A Value Proposition is a carefully crafted statement articulating how your products/services solves your prospects’ problems or improves their situation; what value your products offer in terms of specific benefits and quantified value, and why your prospects should buy from you, not your competitors.
It is one of the most important messages to convey, especially in the B2B marketplace, and it must be written in the customer’s language. If you aren’t absolutely sure if how you talk about your offering is the same as how your customers describe it – ask them! They’ll also be able to help inform you about the most important parts of your value to them, and the impact of your product or service.
If you are unable to communicate your value to your prospects, why should they value what you offer or pay what you are asking? Your value proposition is a really powerful marketing and sales tool for growth, motivating buyers and quickly differentiating your business from the rest.
Creating a strong value proposition
Investing time to create, test and refine your value proposition – which may be slightly different for specific segments of your market or if you are selling a wider range of products or services – will really help accelerate the sales cycle. It must:
- Align your offer with your customers’ needs
- Differentiate your products/services from your competitors
- Communicate specific benefits
- Include quantifiable results – such as increased revenues, lower costs and faster delivery times
- Be free of hype
- Be readable – and understandable – in seconds
Generally, a value proposition will comprise:
An attention-grabbing headline
This should capture the main benefit of your offering, in a single, short sentence.
Your sub-head needs to articulate what you offer, for whom and why it is useful.
This should comprise of two-three sentences or bullet points, listing the product’s quantifiable bottom line value first, and then ‘why’ – the key benefits or features that enable that value.
Remember a great picture can convey far more than words!
If you’re pitching to a room of corporate buyers/influencers in a B2B setting, each of those present will have different needs. For example, if you’re supplying food ingredients, the chef will want to be assured about freshness, quality, choice and supply reliability; the finance person will be concerned about price and the risk involved in buying from a small business; a marketing person might be concerned about good content on provenance and sustainable food production. So you will need to be able to have clearly differentiated benefits for all of them.
What happens if you’re not unique from the competition?
Many businesses operate in really crowded markets – tech, travel, retail, personal and professional services, to name but a few. The number one barrier to growth being reported by many SMEs is “Competition”. But when there’s lots of competition, there’s lots of data for you to research. Good data means better analysis to discover where you might fall short, or you could have a tiny unexploited advantage.
Research shows that web users spend longer on the value proposition than anything else on the page.
If there is little or nothing to choose between your product/service and your competitors’, the smallest of ‘value-adds’ might tip the balance in your favour, especially in the B2C market where you’re often selling the experience as much as the goods.
Those value-adds might comprise, for example,
- Free postage or faster/free shipping
- A special bonus or offer with purchase
- Free trial
- Free installation
- Money-back guarantee
- Quantifiable customer service
- Lower price guarantee
- Flexible, easy-exit contract
- Free customisation
- Easier to use website and ecommerce shop
- Better customer experience and convenience
We know it can be challenging to do this work and put out your value proposition to the market – but if you do, you’ll already be one step ahead of most of your competition!
Here are just some examples of value propositions to help kick-start the creative process and your thinking about how to quantify your offer. Our upcoming workshop will help you to define a compelling proposition that clearly differentiates your brand, products and services from your prospect’s perspective.
Uber’s value proposition – “tap the app, get a ride” – succinctly headlines their benefits: a car comes directly to you; your driver knows exactly where to go, and payment is via the app, so you do not have the worry of having to carry cash.
Domino’s never claimed to provide the best pizza, they understood that when their market wants pizza, they want it now! So they built their business on the value proposition of getting “fresh, hot pizza in 30 minutes, or it’s free”.
How to qualify value
Malcolm McDonald reported in 2022, that research conducted during twelve conferences and through 1,200 marketing practitioners, found that that fewer than 3% have financially quantified value propositions. So even if you struggle to find any differentiation from your competitors, even trying to quantify the benefits will give you an advantage over them!
We need to start from the point of view that it is the sellers job, not the buyers’, to quantify the value, and by doing so, this will remove or at least mitigate challenges over price. Many of us have been in situations where we’ve bought on the lowest price, only to discover it wasn’t the lowest cost…. The main components of value are revenue gains, increased profitability, cost reduction, and cost avoidance, and often softer emotional factors like improved trust and confidence, better morale.
For example, your business is selling a piece of software that will enable customers to interrogate a knowledge base that constantly grows with each query. You know that your target customers currently employ call centre staff to answer these questions. You can make another reasonable assumption that a high percentage of these calls are ‘standard’ and repetitive, with perhaps 5% actually requiring a person to deal with them.
You can research – or at worst, best guess estimate – how many questions one person handles in a week, and the typical cost of that person. Not just their salary, but oncosts like national insurance, pension, overheads etc.
So your software, with its infinite and growing capacity, will remove 95% of the costs of the call centre team, and that’s without taking into account churn, hiring and training costs, phone costs, and the costs of the building in which they are housed, utilities, furniture……!
Or perhaps your business is selling a piece of equipment that will enable 10% more parts to be created each day. You will already know how many parts current machines produce, you should be able to research the sales price of a part, and have a good idea from your market knowledge, what the margin is per part for the manufacturer. So in addition to the quantifiable increased revenue the buyer will gain from this new capacity, the buyer may also be able to speed up delivery times, or offer a small discount for increased volume, thus providing his/her organisation with additional competitive advantages over their competitors.
As a final example, you may be offering HR services to businesses. In this instance, you would want to research roughly how many Tribunal claims there are, for what typical circumstances (protected characteristics, unfair dismissal, constructive dismissal, discrimination, etc), and the average fines. So in this example, your services will ensure that the business avoids the cost – not just of the fine, but all the associated management time and cost connected with managing any kind of claim, which can be really significant and sometimes as painful as the financial penalty. These sorts of management costs can also be estimated for handling grievances; which your service will help prevent.
At the end of the day, provided you have used reasonable assumptions based on as much research from citeable sources as you can, it doesn’t really matter if the end figure is £x or £y. What this exercise demonstrates is that you are thinking from the buyer’s perspective, and showing that you understand what is important to them. The more you can back up your value proposition with real data from existing customers, the better, and use that in your benefits.
For example: “our clients save £xxx per year by using our product”; our clients have increased their business by £xxx by buying from us”; “you’ll reap £xx per computer user on energy savings each year”. Such strong quantified value statements makes the sales job so much easier by motivating buyers where it matters – the bottom line.
Need some more help? Growth Works can help
If you need further help in quantifying and building your value proposition, then book onto a Growth Works workshop to provide you with more insights into how to do that. Book here to join us for ‘Discover your value proposition’ on Thursday 23rd February at 10 am.