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Posts Tagged ‘Value Proposition’

Co-creation: The next realization of value-based marketing

November 17th, 2014 No comments

“If I am your ideal customer, why should I purchase your product rather than any other product?” – Flint McGlaughlin, Managing Director, MECLABS (parent company of MarketingExperiments)

At MarketingExperiments, researchers have used this question to develop value propositions over the past 20 years.

Many things have changed over the past couple decades, which has now, more than ever, left room for the customer to answer the value prop question.

Recently, Professor Wouter Van Rossum, a leading expert on value proposition and product development, held an Academic Lecture Series at MECLABS headquarters in Jacksonville, Fla., where he discussed the evolution of a value proposition in a post-Twitter world.

“Companies don’t want to hear [feedback],” Van Rossum explained, “They don’t like to hear it.”

But, in an era where customers can ask questions and interact with not only the company, but fellow dissatisfied customers online and demand a more and more personalized experience, it “more or less forces companies into co-creation.”

 

Defining co-creation

Co-creation implies a situation where both parties profit in terms of exchange value.

threadless-shirt-contest

 

A “perfect example of co-creation,” according to Van Rossum is Threadless, a company that allows designers to submit art for T-shirts, among other commodities. Customers then vote on designs they want to purchase.

If the design is picked up by Threadless, the designers earn a portion of the profits from T-shirts sold and this creates an exchange of value.

Co-creation of exchange value, according to Van Rossum, implies that the company should determine a value proposition that will account for the customer’s contribution and result in a win-win situation for both the customer and the business.

In the case of Threadless: The company queues up designs that they know will be popular and purchased. The designer earns not only monetary rewards but also has work to add to their portfolio. Both parties benefit from the relationship and business model.

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Customer Anxiety: One element of the MECLABS Conversion Heuristic explained

November 13th, 2014 No comments

If you have participated in a MECLABS, MarketingExperiments or MarketingSherpa event or education program, you may have been exposed to the patented Conversion Heuristic.

It looks like this:

C = 4m + 3v + 2(i – f) – 2a

If you haven’t seen this before, it can be explained in minutes. However, it can take decades to master.

My hope is this MarketingExperiments Blog post will help you gain a basic understanding of the Conversion Heuristic, and specifically, understand the anxiety element in the heuristic.

Each letter in the Conversion Heuristic represents a psychological, emotional or physical element affecting a prospect’s choice to say “yes” or “no” to your offer.

Each number represents the weight or importance each element carries in guiding the prospect to your offer, or away from your offer.

The element “C” represents the probability of conversion. A conversion in this instance describes the event when a prospect becomes a customer.

This event is the foundation of business; without conversion, a business ceases to exist. To increase the probability of conversion, it is important to understand the elements within the Conversion Heuristic. In this post, I will highlight the “anxiety” element present in every conversion process.

Here is the Conversion Heuristic again: C = 4m + 3v + 2(i – f) – 2a

C = Probability of conversion

m = Motivation of the customer

v = Force of your value proposition

i = Incentive

f = Friction

a = Anxiety

 

Customer anxiety

It is very important to remember that your prospects are people. They have thoughts, feelings, needs and desires. When there is product or service being offered to a prospect, that prospect may have questions or concerns.

This psychological concern occurs within the prospect’s mind.

Anxiety is a real concern that the prospect may have regarding your offer. The prospect may not even be aware that it is happening, but when corrected or addressed, there can be some significant lifts in your conversion rate.

Here are some examples of anxieties that people may have when making purchases online.

 

Is my credit card information safe?

billing-information

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Value Proposition: Between perception and reality

November 3rd, 2014 No comments

I recently posted this observation on FlintsNotes, Flint McGlaughlin’s blog designed to showcase his day-to-day work, and I felt that this idea could be elaborated on more:

The challenge for many companies is misunderstood. It is not finding prospects that need what it has to offer, but rather finding prospects who know that they need what it has to offer.

Managers flounder in the gap between perception and reality. They are trained to think about data, facts and rules. This strength obscures a corresponding weakness: They fail to account for the difference between ‘what is’ and ‘what the prospect believes is.’ The latter initiates the experience of the former and thus takes initial precedence.

-Flint McGlaughlin, Managing Director, MECLABS

 

The difference between reality and perception

Fint talks about how managers (marketers) tend to get lost in the blurred line of perception and reality, failing to recognize the difference between “what is” (reality) and “what the prospect believes is” (perception).

He points out that the latter (perception) initiates the experience of the former (reality), thus taking initial precedence.

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Perception vs Reality in the Eyes of a Decision Maker

October 20th, 2014 4 comments

Every company struggles with finding ways to convey the value of their product or service in an impactful way. The reasons for subpar value proposition can range anywhere from the value of the product being presented in a convoluted or confusing way to not reaching the customer when they are motivated to buy.

In some cases, the mindset or pre-existing biases can cloud the value proposition in a potential customer’s mind. The ability to overcome that destructive perception is key to guiding a potential customer through any sales funnel.

 

Clarity trumps persuasion — and a wrong perception

Anyone who has seen a webinar or attended a summit featuring MECLABS’ Managing Director, Flint McGlaughlin, has most likely heard him say, “Clarity trumps persuasion.” I want to take that one step further and say that there is a great feat in providing enough clarity to trump a wrong perception.

Earlier in my career at MECLABS, I spent time as the Lead Generation Specialist. In that role, our task was to generate sales-ready leads for our partners.

During that time, I was assigned to one of our more difficult partners — a global provider of outsourced investment management services.

My job was to speak with C-level decision makers of non-profit organizations and schedule meetings with one of our partner’s regional directors.

These meetings had one purpose: Communicate the distinguishable benefits of the firm and its outsourcing model to these decision makers. The problem was these DM’s didn’t want to talk to me.

The decision makers were well aware, as was our partner, that switching an investment management provider was an extremely long and involved process, and more often than not, the organization I was speaking with was happy with the status-quo and did not want to consider an alternative approach.

Their perception was that we were looking to force the organization to switch their investment model after the meeting. This wasn’t the case. Finally, after many rebuttals that weren’t resonating, we started to change our approach and messaging.

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Subscription Checkouts Optimized: How experimentation led to compounding gains at the revenue level

August 25th, 2014 No comments

Subscriptions have been the lifeblood of almost every media publication since the conception of the industry.

But imagine for a moment that you were trying to subscribe to your favorite newspaper and you were presented with something that looked like the page below.

 

Experiment #1. Reworking disconnected, confusing pages

checkout-test-control

 

This was the first step in the checkout process for  subscribing to a large media publication. 

Editor’s Note: To protect their competitive advantage, we have blurred their identity.

Once a customer entered their ZIP code to determine whether this publication could be delivered to their area, they were taken to this page. Put yourself in the mind of the customer and think about how this page would have been received.

That is precisely what the marketing team did. What they saw was a very disconnected page that gave the customer almost no reassurance that they were still buying from the well-known media publication.

  • The publication logo was almost entirely missing from the page.
  • The colors on the page did not match the brand of the company.
  • The two levels of navigation at the top of the page provided multiple opportunities to click away.
  • The entire process seemed complicated to the customer.

Though there were a number of things the team wanted to change on this page, they needed a new page that changed only a few elements. Every day this page was live on the site, the publication was losing potential revenue from customers finding the process too difficult to complete. A long, arduous Web redesign was not an option. They needed to recover some of that revenue as fast as possible.

So the team ran an experimental treatment in an online test that they thought would require the least amount of time and resources and still achieve a high return on investment. The treatment is displayed below.

checkout-test-treatment

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Landing Page Optimization: 5 factors that lead to (and prevent) conversion

August 18th, 2014 1 comment

Anytime we share research about overall conversion rate benchmarks, I give the same caveat – while it’s helpful to understand conversion rates for your peers, the bigger question you must ask yourself is how to improve conversion rates on your own landing pages and in your own funnels.

 

Is there a methodical way to increase conversion?

While marketing has tended to be dominated by the marketer with the “golden gut” or the star direct response copywriter, other disciplines in the enterprise – from manufacturing to IT – have developed methodological processes to improve quality and consistency.

The MECLABS Conversion Sequence Heuristic is an attempt to bring the same discipline, rigor and sustainable success to the marketing department. It is part of a patented repeatable methodology (patent number 8,155,995) developed by Flint McGlaughlin, Managing Director, MECLABS (parent company of MarketingExperiments), based on years of testing and research of real product and service offers presented to real customers.

conversion-sequence-heuristic

 

For long-time MarketingExperiments readers, you might be very familiar with the Conversion Sequence Heuristic and have, hopefully, been using it to improve conversion in your own tests. (If so, let me know. We’d love to share those results to inspire other marketers.)

But since the Conversion Sequence Heuristic helps more new marketers discovering it for the first time every year, it helps to occasionally revisit this fundamental approach to marketing every now and again.

Read on for a cursory look at the factors that affect conversion, and if you’d like a more in-depth understanding of how you can apply this heuristic to your own landing pages and marketing efforts, you can take the Landing Page Optimization Online Course.

 

Probability of conversion

The Conversion Sequence Heuristic is not an equation to solve. Rather, it is a heuristic, or thought tool (i.e., really cool checklist) to use as you work on landing pages and other marketing offers.

You can never guarantee conversion, but by making (sometimes subtle) changes to the right areas, you can increase the probability of conversion. This heuristic helps you identify those key areas.

 

Motivation of user

The numbers in front of the different elements of the heuristic indicate how much they impact the probability of conversion. All of the elements are not equal.

The motivation of the user is the single most important factor affecting conversion.

To see why, let me give you a simple example using myself as the customer. I am a huge Pearl Jam fan. If Pearl Jam came to Jacksonville, Fla., I would find a way to be at the concert, even if their ticket selling process, sales funnel and landing page were not optimized. I am highly motivated.

The motivation of the user is also the only element of the Conversion Sequence Heuristic that you cannot change. It is intrinsic in your potential customers.

You can, however, gain an understanding of your potential customers’ motivations to better tap into those natural motivations and better serve your ideal customers while improving conversion.

Read more…