As a marketing executive in the ’90s, conventional wisdom held that segmenting and personalizing your message was the best way to get the right product in front of the right person at the right time. This was, and still is, the most popular tactic in marketing: lining up the dominoes just right to trigger a purchase.
Turns out that’s very good in theory; less so in practice.
THE POWER OF BETTER TOGETHER
When I led SMB marketing at Dell, we found that what really motivated certain target audiences was personalizing the hardware, not the message that wrapped around it. No matter how much we segmented the marketing, it rarely offset the cost. What made segmentation profitable across all audiences was creating a joint value proposition—a “better together” story of co-creation.
Although we typically considered association marketing programs low profitability and low priority based on product line reporting, we discovered that didn’t have to be the case. By offering the National Association of Realtors something that could benefit their membership—deep discounts on our best gear—we created an effect that went beyond a bump in sales.
We saw higher revenue, higher margins, a richer mix of product orders, and lower marketing costs from NAR customers versus non-association realtors. We didn’t change our message; we reoriented our thinking around a joint value proposition that offered the NAR and Dell mutually reinforcing benefits. It’s the magic of network orchestration accomplished through joint value propositions.
BETTER MESSAGING MEANS NEW MATH
Creating a joint value proposition goes beyond win-win–you’re looking for a formula that turns 1+1 into 5.
At Dell, this required letting go of the zero-sum mindset. While product managers were unhappy because they got lower margins, Dell won because it earned more total margin dollars per customer.
But it also requires being ok with being unable to completely control network outcomes and identifying the higher-order solutions that provide value not only to your organization and your customers (win-win) but also to the greater “you,” the collective whole. This is how one plus one becomes 11.
More recently, my company worked with a leading technology provider and Internet2 to launch a collaborative, cloud-based approach to cybersecurity that was specially tailored to community needs. Internet2 is a nonprofit, member-driven advanced technology community founded by higher education institutions. The organization works with technology leaders to evaluate cloud services and develop contract terms and pricing. Many would consider these gold standard IT solutions, but they can be challenging for the education community to afford—at a time when it needs protection more than ever.
Because our nation’s colleges and universities are among the world’s leading sources of innovation, they are increasingly popular targets of ransomware and even nation-state attacks. COVID made this threat even greater because every student and teacher suddenly had to work remotely. The reality is that the higher education technology infrastructure was not initially designed for this complex modern threat environment. To knock down the barriers to adoption, the Internet2 community and our technology partner created simple security bundles designed to meet customers wherever they are in their cybersecurity journey.
These collaborative bundles add up to a powerful joint value proposition because every aspect of purchasing and operating and planning are made easier. The community has jointly developed solutions that are tailored to customer’s IT workflows, tested with complimentary services, and built to match the education community’s procurement vehicles and planning processes. This lowers the total cost of ownership dramatically by addressing shortages of IT time and talent as well as dollars and cents.
As a result, the Internet2 and higher education community at large becomes more secure, effective, and innovative. The technology partner increases market penetration, lowers marketing costs, improves product development, and grows critical “share of wallet.”
By reorienting the goal from selling technology to enabling a roadmap for research and collaboration, every part of the greater whole benefited.
NOT JUST FOR TECH GIANTS
Think you have to be a large player to pull this off? Laboratorio Gelato in New York city stays busy and buzzy with gelato recipes created by award-winning chefs from all over the city. This creates advertising and a premiere tasting network.
The beauty of a joint value proposition approach is that any organization can develop one. You don’t have to be the biggest player in the network or own a platform. Here are three things to look for when developing a joint value proposition:
- It’s embedded: By being part of a larger whole, efficiency and effectiveness increase.
- It’s regenerative: The network effect is self-reinforcing.
- It’s holistic: There are complementary benefits to each player and the larger whole.
THE NEW SHAPE OF OPPORTUNITY
Joint value propositions build compounding value. And, at a time when the field can seem tilted toward a few dominant players, companies that don’t own a platform can still compete. We just have to be willing to think a bit differently to orchestrate a better future for a broader set of players. Joint value propositions—creating something for the parts, as well as the whole—are how we get there.
Mark De L. Thompson is CEO of Dialog Group, a business strategy and digital marketing firm helping leaders at organizations of all sizes create network effects.