Online value proposition (Customer value

proposition)
If organisations want to maximise usage of online channels (web, e-mail and wireless or interactive digital
TV where relevant), my view is that a distinct, detailed online value proposition (OVP) or online customer
value proposition must be developed for the target audiences. The key word here is distinct – the online
customer proposition should not simply replicate the existing service proposition or brand promise that it is
available from offline channels, but it should extend it to offer unique online benefits. Includes example
customer value proposition from figleaves.com.
Tags (view related articles): Persuasion Marketing, Internet Marketing Strategy & Planning, Web Design,
Online Branding

Note: My new Smart Insights site has the latest guides and frameworks to help you achieve online
customer engagement you may also find useful.

Introduction - Online value proposition

Contrast this with the approach many companies have taken which is simply to transfer their existing
proposition to the online environment. The worst manifestation of this is the simple ‘brochureware’ sites
which offer little more than an introduction to “who we are, what we do and where to find us” or
sometimes simply “these are our products – take them or leave them”. This approach fails to take
advantage of the unique properties of the online media such as its immediacy, interactivity and depth of
content that is only limited by imagination and resource.
Once an OVP has been defined, then e-marketers then need to work hard to clearly communicate this
proposition online and offline. Furthermore, as for any proposition, they need to evaluate how well it
resonates with its audiences and revise it accordingly. So, part of proposition development is identification
of powerful messages to convey the proposition. Using both offline and offline communications to build
usage of online channels will be ineffectual if the messaging is the all-too-common “Visit our web site @
www.company.com” or “Sign-up for our e-newsletter”!
This article starts with current thinking on developing customer value propositions for brands and then
describes the characteristics of a strong online value proposition and explores approaches to define and
refine the OVP.
Note: In WNIM Issue 29, we introduced my top ten corporate issues of e-marketing (
http://www.wnim.com/archive/issue2804/emarketing.htm). In this e-newsletter and subsequent e-
newsletters, we will explore some of these issues in more detail.

What is a customer value proposition?

Development of a clear customer value proposition is now an integral part of customer-centric marketing,
customer-relationship management and branding. A conventional view of the value proposition is provided
by Knox et al. (2003) in their review of approaches to customer relationship management. They say a value
proposition is:
“an offer defined in terms of the target customers, the benefits offered to these customers, and the price
charged relative to the competition.”
Similarly, Rayport and Jaworski (2004) suggest that construction of a value proposition requires
consideration of (1) Target segments, (2) Focal customer benefits, (3) Resources to deliver the benefits
package in a superior manner to competitors. However, branding advocates believe that the value
proposition is more than the sum of product features, prices and benefits. They argue that it also
encompasses the totality of the experience that the customer has when selecting, purchasing and using the
product. We will see that these customer experiences and also service quality are very important online. For
example, Molineux (2002) states that:
“the value proposition describes the total customer experience with the firm and in its alliance partners
over time, rather than [being limited to] that communicated at the point of sale”.
Similarly, Smith and Wheeler (2002) consider that designing what they refer to as a ‘branded customer
experience’ is vital to delivering an effective value proposition. They also stress the importance of
“developing a profound understanding of the customer’s experience”. The watch word here, is profound –
they suggest that detailed research must determine the nature of value which drive buying and loyalty
behaviour:
From this rapid review of the fundamentals of customer value propositions, we can summarise the
following success factors for developing an effective online value proposition:
1. The offer forming the OVP is developed specifically for different target customer segments.
2. The OVP is not limited to the customer experience on-site but involves how it links to other channels as
part of a multi-channel buying process
3. The product or service offer and experience that form the OVP must be based on in-depth research of
which factors govern purchase and loyalty behaviour and refined according to actual experience of the
OVP by customers.

What is an online value proposition?

From our review of the essence of customer value propositions, we can suggest that the issues to be
considered when formulating an online value proposition should include:
 Identification of a clear differentiation of the online proposition compared to the companies
conventional offline proposition, i.e. to extend the offline proposition.
 Identification of a clear differentiation of the online proposition from competitors based on cost,
product innovation or service quality.
 Target market segment(s) that the proposition will appeal to.
 How the proposition will be communicated to site visitors and in all marketing communications.
Developing a strap line can help this; we will look at some examples shortly.
 How the proposition will be delivered across different parts of the buying process, i.e. it should
not just refer to the product itself, but also give an indication of the pre-sales and post-sales
support that can be provided by the online service.
 How the proposition will be delivered and supported by resources – is the proposition genuine?
Will resources be internal or external?
To summarise, the ‘Online Value Proposition’ or OVP should:
 Reinforces core brand proposition and credibility, but also shows:
o What can a visitor get from your online services that…
 They can’t get from you offline?
 They can’t get from competitors?

Benefits of an online value proposition

Varianini and Vaturi (2000) conducted a review of failures in B2C dot-com retailers in order to highlight
lessons that can be learned. They believe that many of the problems have resulted from a failure to apply
established marketing orientation approaches including definition and communication of a clear value
proposition. They summarise their guidelines as follows:
“First identify customer needs and define a distinctive value proposition that will meet them, at a profit.
The value proposition must then be delivered throught the right product and service and the right channels
and it must be communicated consistently. The ultimate aim is to build a strong, long-lasting brand that
delivers value to the company marketing it”.
Similarly, Agrawal et al. (2001) suggest that the success of leading e-commerce companies is often due to
matching value propositions to segments successfully.
Having a clear online value proposition has several benefits:
 it helps distinguish an e-commerce site from its competitors (this should be a web site design
objective);
 it helps provide a focus to marketing efforts and enables company staff to be clear about the
purpose of the site;
  if the proposition is clear it can be used for PR and word-of-mouth recommendations may be
made about the company. For example, the clear proposition of Amazon on its site is that prices
are reduced by up to 40 per cent and that a wide range of three million titles is available;
 it can be linked to the normal product propositions of a company or its product.
A further practical reason for developing an OVP is that customers expect it! Research reported by Jakob
Nielsen shows that new visitors to a site, particularly of a company they are unfamiliar with, will seek out a
tagline or graphic that explains what the site can offer (WIFM – or What’s in It For Me). Users decide
quickly (often within a few seconds whether to stay or leave a site and the tagline is a large part of this).
Indeed, in 2003 for UK financial services provider egg, their tagline was ‘egg: what’s in it for me?’

Formulating an OVP
If follows from our exploration of what comprises a value proposition, that to create a successful online
value proposition, marketers must understand specific characteristics of online channels and the benefits
they offer to customers. To help formulate the OVP we need to consider the special characteristics of the
Internet and its online services as perceived by customers using them. A simple mnemonic is provided by
these “Six C s” which have been used in varying combinations since the Internet has become a channel to
market.:
1. Content – In the beginning it was said that ‘Content is King’. Well content is still King, it’s just
that I don’t think enough attention is given to precisely which ‘Content is King’. To my mind,
regal content is rich, which means it provides something that other channels can’t. Often this
means more detailed, in-depth information to support the buying process or product usage.
However, often online product catalogues simply replicate what is in offline catalogues without
adding extra information, images or example applications. Messaging through E-mail, SMS and
RSS is also key to providing unique content – these media can be used to deliver timely, relevant
media to individuals.

As well as text-based content which is king for business-to-business there is also interactive
content which is king for consumer sites and particularly brands. Consumer FMCG brands now
use the web to deliver what they term as ‘Digital assets’ which support offline branding campaign.
For example, 2004 New Media Age winner Dare in it’s creative for Lynx used online games,
screensavers, viral e-mails, video clips and soundtracks to extend the brand experience from
applying deodorant to interacting with the brand for 1.4 million unique users.
(http://www.newmediazero.com/awards04/category.aspx?cat=advertising). Connections to content
on other sites is important for many sites since links to relevant resources on other destination sites
can improve the customer experience on the referring (original site).
2. Customisation – In this case mass customisation of content whether received as web site pages or
e-mail alerts and commonly known as personalisation. Of course, Amazon is quoted ad-nauseum
as an example of this, but did you know that they see it as so important, they actually have a
“Director of Personalisation”. At the 2004 London E-metrics summit I listened to a presentation
by Matt Pound and was amazed how much Amazon does customise. In addition to the standard
“customers who bought this product also bought that product” approach Amazon also automates
creation of standard messages on-screen delivered in different slots or portlets, E-mail messages
and Search engine adverts. The ability for a subscriber to an online e-mail service to tailor their
messages by selectively opting-in to particular types of message is a further example of
customisation.
3. Community – Last and probably least is Community, these days known as ‘social networks’.
Online channels such as the Internet are known as ‘many-to-many’ media meaning that your
audiences can contribute to the content. For consumer retail, review sites such as Epinions
(www.epinions.com) and Ciao (www.ciao.co.uk) are important to informing customer perceptions
of brands. Similarly in business markets some specialist communities have been set up. For
example, E-consultancy (www.e-consultancy.com) has forums and reviews which discuss issues
in the supply of e-business services. However such community services are typically independent
from suppliers of products and services and it is more difficult to build in these services into
product supplier sites since comments made by customers may damage the brand. Supplier
community sites were in vogue around 2000 at the time the Cluetrain manifesto
 (www.cluetrain.net) was launched with companies such as Egg with their Egg Free Zone and
Symantec with sharing customer queries and solutions. However, such communities services have
now been closed down, presumably because of the difficulty in controlling the negative
perceptions they can engender.
4. Convenience – This is the ability to select, purchase and in some cases use products, from your
desktop at any time; the classic 24 X 7 X 365 availability of a service. Online usage of products is,
of course restricted to digital products such as music or other data services. Amazon has
advertised offline using creative showing a christmas shopper battling against a gale swept street
clutching several bags to reinforce the convenience message.
5. Choice – The web gives a wider choice of products and suppliers than via conventional
distribution channels. The success of online intermediaries such as Kelkoo (www.kelkoo.com) and
Screentrade (www.screentrade.com) is evidence of this. Similarly Tesco.com provides Tesco with
a platform to give consumers a wider choice of products (financial, travel, white goods) with more
detailed information than is physically available in store.
6. Cost reduction – The Internet is widely perceived as a relatively low-cost place of purchase. In
the UK, Vauxhall have keyed into this perception by offering Vauxhall Internet Price (VIP), in
other words lower prices than through dealer-based distribution. Similarly a key component of the
easyJet OVP when it launched was single tickets that were £2.50 cheaper than phone bookings.
This simple price differential together with the limited change behaviour required from phone
booking to online booking has been a key factor in the easyJet online ticketing channel effectively
replacing all other booking modes.
Note, the 7Cs of Rayport and Jaworki (2003) provides a similar framework of Context, Content,
Community, Customisation, Communication, Connection and Commerce.
At alternative, more classical method of reviewing how the proposition can be extended online is to
consider how the marketing mix can be varied online. For example in the content of the above list:
 Product (Content, Customisation, Community) – Providing new digital services via web
sites and e-mail to extend or tailor the product.
 Price (Cost reduction) – Offering differential prices – typically lower online, but maybe
higher if the Convenience and Content factors are favourable. For example, the London
Eye now offers a 5% discount for online booking, but in the past it has charged a
premium since it was more convenient than phone.
 Place – Online provides a new place and a new channel – simple!
 Promotion – in addition to providing a number of new methods for customer acquisition
through search engines, affiliates and e-mail for example, the web is at its best when
Unique web offers are available in the form of competitions and sales promotion.
 Physical evidence, People, Process (Providing new forms of customer service such as
the in-depth frequently asked questions database at www.easyjet.com). These elements of
the mix are very important to the overall experience. Indeed Jeff Bezos of Amazon has
said (quoted by Smith and Wheeler (2002) that “

“Customer service is a critical success factor in any retail business, but it’s absolutely
critical online”

Fulfillment is critical for online retail sites, but for all sites there are other aspects of
customer service that are important to all companies with an online presence – not just
retailers. These include response times to e-mail or phone enquires and the availability
(percentage of time site is up and running) and download performance of sites. It often
seems as if sometimes these parts of the experience are underestimated. Services such as
Site Confidence (http://www.siteconfidence.co.uk/company/benchmarks/top100.php)
show that there is a large variance between the fastest and the slowest sites, but users will
tend to compare their satisfaction with their current site against the fastest.
Some examples of companies who have developed a successful online value proposition are described by
Smith and Wheeler (2002) who they place in the context of their ‘Branded Customer Experience’:
1. Consistent…reliable and trustworthy delivery of the customer experience across channels.
Example: First Direct.
2. Intentional…using new mediums to create new value.
Example: Tesco.com.
3. Differentiated…uniquely offering a customer experience that is different from the ones that
competitors offer.
Example: Egg.
4. Valuable…creating new value in different ways.
Examples: BBC.com and Smarterkids.com

Formulation of online propositions for

different target audiences
It seems that many OVPs are “one size fits all” i.e. on the web site or offline communications it is the same
messaging and content for all. Although this may be appropriate for smaller organisations, it is a missed
opportunity for larger organisations. Here are some examples of approaches that companies have used to
develop different propositions for different audiences.
 Dell (www.dell.com). Main navigation method is customer self-selection by consumer or
organisation type (company size and private or public sector). Different messaging and product
offerings are developed for each audience.
 Boosey and Hawkes (www.boosey.com). This music publisher has different positioning messages
for different audiences, e.g. making music (for ‘information resources, music and shopping for all
musicians from beginner to professional’); learning music (‘resources to help you learn music
from tutor books to software’); teaching music (‘education resources, information, entertainment
and shopping for any one who teaches music’); composers and repertoire (‘specialist resources for
programmers, performers, broadcasters, librarians and the home of contemporary music on the
web’).
 Siebel (www.siebel.com) Siebel connects with different decision makers in organisations by
providing a resource library with many whitepapers which will appeal to different members of the
buying unit such as CEO, CFO, CMO and CIO.
 House (www.house.co.uk). Clearly explains its core proposition – British Gas welcomes you to
house – It’s where the experts live! Find the advice and services you need to help you run your
home smoothly. Then the calls-to-action on the home page showcase the proposition by
highlighting financial savings (‘paperless billing could save you £15 a year’), special offers and a
primary navigation system which is task-based and based on action verbs, i.e. ‘Fix a problem’,
‘Improve your home’, ‘manage your info’, ‘move homes’, ‘manage your bills’ and ‘protect your
home’.

E-commerce value propositions

For E-commerce sites, site owners needs to provide sufficient details to overcome reluctance to buy. An
excellent summary of messsages to explain these online retail propositions are presented in the Online retail
checkout report from E-consultancy.
"1. The Product proposition – what is the product (details, colour, size etc.), what does it look like
(product images), what is its availability and what are other similar and related products (up-sells and
cross-sells)?
2. The Price proposition – how much does it cost, including VAT and delivery charges, available offers
(e.g. Buy 2 save 10% / add £15 to your basket and get free delivery), are any vouchers or promotional
codes available?
3. The Delivery proposition – when will it be delivered, how much does delivery cost, which carriers are
used, what delivery options are available (e.g. how to obtain free / faster / cheaper shipping), what are the
delivery terms and conditions, the returns policy, guarantees and gift options (e.g. wrap, message, don’t
indicate price with delivery)?
4. The Payment proposition – how can payment be made, what advice, information and reassurance is
available on the payment process (privacy, security, data protection, guarantees etc), how can the
company be contacted (to engender trust)?
5. The Registration proposition – is registration required, is registration offered and if so, what are the
benefits of registering?"

Customer-scenario based proposition

development
A practical design approach to developing detailed customer-centric propositions for different audiences is
the customer scenario design approach. This concept was popularised by Patricia Seybold (Seybold, 2001),
but was based on earlier task-based approaches used for designing web site usability (see for example van
Duyne et al. (2002) for a description). This concept involves creating personas or thumbnails for different
audience members and then to describe their tasks or experiences they are looking for when visiting a web
site. For example, for a music publisher such as Boosey & Hawkes, two of the personas and a scenario for
each might be as follows:
Persona 1:
George is a 45 year old violin teacher who has used the Internet for less than a year. He accesses the
Internet from home over a dial-up connection. He has never purchased online before, preferring to place
orders by phone.
Scenario A:
He is looking to purchase sheet music suitable for beginners.
Persona 2:
Georgina is a 29 year old ad exec who has been using the Internet for 5 years
Scenario B:
She wants to research music suitable for a new sports car advert before licensing or purchasing the chosen
track. She has used a search engine to arrive at the site and is not familiar with the company.
Content and services to support each persona in their tasks can then be developed. The scenarios can then
be used to test the effectiveness of new designs in focus groups.
A related approach is the Egg diagram approach of Rayport and Jaworski (2004). They suggest companies
can benchmark their online proposition against competitors by filling an egg diagram that shows content
available to support Pre-purchase (Problem recognition, Information search, evaluation of the alternatives),
Purchase and Post-purchase (Satisfaction, Loyalty).

Examples of online value proposition

messaging
At its simplest, the OVP can be communicated with a simple tag line which is prominent on the home page
and in offline communications accompanying the URL. The tagline should simply explain the essence of
what is provided by a brand online. Some of the best taglines have been developed by the startup
companies, for example:
 ‘Compare. Buy. Save’ from Kelkoo (www.kelkoo.com)
 ‘Earth’s biggest selection’ from Amazon (www.amazon.com)
 ‘Search the largest inventory of cars and trucks on the Internet. More than 1.5 million listings,
updated daily’ from Autotrader (www.autotrader.com)
Of course, graphics, features and benefits lists and the content itself all can help communicate the OVP.
The Citibank design (www.citibank.com) uses a range of techniques to illustrate its core proposition and
OVP. The main messages are:

Welcome to Citibank: The one-stop

solution for all your financial needs.
Look for a product or service; Learn about a financial product; Find a location.
Different OVPs can be developed for different products or different segments.
For Citibank UK, the OVP for its Internet banking service is: “Bank whenever you want, from wherever
you are Citibank Internet Banking gives you the freedom and flexibility to manage your day-to-day
finances. It's secure, convenient and very easy to use”.

Tagline guidelines
In his Alertbox ‘Tagline Blues: What's the Site About?’
http://www.useit.com/alertbox/20010722.html Jakob Nielsen suggests:
‘To assess whether your homepage communicates effectively to visitors in the crucial first 10 seconds,
follow two simple guidelines:
First, collect the taglines from your own site and your three strongest competitors. Print them in a bulleted
list without identifying the company names. Ask yourself whether you can tell which company does what.
More important, ask a handful of people outside your company the same question.
Second, look at how you present the company in the main copy on the home page. Rewrite the text to say
exactly the opposite. Would any company ever say that? If not, you're not saying much with your copy,
either.’
http://www.useit.com/alertbox/20010722.html
But the communication of the OVP should not end with the tag-line. More detailed explanations of the
benefits of using the OVP can be communicated:
 On the homepage through feature lists or imagery that shows the benefits or experiences that are
available
 In the About Us section
 In the Contact Us section
 In the Help section
 In the e-newsletter archive
 In Frequently Asked Questions
First-time users of web sites commonly turn to the About Us, Contact Us and Help sections, so these are
popular pages where it is important to detail the OVP through listing features and benefits.
In offline communications too, the OVP can be explained in more depth to encourage usage of the channel.
Product catalogues from holiday home companies or computer manufacturers often use at least one page to
showcase the OVP. Banks may use communications in branch, phone or by direct mail to explain the OVP
thus reinforcing the messaging across media.
Example e-retail Customer value proposition
Here is a great example of an OVP from Figleaves an online lingerie retailer - in their "About Us" section
which is a good place to check when benchmarking OVPS: figleaves explains it’s online value proposition
as follows:
 figleaves.com is the world’s largest online seller of branded intimate apparel. We offer branded
underwear, swimwear, exercisewear, nightwear and hosiery for men and women. [Core brand
proposition and audience]
 “While the choice is huge, it couldn’t be easier to find what you are looking for. You can shop by
brand, size, price, colour, style or occasion or, if you know exactly what you are looking for, we
will take you directly to it in one click [Ease of use / Findability].
 You can easily return goods if they don’t fit or if they don’t meet your expectation. It’s our famous
‘no hassle' returns policy. If you're in the UK we even pay the returns postage.[Returns policy]
 What’s more, you can check out your purchases at home - no queuing for or embarrassing
moments in luridly lit changing rooms. [Unique channel-specici advantage of online service]
 Underwear makes a great gift for both men and women. If you are buying for a loved one then we
can send your present in a beautiful gift box along with a personalised message. Alternatively,
you can send a gift certificate so that the recipient can choose exactly what they want themselves.
[Gifting]
 We know how much you appreciate speedy delivery – in stock items are usually dispatched within
24 hours.[Delivery]

Evaluating proposition delivery

At the start of the article I suggested the need for continuous refinement of the OVP and ongoing checks
that it is delivering the right experience experience. Financial services brands such as Egg, IF and Deutsch
Bank have rolling surveys where tens of thousands of consumers are surveyed through e-mail each month.
Tesco.com send out an e-mail survey immediately after the first online shop to check consumers are happy
with the experience, and in so doing, improve the experience further. Even having a simple feedback button
can help alert the brand owner to problems with the site. IF receives hundreds of comments a month
through an online feedback box, so that recurring issues can be acted upon. Hygiene factors such as site
performance and availability should also be monitored and controlled through service level agreements
with a hosting provider. One of the main metrics Amazon use to assess practical problems with their OVP
delivery is revenue per minute. For the 2003 revenue of $5.7 billion I estimate this means that the alarm
bells start ringing in the Amazon operations control centre when this KPI falls below $10,000 per minute!
Written: June 2004, Updated July 2007

References
Agrawal, V., Arjona, V. and Lemmens, R. (2001) E-performance: the path to rational exuberance.
Mckinsey Quarterly, No 1. 31-43.
van Duyne, D., Landay, J. Hong, J. (2001) The Design of Sites. Patterns, Principles, and Processes for
Crafting a Customer-Centered Web Experience. Addison-Wesley, Reading, MA.
Knox, S., Maklan, S., Payne, A., Peppard, J. and Ryals, L. (2003) Customer Relationship Management:
Perspectives from the Marketplace. Butterworth Heineman, Oxford, UK.
Molineux, P. (2002) Exploiting CRM. Connecting with customers. Hodder & Stoughton, London, UK.
Nielsen (2001) Tagline Blues: What's the Site About? Alertbox, July 22, 2001
http://www.useit.com/alertbox/20010722.html. See also: About Us – Presenting information about an
organization on its web site: http://www.useit.com/alertbox/20031027.html.
Rayport, J. and Jaworski, B. (2004) Introduction to E-commerce. McGraw-Hill, NY, NY. 2nd edition.
Seybold, P. (2001) Get inside the lives of your customers. Harvard Business Review. May 2001, pp80-89.
Smith, S. and Wheeler, J. (2002) Managing the Customer Experience. FT-Prentice Hall. Harlow, UK.
Varianini, V. and Vaturi, D. (2000) Marketing lessons from e-failures. McKinsey Quarterly, No 4. pp86-97.
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