Khuram

There is only one currency, its called “VALUE”

On Friday i had my first meeting with my mentoring student, as part of the local enterprise initiative to provide support to individuals with little or no previous business experience.

I had been paid a visit by the representative of the community initiative about 6 months ago, who felt i could provide valuable insight based on my own experiences.

I was reluctant to commit, but in the interest of further building relations with local establishments i decided to put my name down as a mentor.

My hesitation was due to two reasons. Firstly, i have no interest in expending my time and energy with people, who are always looking for others to ‘do their push-ups’ for them. A rather, cynical view, i agree, but unfortunately i have met too many such people in the last few years.

Secondly, i was unsure of exactly how useful my insights could be and wondered if it would be a pointless exercise for both myself and the student.

Nonetheless, i received a phone call from my first candidate last week, and agreed to meet him in the local cafeteria on Friday afternoon, to discuss his plans and ideas for a new online business.

We sat down with a cup of coffee, and got straight down to business. The student was much older than i. Not that it should matter, but i was expecting some loose pant wearing graduate from college.

Anyhow, he explained to me his idea about his online business, which i wont disclose in the interest of confidentiality, but suffice to say it was a worthy enough idea and i felt it had a fair chance.

I asked him, about how he came up with the idea and he explained to me, that he felt he had seen a gap in the market, and he had done some market research by handing out surveys at local events and exhibitions related to his industry sector of interest.

So far, so good.

He also explained that he contacted his local chamber of commerce which were keen to help him, but said that they had no staff who were qualified to assist anyone who wanted to start an online business. Truly remarkable, i thought.

Neither he, or i, could believe that even in 2009, the local business support initiatives were inadequately equipped to help new start-ups. After all, pretty much every business, if not all, requires at the bare minimum, an online presence.

He had participated in some brainstorming classes, as part of a large group, at the local chamber, for the purposes of basic business planning and so on, but felt it lacking and was keen to find someone who could help him further refine his ideas, and put an actual workable plan together to move forward.

This was why, in the first instance, he was put in touch with me.

I decided to start with the very basics, after commending his efforts thus far, and empathising regarding the current state of start-up support in the area.

The Value Proposition

I started by asking him to explain, what the specific customer pain was that he was addressing, and in what way.

At this point the candidate gave me a rather perplexed look, and he must have wondered if perhaps i was asking him to demonstrate his expertise in allopathic medicine. I could see clearly, that for the remainder of the meeting we would have to discuss what a ‘value proposition’ actually is, and what it means to address a specific customer pain. After all, for any business, this is the fundamental question that needs to be answered to ensure marketing success.

The value proposition is the reason why people are in business. This term ‘value proposition’ also goes by other names such as Competitive Advantage, and Unique Selling Position. On a side note Jaynie Smith’s “Creating Competitive Advantage” book is a great primer if you are currently planning or refining your value proposition.

So i proceeded to explain my own understanding of the value proposition starting with the components.

The Pain

The customer pain, (in my own words) is; A problem, need or a desire experienced by the intended target audience .

Problem: “I cant find what i’m looking for on the Web”

Answer: Google

Need: “We need good quality education for our children”

Answer: Schools, private education institutions and paid tutors

There is a common mis-conception where ‘desire’ is concerned, in that, many believe desire is not a customer pain, because the word ‘pain’ carries a negative connotation.

Desire is still a form of understanding what it is that the customer wants, which is ultimately the true essence of understanding the customer pain.

Desire: “I want to watch Pixar’s latest animation in high quality definition”

Answer: Blu-Ray DVD

Value exchange

When we deem something of value, it is something that is useful to us, or of benefit. i.e. it addresses our ‘pain’.

Our value proposition, therefore is our offering (a product or a service) that addresses a specific customer pain and often in a specific way.

When a member of our target audience consumes our product or service, this is when value exchange occurs. We give something of value to this member of the audience, and in return this person addresses our own pain in whatever form that may be, usually money, but not necessarily.

While it is true, that in business, the consumer will usually part with money, this case is not necessarily universal.

Consider Google as an example. In its simplest form, Google facilitates my desire to find ‘cheap flights to Malaysia” with fast and relevant search results for all the websites that have cheap airline tickets. I attain value as soon as i find what i want.

In return, i give Google value in the form of Web Traffic. That is all Google wants from me, if we consider this point in isolation.

Yes, ultimately, Google wants to benefit its bottom line financially, but for the purposes of my personal relationship with Google that is not the scope of the value exchange it wants with me, nor i with it.

Maybe Google uses that Web Traffic to entice advertisers, maybe it sells data, whatever the case may be, it is a separate discussion.

A valuable meeting

Suffice to say, the student felt he got great value out of the meeting, and he had experienced a shift in his thinking. I got great value too. It was rewarding to be able to contribute.

Over the next few months we are going to be working together on his start-up, and he might just end up creating the next eBay. You never know!

Of course, the next fundamental question is going to be, how is his value proposition better than the existing competition, and whether his proposition is a solution to a pain that already exists, or if its a solution to a pain that doesn’t yet exist (yes, that does happen)

Image courtesy of Will Lion