Value Propositions
Value Propositions
What Are Value Propositions
& Why Your HVAC Company Needs One
Service Strategist wants to make your HVAC company’s growth as painless as possible and assist you in developing a top-notch Value Proposition which is an important part of growing your HVAC company. Standing out in the HVAC industry is a multi-step process and one important step is creating a simple headline that describes your company along with a brief description all wrapped up in an eye-catching visual.
Take Note: A value proposition is divided into three elements: A Headline, a description, and a visual.
We need to use every tool in our belt in order to be unique and eye-catching so the customer notices us, a value proposition is one way to do that. Also, it allows your company to charge more because you are adding value to your product and service. But let’s slow down and pump the breaks, we are not adding value through offering a discount or throwing the client a freebie, we are making the product and service more valuable by highlighting the harder-to-see qualities.
For example, let’s look at cars on the road. They all pretty much do the same thing, four wheels, and an engine and drive the speed limit, sometimes they are and are even made out of the exact same parts. Yet some cars have a luxury feel and cost way more than others. Let’s look at two examples of car manufacturers and think about which company has made good use of a value proposition.
Manufacturer: Bentley
Product Name: Bentayga
Make & Color: 4-Door White SUV
Fuel Economy: 5L/100km
Engine: 3.0L V6
Price: $227,000
Manufacturer: Kia
Product Name: Niro
Make & Color: 4-Door White SUV
Fuel Economy: 4L/100km
Engine: 1.6L 4-Cylinder
Price: $26,000
Side by side the cars do have some differences under the hood, but the price is literally night and day between the two models. So how can Bentley get away with charging so much more? The answer, a better value proposition. The value proposition allows you to aim your business at an ideal customer and in this case, Bentley aims high, and Kia aims low, much lower. Owning a Bentley is a status symbol and owning a Kia is something you would never brag about. People perceive Bentley to be more valuable and to be the better car, but at the end of the day, these SUVs do the exact same thing. Let’s go by the numbers and see how huge of an impact a stellar value proposition can have.
In 2019 & 2020 Kia sold just about 42000 Kia Niros which is over a billion dollars in revenue, fantastic! However, Bentley only needs to sell around 4500 cars to generate their billion in revenue. But would it surprise you to learn that in 2019 & 2020 Bentley sold nearly 23,000 Bentaygas which is substantially more than $1 billion and they had to build far fewer cars than Kia to do it. Think about it, both companies are selling you a white 4-door SUV, but the difference is Bentley’s value proposition. Everyone associates Bentley with luxury even the name seems to have more gravitas behind it than Kia, which sounds more like a noise your car makes when you jam the brakes.
Let’s take it one step further, look at Kia’s website versus Bentley’s, it’s obvious one is selling cars and the other is selling a lifestyle. Reading through the descriptions for each car we mentioned above, you will find such phrases as “Your security blanket: park fearlessly in tight spots” or “Crafted to turn heads and make hair stand on end” Can you guess which phrase describes the $200,000 car?
Where you position your company’s value proposition matters because if your company/brand/products/services are thought to be discount/affordable/cheap/inexpensive then clients will be less willing to pay more for them because they think the value is lower. The price becomes more and more emphasized when you position yourself alongside a frugal mindset and this makes adding value harder because it will always increase the price.
When a customer wants to buy a Bentley, would they even blink at the 200k price tag? Likely not because they have bought into the value proposition. If the customer thinks your product or service is worth more, they expect the price to match. This is the success of Bentley’s carefully crafted value proposition to deliver a luxury driving experience in and outside the car. At the end of the day, they are both SUVs that can do the exact same thing, but one is perceived as a luxury vehicle and the other as a budget family car.
Let’s look at another example from the car industry that really shows the impact a value proposition can have.
Manufacturer: BMW
Product Name: 7 Series xDrive
Make: 4-Door Sedan
Transmission: 8-Speed
Engine: twin-turbocharged and intercooled DOHC V-8
Price: $103,645
Manufacturer: Rolls-Royce
Product Name: Ghost
Make: 4-Door Sedan
Transmission: 8-Speed
Engine: twin-turbocharged and intercooled DOHC V-12
Price: $442,700
The kicker here is that both cars are manufactured on the same frame and are both made by BMW. Yet Rolls-Royce designs the car in a bespoke way that literally 4xes the price tag. The over-the-top handcrafted customization is Rolls-Royce’s value proposition. It is an elite level of luxury. Whereas BMW’s 7 Series is more of a middle-class luxury. BMW is making the same car but pointing its sales tactics are two different customers.
What do cars have to do with the HVAC industry? Turns out, not much, we actually care more about trucks! But you too can utilize a value proposition in your company. Know this, above all else, you can add substantial dollar value to your HVAC service/products if you develop a good value proposition and apply it to your company’s products and services.
What are the parts of a Value Proposition?
Much like building a car, you have different components that eventually come together to form your value proposition.
Creating a value proposition for your company is a journey and a deep look inside what makes your company different. The Service Strategists highly recommend this is something you sit down and do yourself, after all this is your HVAC business, not ours. If you are lost, we do offer targeted 1-on-1 sessions if you need them. At this point, what we can do for you is tell you the starting point and what features you need to identify to help develop and create a value proposition for your company.
We mentioned this earlier, a value proposition is three things that the customer can see, it is a headline, a description, and a visual element that ties it together. But how do you get there?
- Create an ideal customer profile
- Identify your company’s business offerings/services
- Compare the customer profile to the offering and rank the most important
Step 1:
Customer’s Task: What does your customer need to complete or what is their problem? Give further thought to what is the purpose of your product in the eyes of the customer.
Customer Expectations: What does the customer gain from doing business with you? What do they expect the company to do for them and does the service and product live up to the customer’s expectations?
Customer Pain Points: What negative emotions do they feel before using your company’s products? Do they take any risks by not going with your company’s solutions to their problem?
Step 2:
Classify what your business offers in the following categories.
Happiness Generators: How does your product make customers happy? Write down how it impacts the customer’s time, money, feelings, and even physical self.
Pain Relievers: Based on the pain points you identified that your customers had, write out how your product/service solves those problems.
Products & Services: A list of core products and services your company offers at the moment.
Step 3:
Look back at what you have written and display it in a simple ranked list. Force yourself to decide what is the guiding principle in your ranking, is it time, money, or man-hours? You want to rank the information you have gathered so you can decide how to shape your value proposition. It’s going to help you write and design it.
Write Out A list for each point:
- The Customer Profile: Tasks, Expectations & Pain Points
- The Business Profile: Generators, Relievers & Products/Services
Now, with this information, incorporate this into the company branding, advertising, and core philosophies of your company.
Finished This section?
Mark As Complete!
Once you’ve finished reading a topic, be sure to mark it as complete to track your progress. There will be a toggle switch at the bottom of each topic page. The Service Guild page will log your total progress and each pillar section will log its corresponding progress as you go!
Toggle here to mark this section as completed!