2001) Tagline Blues: What’s the Site About? Alertbox, July 22, 2001
http://www.useit.com/alertbox/20010722.html. See also: About Us – Presenting information about an organization on its web site: http://www.useit.com/alertbox/20031027.html.
Rayport, J. and Jaworski, B. (2004) Introduction to E-commerce. McGraw-Hill, NY, NY. 2nd edition.
Seybold, P. (2001) Get inside the lives of your customers. Harvard Business Review. May 2001, pp80-89.
Smith, S. and Wheeler, J. (2002) Managing the Customer Experience. FT-Prentice Hall. Harlow, UK.
Varianini, V. and Vaturi, D. (2000) Marketing lessons from e-failures. McKinsey Quarterly, No 4. pp86-97.
Source: http://www.davechaffey.com/E-marketing-Insights/Customer-experience-management/Online-customer-value-proposition