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Is There Real Value
In Your Value Proposition?
Dave Brock, Partners In EXCELLENCE
 (Download PDF Version)
Everyone is talking about value. Go to virtually any web site, or look at
the marketing materials for any company and you will see them extolling
their value propositions. Here are some we have recently seen:
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“We
provide our clients with e-procurement solutions that will allow them to
reduce the time, effort, and cost associated with….”
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“Our
clients benefit from a lower total cost of ownership due to our
framework's superior scalability, interoperability, flexibility and
adaptability…”
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“…enables [customers] with the ability to improve the performance,
availability, and reliability of service delivery over the …
infrastructure. … - saving the operator valuable downtime and maximizing
overall service availability and customer satisfaction…”
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“…offers superior products at competitive costs and industry-standard
products at lower costs…”
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“…We
are unique in our commitment to helping our clients improve their
organizations for the long term. We not only bring our clients new
products and technology, but we also enhance their capacity for learning
and change. The best measure of our success is that we create lasting
value for our clients, their customers, employees and owners…”
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“…solutions enable its community of [customers] to capitalize on the
latest web-based technologies quickly and cost-effectively without the
burden of building, managing and maintaining the infrastructure required
to support mission-critical …applications….”
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“…sellers will reduce overhead cost in distribution and marketing costs
and these savings will reflect lower prices and increased efficiencies to
buyers…”
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“… By
thus to lower their total cost of operation and maximize their return on
investment….”
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“Leverage the full-service capabilities of …and gain all the advantages
you've been struggling to attain….Improved Business Focus …Personalized
Solutions …Faster Time to Market …Predictable Costs …Industry Leading
Technology …Complete Accountability”
After a while, they
blend, everyone is saying the same thing. There is validity to much of what
we hear and read, however, but when we hear the same thing from everyone,
what is the difference?
In defining and
communicating your value proposition, you must focus on several issues.
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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.
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Value
is simply the difference between the perceived benefits and 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.
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To
win, the customer must perceive that your value proposition must be
superior to every alternative being considered. This includes
competitors, or the possibility of the customer doing nothing. It is your
responsibility to differentiate your solution, producing a superior value
proposition.
This is
not rocket science. However, we see too many people making fundamental
mistakes in defining and communicating their value proposition. Here are
some tips, based on our experience:
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Many organizations
make the mistake of trying to 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.
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Customers needs
change, effective value propositions must be updated to meet the changing
needs of customers.
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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.
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The greatest value
often lies outside the product you are selling. The greatest value may in
many intangibles such as the relationships the customer has with the sales
team or the company, the ease of buying a product or service, the
reputation of the sales person or company, the responsiveness of the
organization, the flexibility of the company, the ease of doing business,
the integrity or trustworthiness of the sales people and the organization,
the performance of the company in meeting commitments, the services
offered in addition to the product, and many more things. Sales people
must think “outside the product box” when developing the value proposition
for each customer.
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Elements of value may
be business or personal oriented. Many sales people tend to focus only on
business elements in defining value, but more often, it is the personal
elements that are more important. To an individual, “getting his boss off
his back,” may be the single most important thing in making a decision.
When trying to discover what customers value, look for both the business
and personal elements of value and try to respond to each in presenting
your offer.
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When I refer to
developing unique value propositions for each customer, I mean each person
involved in making or influencing the decision in the customer
organization. Each of them has different needs or hot buttons, these
change with time. To be successful, sales professionals need to present
the value of the offer that means the most to each individual at the time
the decision is being made.
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There are no silver
bullets! When the Lone Ranger died, all the silver bullets went away.
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.
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When defining your
value proposition, if you can clearly answer the following questions in a
way that is meaningful to your customer, you have gone a long way in
developing a winning offer.
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What do we do in
helping our customers increase their revenue?
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What do we do in
helping our customers decrease their costs?
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What do we do in
helping our customer increase their profitability?
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What do we do to
help our customers better respond to the needs of their customers, to
new opportunities that might be presented by their customers, or to
threats?
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What do we do to
help our customers improve their productivity?
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What do we do to
help our customers improve their cycle time/speed?
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What do we do to
help our customers improve the satisfaction, retention, and growth of
their customers?
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What do we do to
help our customers improve their quality?
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What do we do to
help our customers improve the satisfaction of their employees?
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Marketing develops
value propositions aimed at groups of customers or market segments. These
generic value propositions must create interest and leads.
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It is the job of sales
to take those interested potential customers, developing the unique value
proposition that fits their specific needs. If sales merely reiterates
the generic value proposition, then they are not doing their jobs and
should be fired!
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Customer focused
organizations start defining elements of their value propositions in
product definition and development. This assures that real needs of
customers are addressed.
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In developing your
channel or distribution strategies, it is important to keep two things in
mind:
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What value do your
partners contribute to the value you deliver? If the partner is not
adding value, then they are adding cost.
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What is your value
proposition to the partner? Partners are your customers as well. If
you do not create value for your partners, you will not have an
effective relationship.
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Remember 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.
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Finally, make sure you
are delivering real value! Failing to deliver on the value the customer
thought they were buying will destroy the relationship over time.
Developing and
communicating a differentiated value proposition in each sales situation is
critical to success. There is a lot of hype about value propositions.
Focusing on the elements listed above will help guide you to greater success
with your customers.
Partners
In EXCELLENCE provides many training programs helping organizations better
define and communicate their value propositions. For information on
the
Value Proposition Workshops, follow the link.
ã 2002, Partners In EXCELLENCE, All
rights reserved.
Partners In EXCELLENCE
works with its clients in assuring their organizations perform at the
highest levels in these tough times. For tools and white papers on various
specific aspects of managing in tough times, visit our web site at
www.excellenc.com. For more discussion and insight on the items
discussed in this article, please call at 949-305-7146 or contact us at
info@excellenc.com.
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