Value Proposition That Works

Everyone is talking about value. Go to virtually any website, or look at the marketing materials for any company, especially in the B2B area, and you will see them extolling their value propositions. You will see that one company says “our client benefits from a lower total cost of ownership due to our framework's superior scalability, interoperability, flexibility and adaptability”. Another company would say “we offer superior products at competitive costs and industry-standard products at lower costs”. Yet another player will say “we will reduce overhead cost in distribution and marketing costs and these savings will reflect lower prices and increased inefficiencies to buyers”.

After a while, they all blend, everyone is saying the same thing. There is validity to much of what we hear and read, however when we hear the same thing from everyone, what is difference?

In defining and communicating your value proposition, you must focus on several issues. First, the customer must have a need or a business problem they need to solve. This seems obvious, but too often, we see sales people pursuing opportunities in which the customer has no need to buy. Second, value is simply the difference between the perceived benefits and the consequences of selecting a solution. In thinking about this, you must develop a very broad view of defining the benefits and consequences. Focusing only on your product features and benefits is a certain way of losing. Third, to win, the customer must perceive that your value proposition must be superior to every alternative being considered. It is your responsibility to differentiate your solution, producing a superior value proposition. The ultimate goal is to make your customer says “aha, this is the best solution for my condition amongst the other alternatives”.

Developing a value proposition that works is not a rocket science. However, we see too many people making fundamental mistakes in defining and communicating their value proposition. Many organizations make the mistake of trying the develop “THE VALUE PROPOSITION.” There is no such thing as THE value proposition. Value is in the eye of the beholder! Each customer has different needs and business problems. Effective value propositions are customized to the specific needs of each customer. Customers needs change, thus value propositions must be updated to meet the changing needs of customers.

We must also remember that value based solely on a product feature, functions, performance and pricing is not sustainable. Everyday, competitors announce new capabilities. Basing your value proposition solely on product features functions, performance and pricing may win today, but tomorrow when your competition introduces better capabilities, you will lose.

The greatest value often lies outside the product your are selling. The greatest value may in may lie in many intangibles such as the relationships the customer has with the sales team or the company, the ease of busing a product or service, the reputation of the sales person or the company, the responsiveness of the organization, the flexibility of the company, the ease of doing business, the performance of the company in meeting the commitments, etc. Marketers must think “outside the product box” when developing the value proposition for each customer.

Several guidelines need to be remembered to ensure that your value proposition works.

• There are no silver bullets. Developing, communicating and delivering value requires real understanding of what your customer seeks to accomplish, the roadblocks they face and what is important to them.
• Think about your customer. Always ask yourself “how can we make our customers' life easier?” Also remember to speak the customer's language, not your company's superiority or process that leads to it.
• Differentiate. Remember that your competition is trying to develop and communicate their value proposition. To be successful, your value proposition must be differentiated and superior to all others. Never lose sight of your differentiation
• Be flexible. Value proposition that is developed for a group of customers or market segments is a generic one and is primarily aimed to create customers' initial interest and sales leads. When facing particular customer situation, however, you must develop a unique value proposition that fits their specific needs. If your sales pitch merely reiterates the generic value proposition, you are not going to sell anything.
• Simplify. It is not advisable to present a long-winded description of your value proposition that takes forever for your customer to understand. The key is to offer something that is simple and easy enough to understand, but most importantly touch the customer's ‘hot buttons'. It is much better to say that “we are fast in responding to your needs” rather than “Due to our position as a pioneer in this industry, we are much better in quality, efficiency and speed.” Less is often more.

Developing and communicating a differentiated value proposition is critical to success. There is a lot of hype about value propositions. Focusing on the elements discussed above will help guide you to greater success with your customers.

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