Aaron Vidas is the founder of StrategyBox, a marketing consultancy for $50M companies. In this episode, we discuss realigning your value proposition with a new target market. In the first segment, Aaron explains how he realized he was not aligned and the steps he took to change it. In the next segment, we explore how to research a new target market through interviews and conferences. He concludes with a couple of pricing stories from his experience.
Aligning Your Value Proposition
What is the most important thing you can share about pricing?
You have to have alignment with the customer, not simply agreement. Agreement is when someone nods their head during a conversation. Alignment is when they take action to support the course of action to which they agreed.
How did you discover you had an alignment/pricing problem in your business?
During a run, Aaron had a realization that his customers loved the marketing plan he created but they had trouble executing on it. He then asked the question, “Am I doing the right thing for the wrong audience?” He created a new business plan and then interviewed a couple of CEOs in the new target market to verify his hypothesis.
Was the decision process more emotional or analytical?
It was both. From an emotional standpoint, it felt like a monumental decision. It was a slow crescendo in frustration over time. Then the final straw that broke the camel's back.
For the analysis, Aaron asked two questions, “Do I need to create different value for the same customers?” or “Do I need to create the same value for different customers?” Then he went to a cabin for the weekend and crunched the numbers.
His coach helped with the emotional and analytical aspects. The value of an outside perspective is that without objectivity there is no innovation. Aaron suggests the book From Darwin to Monger to learn about cognitive bias in decision-making.
How did you make the shift to serving a different customer?
His first challenge was age-bias. Would the CEO of a $50-million company listen to a twenty-something consultant? Aaron overcame it by interviewing potential customers. He also learned he would have to change the form of the offering.
Next, Aaron took steps to position himself as an authority for his target market. He wrote a couple of white papers and booked speaking opportunities at conferences attended by his new customers.
Researching a New Target Market
How did you overcome the intimidation of interviewing potential customers?
It is OK to be uncomfortable. Have the courage to ask, “Would this be helpful to your company? If not, why not?” Learn who they are and what is the problem you can help solve.
The conversation is not a zero-sum game. Not only do you receive valuable feedback, you can help the interviewee generate new ideas. You serve the customer by asking how to create value for them.
How do you research how the customer creates, captures and communicates value?
Aaron recommends the book The Business Model Canvas. It provides a framework to understand how a business operates. It teaches you how to ask questions to understand the cost of a problem and the value to solve it.
How do you find the conferences your target customers are attending?
Once you have your foot in the door at one conference, it is easier to book the second, third, etc. Use video to prove you can speak with confidence to the event organizer. If you receive a no, ask why it was a no. Positioning yourself as an authority is the foundation of your outreach.
Stories from the Trenches
What did you learn from Thomas Nagle, co-author of The Strategy and Tactics of Pricing?
You can charge for value. You do not have to use cost-plus pricing or match your competitors. There are tools to evaluate the economic benefit of your product or service to the customer.
What is one of your best stories about creating value for a customer?
Aaron is a fan Principles by Ray Dalio. He learned that one of his customers was also a fan. He introduced his customer to a contact of Ray's which led to the customer meeting Ray in person. The customer purchased two around-the-world tickets for Aaron to say thank you.
- Website – StrategyBox.com
- Sales Strategy Guide – StrategyBox.com/aov