Corvus: The Successful Value Proposition

How to find the sweet spot where buyers and sellers see value. To sell its products or services, every business needs a strong value proposition. But this becomes difficult when a company has a complex product. There will be a mismatch between how the producer and the buyer see value. Understanding can’t be forced, so the only solution is to make a complex product easy to understand and use, as Brent Perry did with Corvus boat batteries. The Problem

Corvus Boat Battery | BCBusiness
Corvus’s Brent Perry takes a tug boat’s diesel engine and converts it to electric with new battery technology.

How to find the sweet spot where buyers and sellers see value.

To sell its products or services, every business needs a strong value proposition. But this becomes difficult when a company has a complex product. There will be a mismatch between how the producer and the buyer see value. Understanding can’t be forced, so the only solution is to make a complex product easy to understand and use, as Brent Perry did with Corvus boat batteries.

The Problem

In 2006, boat builder Brent Perry was asked to build a yacht that had a hybrid engine just like the new hybrid cars appearing on the market. Perry did a deep dive into the business and realized that, while there was interest in the technology, no such engines existed. The only batteries available were for cars and were, therefore, too small. The technology wasn’t available to make the bigger, reliable, powerful, green batteries needed to drive large boats.

The Solution

Perry found a potential market among multi-million-dollar “working boats,” which are active in every harbour in the world, and whose technology hadn’t changed in half a century. He decided to create batteries for industrial applications such as tugboats. However, the worldwide marine industry is tough to penetrate; he would have to convince potential clients that the lithium-ion batteries are weatherproof, long-term, cost effective and able to survive in the worst environments. They would have to not only be green; they would have to be better than diesel engines.

Just as Perry was ready to begin development, the marine industry suffered a severe downturn. Suddenly, price became the main factor in buying decisions, trumping any kind of green thinking. It wasn’t enough for the batteries to simply be reliable and easy to use; they had to involve significant cost savings.

Perry put together a strong team and worked for four years to develop a battery that would be relatively inexpensive to produce, could be retrofitted into a boat easily and could save buyers money. He found suppliers of battery components and, to avoid high shipping costs, designed a portable assembly “plant” that could be shipped to a client’s own manufacturing plant and produce the batteries there.

In 2010, a top boat designer agreed to use Perry’s Corvus battery conversion kit in a training tug he was showing at an international tug and salvage show. The battery was a hit, and prospects became interested in this new technology.

They were especially interested in its price and cost savings. Tugs typically work 2,000 to 3,000 hours a year, but spend much more time waiting to do their work. During this waiting time, they continually burn diesel fuel that tug owners can’t bill for.

Corvus had found its value proposition: its battery technology makes it easy to convert engines from diesel to hybrid; the batteries llast 20 years and, during that time, the system will continually shave operating costs for a tug owner. Corvus sweetened the proposition further by offering to lease the battery conversion kits to boat owners, thus helping them to avoid the high upfront costs. It also helped buyers get carbon credits for the conversions.

LESSONS

• Know what buyers need. Buyers liked many features of Corvus’s batteries, but what sealed the deal for them was a quick payback.

• Innovate to cut your own costs. Corvus decided to do almost everything differently, such as being able to assemble its batteries in 30 minutes, and shipping the disassembled manufacturing “plant” to Asia in a container.

• Make it easy to buy. Instead of selling outright, Corvus devised a leasing scheme that made it easier on buyers’ bottom lines.