Defining Your Brand and Your Value Proposition Will Pay-Off Now and in the Future

What does your brand stand for?  Do you have a value proposition?  Why do your customers buy from you and not someone else?    

If you don’t have a quick, succinct answers to these questions, it is a strong indication that you can improve the effectiveness of your marketing and sales efforts by developing a strong brand and compelling value proposition.  A well defined brand and compelling value proposition can not only you increase your sales, it can add overall value to your business. (more)

Can “flipping the pyramid” help you achieve growth, prosperity, and freedom?  The basic concept has worked for many business owners that I know and have worked with, but the answer depends on what you want and the nature of your business.  This article can help you determine if flipping the pyramid can work for you and it will give you a framework to help you do it. (more)

Type: Business-to-business, manufacturing and distribution preferred.

Type: Manufacturing or Distribution in the Powersports Industry (no retail).

Developing an effective brand and value proposition starts with a keen understanding of why your customers choose your products or services.  You can get this information by surveying your customers or asking them directly why they buy from you.  Try to learn what specifically makes you different from your competitors.  You will soon discover how you are perceived in the market place and the experiences on which you should be capitalizing.  Know that “great quality” or “outstanding service” alone is not good enough.  You must know what makes your product or service of higher quality or why your service is better.  Once you have an in-depth understanding of how your customers perceive your business and why they buy from you, you can begin developing your brand and value proposition. 

To be clear about the difference between brand and value proposition, brand is about overall meaning.  It is developed over time by managing customer experience and through consistent advertising campaigns.  A value proposition gives a specific reason for your customer to buy from you. 

The objective for establishing a brand is to capture a position in the minds of consumers.  For example, knowing that clean restrooms are important to travelers, a service station chain may “position” itself in the minds of consumers by claiming the cleanest facilities.  The company would then promote the cleanliness of its stations and ensure it is consistent with customer’s experience by implementing an operations policy that guaranteed cleanliness.  Eventually, people will come to know the chain as the clean chain.  So, branding is about finding a position in the market place and delivering a product or service that is consistent with that position. 

Companies use tag lines to drive home their brand message.  For example, the primary difference between Home Depot and other hardware and building supply stores is breadth of product and price.  This is reflected in their current advertising tag line: “More Saving. More Doing.”

A value proposition is all about giving a customer a clear reason to buy.  A generic and commonly used value proposition is the money back guarantee.  We have all heard it: “try our product for thirty days and if you are not entirely satisfied return it for a full refund.”  However, this value proposition is much stronger if it comes with a specific promise.  For example: “try our product and if in thirty days you haven’t lost fifteen pounds just return it for a full refund.”  The promise of losing fifteen pounds makes it much more powerful.  Better still is to link the promise to something that differentiates the product or service from that of a competitor.  For example: “try our patented time release capsule that keeps you from getting hungry and if you don’t lose fifteen pounds in thirty days just return the unused portion for a full refund.”  This proposition differentiates the product and delivers a promise that is backed with a guarantee.

To develop an effective value proposition, try completing the following equation for your products or services.  Differentiation + Promise = Value Proposition. 

Developing a powerful value proposition instantly differentiates you from your competitors, making the buying decision easier for your customers.  Building a strong brand not only supports your sales efforts, it also makes your business worth more because buyers will pay more for businesses that have established brands. (top of page)

It is important to first understand that business owners receive income from two sources.  One, they derive income from profits of the business through their ownership interest.  Two, they derive income from the job they perform in the business.  Initially, the majority of business owners must configure their business to maximize income from the job performed.  However, as the business grows this can inhibit growth and mean long, stressful hours for the owner(s).

Owners of small businesses are often not able to live just on the profits generated by their business, so they will take on as many functions as they can perform to save money by not paying someone else to do them.  This would include tasks related to marketing, personnel management, administration and other jobs typically associated with owning a small business.  The more of these jobs they do, the more money they will save.  Further, owners will likely fill a key position in the company.  For instance a service station owner may also be the chief mechanic, thereby performing a job that provides them with additional income.  The problem is that to make more money, they have to take on more tasks, which is why so many business owners are overworked.  Under this configuration there is a limit as to how much money the owner can make, but many business owners are happy in this position and are satisfied with their income.  For them, there is no need or desire to change.  However, if they want to maximize the profits generated by their business versus the income from the job they perform, they will eventually need to take a different approach.

The first step is to determine if a business is capable of producing enough profits to support an owner through scale or repeatability.  Scale simply means the business serves a market large enough and has the capacity needed to generate the necessary profits.  If the company is not scalable, then the next question to ask is if it is repeatable.  For example, a service station is not likely to be scalable, but it is definitely repeatable.  So, owning a number of service stations could provide enough profits to provide a living income to the owner.  Therefore, if your business is scalable or repeatable, you have the option of flipping the pyramid to maximize income from business profits versus from the job(s) you perform.

Virtually all small businesses start out with the owner having a functional role in the business.  It is only by performing numerous functions that a person can successfully start a business.  As the business grows, owners will concentrate on critical functions and begin hiring personnel to do less critical work.  Eventually they find themselves on top of the organizational pyramid managing the functions of the business, but their role is still functionally oriented.  And as long as they are functionally oriented, a good portion of their income will be derived from the job they are performing.  To break the vicious cycle of more hours for more money, they must take on a developmental role and that is where flipping the pyramid comes in to play.

The term “flipping the pyramid” is derived from the fundamental paradigm shift and change in role an owner must embrace if they are to change to a developmental role.  A functional orientation has the owner on top of the organizational pyramid as described previously.  Conceptually, a developmental orientation has the business owner on the bottom of the organizational pyramid where their role is to support the rest of the organization.  Owners must give-up the “top dog” mentality, which is a mental and behavioral adjustment that is often far harder than managing the process of flipping the pyramid. 

A developmental orientation puts focus on building the business where the primary role of the owner is related to business strategy and organizational development.  The books The E-myth and The E-myth Revisited by Gerber do a great job of conveying the concept of flipping the pyramid and the necessary paradigm shift.

While this book and others can be a great reference for understanding the managerial aspects of flipping the pyramid, the most difficult part (and the key to success) is making the paradigm and behavioral shift.  To help people make behavioral changes psychologists often use a technique called “gap” analysis.  Using this technique together with activity analysis has proven to be an effective strategy for starting the process of flipping the pyramid.

To do this, start by listing all the tasks you are doing in your current role.  Next, list the tasks you should be doing in your new, developmental role.  Then, record where you are spending time by keeping a log and try to move time away from the functional role to time spent in the development role.  The results should be viewed weekly and finding out where your time is really going is very likely to be an eye-opening experience. 

To help define the strategic aspect of their new role, owners can reference one of many  good books on the subject: from the “how to” book: Team Based Strategy, by Fogg; to business specific strategy like Strategy Concept and Process, by Hax and Majluf; to the more conceptual, like Sun Tzu’s The Art of War.  It is critical for an owner to define strategy as it provides organizational direction and much of the context for its development.  As engineers like to say, form follows function.

To help define an owner’s role with regard organizational development, it can be helpful to start by looking at the following definition of a business organization.  An organization consists of people and processes configured in a systematic way to fulfill the needs of its stakeholders (i.e. its customers, employees, owner(s), government and the community).  Defining the needs of stakeholders and the processes for fulfilling those needs provides the overall context for organizational structure and is a primary task for an owner.  An owner must be involved in those activities that shape an organization and build its capabilities, which includes training and development, policy formation, cultural development, process analysis, and defining benchmarks/goals.  Again, there are many books related to these activities, but a great place to start is with Dr. W Edwards Deming’s book Out of the Crisis.

Flipping the pyramid can be very challenging, but it is likely to have great benefits.  Often it means faster growth and increased profits.  Plus, it helps build a self sustaining business which will increase the value of the business, provide an owner with more day-to-day freedom, and give them more flexibility in terms of their exit strategy.

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