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How to Structure Your Value Proposition For Retail Customers

A Value Proposition

We work with our clients to help them develop better insights, strategies and plans to help them win with consumers and shoppers. But while they can execute their consumer marketing plans as they see fit, there is a potential barrier to the execution of most shopper marketing plans – the retailer.

The majority of shopper marketing activity takes place in a retailer’s store (either on or offline) and therefore we need retailer buy-in to get that execution to take place. At its heart our presentation to the retailer must contain a clear value proposition which explains to the retailer why they should support the activity. In this post we’re going to explore the three core elements of a strong value presentation for retail customers.

Most companies don’t put enough focus on the value proposition for retail customers

Given the importance of getting retailer support for our marketing activities, it often surprises me how little time, effort and funding is put into creating great retail sales presentations. After all, if major retailers say “No” then we have a real problem. Conversely, our experience suggests that a well-structured retail sales presentation can dramatically increase the chances of getting agreement from a retailer, and can reduce the costs of activity (in the form of fees from the retailer). Yet while we lavish millions of dollars on our consumer communication, too often the communication we make to the retailer is an afterthought.

Over the last decade our team at Engage must have seen hundreds, if not thousands, of customer presentations. They vary considerably. Most have some details of the proposal, be it a new product or a promotion, or a change in merchandising. Most detail some of the marketing activity that will support the activity (for example the TV advertising which will support the new product launch). Most have the logistical details the retailer needs to implement. Some (but by no means all!)  articulate the benefits that the retailer may enjoy as a result of the activity (for example, increased category sales). But very few have a clear, structure to explain how and why the activity will work and connecting that to the customer’s business. In our experience, really effective presentations have a clear retail customer value proposition at their heart. And a really strong value proposition for a retail customer has three core elements.

The retailer value proposition – part one – The consumer proposition

The retailer needs to believe that consumers do really need/want/desire the product, and will consume it differently. If you have a new product, the retailer will need convincing that the new product meets the needs of consumers. If you’re running a promotion, the retailer wants to know that consumption will change as a result. The consumer proposition explains who the target consumer is, what they do right now, and what they will do as a result of this activity. Will they switch to a different brand? Start using the category, or use the category more frequently?

The retailer value proposition – part two – The shopper proposition

A consumer proposition, however, isn’t the most important part by a long way (although this is what most customer presentations focus on. The retailer is less interested in consumers, and much more interested in shoppers. And not just any shoppers, either. The retailer is interested in the shoppers that shop in her stores. The shopper proposition demonstrates that shoppers in this retailer’s stores will change their shopping behavior as a result of this activity. The retailer wants to have more traffic, or bigger transactions: so we need to demonstrate that shoppers will shop differently and in a way that will drive sales of profit for the retailer’s business. If shoppers don’t change behavior, then there is no benefit for the retailer.

The retailer value proposition – part three – The customer proposition

The last element of the value proposition for retail focuses on the retailer’s business. The customer proposition explains how the changes in shopping behavior described in the shopper proposition translates into an improved financial performance for the retailer. This can be increased sales, profits, or both. The benefit may be strategic too, but the strongest customer propositions will articulate clear financial benefits to the retailer. Will category sales increase? Will the category profit mix improve? Will there be an improvement in stock turns, so driving a better return on inventory investment?

The benefits of a structured value proposition for retail customers

Beyond the fact that it is a more effective way of demonstrating the value of your activity to the retailer, there are other benefits from following this approach to creating a value proposition.

Firstly, it’s a simple checklist that helps in a number of ways. Firstly, check that every presentation made by you and your team includes each of these three elements. If not, you haven’t made your case effectively enough.

The structure also is a great way of helping decide which research data to present. Often we see sales presentations which are weighted down by way too much data. The only data that is required (more or less) is the data which supports this argument. The data story should explain that there is consumer demand: that the activity will encourage shoppers to change their behavior, and that this change in behavior will be financially beneficial to the retailer. If the data isn’t required to tell that story, we should question why it is included.

Lastly, as long as the value proposition for your retail customers isn’t being developed at the last minute (sadly, it often is) there is an opportunity to change the plan if the value proposition doesn’t create enough value for the retailer. Could more support be included? Could some activity be switched out? Or could we gather more shopper research data to support our consumer proposition and shopper proposition so that our assumptions are more robust and credible. The creation of the value proposition for the retail customer should happen as the marketing plan is being created, not as an afterthought just before the launch!

Developing retail sales presentations is one of the most challenging and important tasks in the organization. While millions of dollars are spent on consumer communication, often customer communication is an afterthought. This is crazy.

This blog found in Course 30: Using Total Marketing to Motivate Retailers.

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