Product Value and How to Communicate it to the Market
We are constantly being bombarded with new digital products in every kind of business imaginable. If you are involved in product management or business development, how do you effectively sell the value of your product with all this noise? How do you cut through to differentiate your product?
Overcoming Uncertainty
For any new product, there is generally a level of uncertainty from the market. However, that uncertainty is significantly higher for disruptive products that propose the creation of new markets.
To overcome this uncertainty, communicating value to potential markets and customers is key. Once you have determined this value, you will then need to craft a ‘story’ to help them understand how the product will solve their real-world problem.
The following three-step process will help you craft a story that hits the mark.
Step 1 — Identify Product Value
Identifying where your products create value for the end-user is a critical first step. For example, in looking specifically at B2B Digital Products, PIPE (Products, Innovation, Partnerships and Ecosystems in Arup) identified 4 key sources of product value:
- Brand Value — enabling businesses to retain clients and attract new clients
- New Capability — entering new markets
- Parallelization — enabling staff to carry work on more projects/business at the same time by freeing up their time
- Time saved — reducing project costs, leading to improved margins and more competitive production costs
Once you identify the different sources of value, try to understand how the different User and Stakeholder Personas you identified in the Product Management Process prioritize these sources, as this will help you in Step 3.
Step 2 — Quantify Product Value
Now that we understand what our customers care about and value, we need to look at our product and see what value can be specifically measured.
Why? This comes back to reducing uncertainty. Psychological research shows that presenting numbers and tangible proof is an effective tool in reducing uncertainty. Furthermore, this feeds into our need for ‘Social Proof’ (taken from the seminal book on the psychology on persuasion, Influence, R. B Cialdini), whereby we want to know the product is working effectively for others before we approach it ourselves.
The simplest way to think of this is by asking the following three questions:
- What are the cost savings? Look at values such as amount saved, time and efficiency savings for example.
- How are process efficiencies improved? Look at delivery improvements and improved response times.
- What are the improved outcomes? With our B2B customers, we identified specific metrics such as Embodied Carbon Reduced, Improved Accuracy of Forecasting and Reduction in Aborted Work but, you could derive similar outcomes for almost any type of product.
Step 3 — Communicate Product Value through Stories
Now that you understand the source of value and have quantified it, we need to craft our story! How do we communicate value?
At this point, we will need to go back to our Product Management process and create a Value Story using the evidence we have collected. Remember that the Story should be crafted to different User Persona’s and presented with this in mind.
Using the process in the diagram, you will identify:
- Product Novelty
- Product Benefits (over current products)
- Improvement of outcomes with the product (use the Cost, Efficiency and Outcomes measurements here)
- Value of purchasing the product (i.e. you are better of with the product than without)
What next?
The purpose of those three steps is to create a message that identifies with your customers and helps them overcome the uncertainty of buying and using your product. You are now ready to spread the word!
And finally, don’t forget context!
They say ‘timing is everything’ and this applies to product value. Changing situations can change the perception of value and the Paradox of Value demonstrates this beautifully. For example, the relative value of a bottle of water and a diamond can shift depending on the context. The video linked explains this concept well:
In the case of PIPE, our focus is on products that deliver sustainability goals for our clients and wider community and this is in response to the contextual need of the market to climate change, from a race to Net Zero to COP26.
For your business, look at the wider market and trends. For example, has Covid shifted the value of your product?
For a deep dive into value and contextual changes, Mark Carney’s recent book, Value(s), covers how market value is changing with our values. He studies three key drivers; Social Change, Covid-19 and Climate Change. As almost any product will be affected by these changes, it’s worth a look!
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This piece was written by Zeena Farook, Digital Product Growth Lead at Product Innovation, Partnerships and Ecosystems team within Arup. You can also find her on LinkedIn.
