Empty Slogans Won't Drive Price Performance

In an opinion piece in this week’s B-to-B Magazine, Kay Plantes provides insight into how to avoid the commodity trap where price becomes the primary driver in buying decisions.  Her advice focuses on shaping the company’s business model strategy around a core value assessment, which is based on product differentiation, competitive forces and the overall value that’s delivered to customers.

Ms. Plantes explains the first step in the process involves developing a value promise with tangible benefits that excite customers, such as lowering costs or improving productivity.  Secondly, she suggests the value promise should be communicated clearly before individual products or solutions are presented.  As an example, the article cites IBM’s successful “Think Smart” campaign, which communicates the overarching benefit of working with “Big Blue” before making the pitch for specific Smart Grid energy solutions.  Finally, Plantes discusses the importance of ingraining the value promise into the collective consciousness of the organization from the executive suite right through to the factory floor.

Sounds great, but there’s one problem - what if the value promise is off base?  There are countless companies that thought they had it nailed, only to find their message failed to resonate with their target audience - even after spending millions on branding initiatives and advertising efforts.   For every “Think Smart” value promise, I can think of several others that fell short like Nortel’s “Business Made Simple” and Gateway Computer’s “Technology you can Trust” or my favorite “Only GM”, which touted the quality of the car maker’s product. 

This is not to say I disagree with the approach, I don’t.  However, it is of utmost importance for companies to be intellectually honest about their own value chain and to understand exactly what it is that drives customer buying behavior before beginning the exercise.  The ability to quantify these factors for objective assessment is critical to developing a successful strategy.  As Ms. Plantes states, ‘the value promise is about the customer, not you,’ which means we must listen to what the customer is telling us about our products, our brand, and our company.  They can speak to us through market research and conjoint analysis or indirectly through their propensity to pay a premium for particular attributes in previous transactions.  Whatever the case may be, we must be aware of the signals they’re sending because therein lies the truth.  As the great diminutive Jedi consigliere Yoda once said, “Listen we must, to words, to actions, to signs unspoken.”

In the final analysis, aspirational slogans do provide some level of value through brand image and awareness, but where the metal meets the meat in the front-line trenches of price negotiation, substance will prevail over style every time.