I’ve known for as long as I can remember that the Panama Canal ranks among the great feats of human engineering. Upon visiting the Canal for the first time recently, I discovered that it is also a shining example of a rock solid value proposition.
As I watched a skyscraper-sized freighter full of Japanese automobiles make its way through the Mira Flores locks, a guide informed me and other onlookers that the fee for the ship’s passage was approximately $280,000. Just as I was asking myself why a company would pay that much money to send a ship through the Canal, the guide added that the cost of the obvious alternative – sailing around the tip of South America – was approximately $3 to $4 million.
Ah! A return on investment of at least 10 to 1. Very clear, very crisp – enough so that the Canal pretty much sells itself. No doubt Panama gets some customers who want to negotiate the price, but with that clear of a value proposition, it doesn’t really have to. It’s hard to argue that a 10 to 1 return is not fair – where else is anyone getting that these days?
Now, things are not so clear in the world of knowledge and education products, but that doesn’t eliminate the need for a strong value proposition and a clear return on investment – at least if you want to avoid things like price competition and razor thin margins.
So, what’s your Canal proposition?
- Are you helping your customers meet their objectives faster and more efficiently like the Canal does? (Do you know their objectives?)
- Are you clearly better than the alternatives? (Do you really know the alternatives?)
- Overall, what kind of return on investment do you offer? (Have you thought through how ROI might be measured? Hint: Post session evaluations alone won’t do it.)
These aren’t usually easy questions to answer, but that doesn’t mean they can’t be answered. As we head towards a new year, it’s worth putting some time against them and figuring out your Canal proposition as you go into 2012.