Why most values props are dumb, and 4 questions to make yours better
Most value propositions are dumb.
Take my four years at Morgan Stanley as a case study. Every few months or so, the newest recruits head off to a centralized training center in the Northeast to be taught how to create an elevator pitch and have conversations with potential clients.
Two hundred newly minted financial advisors spend the week honing and perfecting their own value proposition. On the final day, they each say:
“As a financial advisor, I work with individuals, families, retirees, and business owners to help them achieve their financial goals.”
It may all be true, but the line by itself is completely undifferentiated and meaningless to a potential client. In addition, a similar version is being repeated by 15,000 other advisors at Morgan Stanley, and another 50,000 advisers at the other big investment firms. There’s absolutely no differentiation from the client’s perspective on what that individual does or why the client should choose them.
However, not all advisers stick to the script. The ones who are exceptionally high-performing discover and use something much more targeted and authentic that’s attractive to a specific customer base with whom their vision and values are aligned. It is these individuals who become the outliers — the Elon Musk or Jeff Bezos of advisors.
By the end of my four years at Morgan Stanley, my focus was on union pension funds in the building trades on the East Coast between $25MM-$250MM in assets. Clearly, it was a smaller market than serving all individuals, families, and business owners in the country, but given our focus and expertise, we had a great success rate in connecting with our market, finding an opportunity to differentiate ourselves, and quadrupling our business in three years.
Most banks still haven’t figured this out. For example, let’s look at a few value propositions/mission/value statements from some well-known banks.
Bank of America: Making financial lives better through the power of every connection.
Wells Fargo: We want to satisfy our customers’ financial needs and help them succeed financially.
BB&T: Our ultimate purpose is to create superior long-term economic rewards for our shareholders. (I’m not kidding, this is actually on their website. Having a hard time getting over this one…)
Nothing above is differentiated or tells me why these banks are uniquely suited to meet my needs. Sure, they may be able to facilitate my transactional needs, but that will be priced as a commodity business where all of these banks are interchangeable.
There are a few better examples:
US Bank: We invest our hearts and minds to power human potential.
USAA: When you join USAA you become part of a family that stands by you during every stage of your life.
Live Oak Bank: Empowering the American Dream of small business owners.
USAA is widely recognized as a leader in banking and mobile technology, but it doesn’t lead with that fact. Their core member base is active, deployed military members who don’t have access to a branch, are away from home, and often move every few years. Ron Shevlin said it best:
“USAA isn’t mobile-first because some survey said consumers are relying more heavily on their smartphones to do things. USAA is mobile-first because the consumer segment(s) it serves requires the firm to be mobile-first.”
What impact could a stronger, more targeted, customer-centric mission and vision have on your business and strategy? Think about Chase’s $500 checking account offer. If you continue as a commodity business with the same message of “improving financial lives and providing convenience and technology,” you’ll be earning commodity-like returns yet having to compete against increasing customer acquisition costs. One way to compete is to pay $600–700 per customer and attract the deal chasers, but your margins will go way down and you’ll be stuck in a race to the bottom with predictable results.
Or, you can change the game completely. You can’t be all things to all people anyway, so discover who you can serve authentically in line with your values and move the conversation beyond price and convenience. Spend some time on the following questions:
1. Why does your organization exist, and why should your customers care?
2. Who do you serve, and what makes you uniquely qualified to serve them?
3. How is the world different, or how are people’s lives changed, because your company exists?
4. How can you connect with them based on your shared values?
Answering these questions will help you understand more clearly where and how to compete on your own terms and win much more easily (and inexpensively).
Don’t forget, the riches are in the niches.
P.S. If you answered “to meet their financial needs” to Question 1, you failed. Start at the top and read again, or reply to this email and we can talk about it.