Everyone has their own favorite way of creating a value proposition. As I have mentioned before I like the one defined in Crossing the Chasm. The format looks like this:
Who: (key purchase motivation insight)
Our product is a: (customer language)
That: (key benefit)
Unlike: (key competitors)
Ours: (key differentiators)
At a price: (less than, equal to, or higher than competitors).
I’ve been doing a bit of value proposition work over the past couple of weeks so I have this on the brain right now. Here are some tips on how you might think about each of the pieces of this.
For: (bulls-eye customer)
In my mind this has to encompass not only some thinking about what segment the customer is in (i.e. Retail SMB, Transportation, etc.) but also who the buyer is. If you have more than one buyer, be prepared to create more than one value proposition (if you want to learn more about buyer personas I recommend Adele Revella’s excellent Buyer Persona Blog) It’s important to be honest with yourself here. Most smaller companies want to sell higher up in the organization than they are selling. If your sales folks are mainly talking to mid-level IT managers, having a great CIO value proposition won’t get you all that far.
Who: (Key purchase motivation insight)
Put another way, this is the reason your target customer is looking to buy something in the first place. It’s a description of the problem your solution will solve (As an aside – I have heard folks talk about “jobs” that products perform but that just doesn’t seem very customer oriented to me. I have never heard a customer say they wanted to “hire” a product for a “job”). I’ve often asked the question “what is keeping this person up at night?” or “How is this person’s performance measured?” Again, it helps to be brutally honest here and not confuse what you think your product is good at with what the customer is actually looking for.
Our product is a: (customer language)
I’ve beaten this one to death in a couple of other posts but put simply, this is how a customer would describe what it is you do. And I can tell you right now they aren’t going to call your product “An innovative, next generation Web 3.0 framework”. Seriously. They aren’t.
That: (key benefit)
This part is the expression of the value that your solution brings. When working with companies on value propositions, I usually find that the hard part about this one is getting focused on value that lines up with the key purchase motivation. Your product might have lots of nice to have points of value but if it doesn’t provide value that lines up with the key reason the customer wants to buy, you are in trouble.
Unlike: (key competitors), Ours (key differentiators)
In this section you list the key competitors in the space and articulate what you can do that they can’t.
At a price: (less than, equal to, or higher than competitors)
I’m often tempted to skip this part but usually end up thinking it is really important by the time I get done all of the other sections. In particular, in this economy, the issue of price is huge in the minds of customers. If your price is higher you better have a pretty strong case for customers as to why they should be willing to pay a premium for your product or service.
So I will leave you with this example Value Proposition for this blog:
For marketing staff working at technology start-ups who want to learn more about marketing best practices, Rocket Watcher is a blog that provides practical, experience-based information on product marketing in an (occasionally) entertaining fashion. Unlike other marketing blogs that focus only on one facet of market, such as public relations or social media marketing, or marketing blogs written by marketers working at large companies, Rocket Watcher covers the broad spectrum of marketing issues that start-up marketers deal with everyday with an understanding that people and money are always constrained.
This can be then simplified as:
The Rocket Watcher blog provides an entertaining, practical look at product marketing for start-ups. From social media, to traditional product marketing to public relations, Rocket Watcher aims to help start-up marketers make the most of their limited resources.
Rocket Watcher: Product Marketing for Start-ups.
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34 thoughts on “Value Propositions 101”
April, thanks for this excellent summary. This is value proposition week, I guess: I wrote a post a couple of days ago entitled “Another Kind of Value Proposition” (http://bit.ly/cEcvV).
In business-to-business markets, the emotional component has a heavy influence on sales and, especially, retention. The buyers/users emotions are “values” of a different sort. That’s what I try to discuss in the post. I would appreciate your readers’ feedback on those ideas.
Thanks for the comment – I love that post! You are right that right now folks are making some pretty emotional decisions around reducing risk, both to the business as well as to their own employment. Vendors would do well to spend some time really understanding how their customers are feeling.
By popular demand – a blog post: Value propositions 101 http://tinyurl.com/dakszy
Pingback: Jay Shah
You can use this one for free…
Rocket Watcher: Read it first, ask questions later.
Ha! I like it!
The buyer persona brings to mind that B2B software must be sold to the buyer and the user at the same time. It isn’t until the upgrade that you can cut the economic buyer out of the picture. They are not involved anymore. It will be the users that drive upgrade purchases.
Still, it gets messy, because you are still hunting up new economic buyers as prospects, even as you farm your existing customers.
Somewhere across your collection of value propositions, you have to address both markets. Maybe the verbage must be different. Maybe the functionality must be different.
Great post, April – a simple approach to a topic that does tend to get lost in the mix on a regular basis at most start-ups.
Value props take time; they are never right the first time through. You need to continue refining your product, sales approach, and materials – and of course, your marketing strategies as you go.
This is a great blueprint for doing so!
Thanks for the comment!
You have to have different value propositions for different folks that are involved in making the purchase decision. For example, if a line of business is driving the purchase but IT and the end users have a say in the process, then you need three different value propositions. There are likely going to be some common elements but there will almost always be critical differences.
Great discussion of this very important topic of VP. We are in this precise situation: Enterprise software that will be used by business users but the decision maker is line of business mgmt. The product’s benefits will utlimately be most realized when used by many users in collaboration, rather than be a individual-user product. IT is also a heavy influencer and may even be a gate-keeper. End users will be influencers.
We are in a bit of a time/resource crunch, so our first priority is a VP for the decision maker (Line of biz mgr) then second priority is IT. I am hoping to also have the time for VP for the individual user-influencer.
My question is how do we then best use the various VPs. The web site, especialy front page, has limited real-estate. Same thing for collateral. Do we target our high visibility web content/datasheet primarily at the decision maker with possible links to influencers and then try to reach our influencers via other means such as blogs, developer community, etc?
What about sales situations? We can obviously arm our sales people with messaging for each buyer/influencer persona, based on exact sales situation. But what about the sales “golden pitch”? How do you best address all audiences at once when the messaging is different and you may be presenting to a room that includes several buyer/influencer personas? Do you talk about the high-level VP for the buyer and then include slides for the benefits of the other constituents/influencers?
Thanks for the comment.
That’s a great set of questions. In complex B2B sales situations there are generally multiple groups of influencers and trying to message to everyone all the time would do nothing but water down your message or confuse everyone. In my experience you have to work through the sales cycle and think about which marketing content gets used at which stages and which groups are involved at each stage.
For example, the website is generally a first point of contact and particularly for larger B2B type sales, the primary buyer/budget holder is who the site needs to be targeted to. As the prospect moves along the sales pipeline there will be content and materials geared toward the various influencers. Depending on your sales model, this content is either distributed by the sales team or sits in special sections of the web site geared toward those other groups at the different stages of the sales process.
As you mentioned the sales force will have times where they will be different groups in the room and in those cases you are going to have to have presentations that speak to different groups. It’s tricky but I’ve found that there are usually common things across the value propositions and then you can address the key points that haven’t been hit in separate slides. The other thing to remember is that it’s impossible to try to cater to more than a couple of groups at one time with a single pitch. Make sure your folks are armed with messaging and materials to talk to any group but keep your presentation to the top couple of groups or you’ll risk losing everyone in the room.
Hope that helps,
Thank you for the insightful thoughts. That makes a lot of sense to me and fortunately, I think it will be quite plausible to do what you are recommending.
Thanks for the comment Adam and you make a good point about value propositions taking time. Really good value props evolve over time and it helps to get as much feedback as you can along the way to fine-tune it.
Thanks for mentioning buyer personas as a foundation for messaging. Internal stakeholders so frequently disagree about which words to use or which capabilities should be emphasized, regardless of the message format. Companies that evaluate the priorities and attitudes of their buyer persona(s) have the best context for the message discussion. They are unavoidably reminded that the only stakeholder who needs to be satisfied with the message is the buyer.
Great post, April.
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Great post. The value proposition statement is a great way to get everyone internally to get on the same page as well. I have found that bringing a cross functional team together to walk through a high level value proposition presentation is a gret team building excercise.
Hi Adele, Thanks for the comment and I couldn’t agree with you more.
Great point. I just went through an exercise where a subset of the exec team worked on a value proposition. The best about it is that everyone understands what it means, will use it consistently and will teach others in the company how to use it and why it’s important.
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@pphilp, @EricJHannon, @StephanieTilton, @robtyrie Wow, thanks for the RT on the value props post! http://bit.ly/ZEP1r
Pingback: Andrew Kinnear
Thanks for this information, very much appreciated and timely.
Hi April. Nice post. Thanks for sharing your value proposition. I believe that the importance of value propositions are underappreciated. Here’s a link to another article on developing a value proposition. Thanks…I just started following you on Twitter 🙂
I think you are being too literal about the “job” comments (Google ODI or outcome driven innovation”. This is meant to be how we see the reason for why the person is doing what they do…it relates to the goal or outcome they are seeking, even if this is not something they recognise conciously.
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RT @aprildunford: Value Propositions 101
Our product is a
At a price
Love, love, love this! RT @aprildunford: Value Propositions 101 http://t.co/Nn44I1mO #prodmgmt
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