As we discussed last week, a compelling value proposition is a clear, concise description of exactly how buyers will benefit from your solutions. Done well, it motivates action by speaking directly to the needs of those who need your services most and mitigates risk by addressing potential reservations.
Your value proposition must target your most promising prospects.
Nevertheless, to be truly effective, your value proposition must target your most promising prospects. Willie Sutton robbed banks because that’s where the money was.
Yet, one of the most common mistakes that many businesses make is selling to profitable markets, without questioning whether better opportunities exist elsewhere. When they do, they run the risk of expending valuable sales and marketing resources in the wrong places. That’s what happened to several of my clients before they focused on first determining who valued their services most.
Not all value propositions are equally compelling
One of my clients had been marketing its analytic software as a productivity tool that streamlined regulatory compliance and reporting. When a new marketing vice president joined the company, he engaged my business-to-business marketing consultant company to validate the company’s value proposition.
We interviewed decision makers in a number of market segments in search of unmet needs. Eventually, we discovered a more profitable application for the company’s products. We found a set of decision makers that were seeking analytic software that they could use in a pre-sales environment to reduce investors’ risk. Because these customers felt such a tool would help them attract new clients—rather than just reducing reporting costs—they were willing to pay top dollar.
As a consequence, my client was able to penetrate a new market segment and increase revenues by 9 million dollars—after marking minimal modifications to the customer interface of an existing product. Today, sales of the new product have totally eclipsed sales of the original solution. That's 9 million dollars that the company had previously left on the table because they failed to validate their marketing assumptions.
Your market decides what value proposition is most compelling
Another client found a more profitable market by happenstance. This professional service organization was marketing its engineering consulting services to large accounts in a highly competitive market. At the same time, the company was turning down smaller projects that required the same capabilities because the company “wasn’t in that business”.
When we reviewed the company’s win/loss data, the owner realized that the requested services were far more profitable than the ones he was currently selling. He, then, decided to actively pursue the market the company had been avoiding. A year later, he had a new million dollar business that leveraged his company’s existing capabilities. Had he neglected to regularly analyze his wins and losses, he would have continued to do business as usual and missed out on a highly profitable business.
Just because you’re doing well, doesn’t mean you’re not leaving money on the table
What are the lessons learned here? Just because you’re doing well, doesn’t mean that you’re not leaving money on the table. Your most promising prospects may not be who you think they are. The value they seek may not be what you think it is. The only way to be absolutely sure what the market values most is to gain deep insights into prospective buyers' needs and priorities.
When developing a value proposition: ask don’t guess
To determine what prospective customers value most, it’s important to ask buyers directly, rather than making assumptions. This can be more difficult than it appears.
In most companies, multiple parties have direct contact with customers. They, therefore, think they know what matters most to the customer and how to create a winning value proposition.
Sales may believe that the reason the company made—or lost—its last sale highlights the solution’s value, and will be true for all sales. Marketing may push for value propositions that generate a lot of leads—rather than a few higher quality leads. Finance may push for replicating past successes because their analyses show these accounts are the most profitable.
It’s like the old story about the blind man and the elephant. Everyone in the company has had experiences with customers. The problem is that no one has had discussions with a broad spectrum of decision makers that focus exclusively on these decision makers’ goals, totally independent of the vendors’ solutions.
Consider engaging an expert to help you discover your value proposition
Sometimes you need an outside perspective—someone who can help the team step back and see the whole forest—rather than just the trees. It often takes someone who is less invested in the outcome of the decisions and is less likely to have assumptions about the market.
This individual is more likely to focus on prospective customers' needs--rather than the value they place on existing solutions. Rather than asking questions about what prospective buyers value, experts are trained to ask how their employers measure their success, what their goals are, and what's getting in the way.
Getting to the heart of the matter also requires specialized ability and training. Much more than just the ability to ask open-ended questions and probe for clarity, success depends on knowing exactly what questions to ask—and how to ask them--to uncover needs that the decision makers, themselves, may not yet fully recognize or be able to articulate. Equally important is the facility to translate the information that the interviewer gathers into solutions, marketing messages, and marketing programs that will accelerate the sale.
Value is in the eye of the beholder
More important than developing a compelling value proposition is first determining the highest value your company can deliver. Although performing marketing research can be time-consuming, it’s usual the single most effective investment that any company makes. That’s why Fortune 500 companies invest so heavily in marketing research, they can’t afford failure, they don’t want to spend money on rework, and they abhor leaving money on the table.
What steps has your company taken to assure your solutions are aimed at your most promising prospects—rather than those with smaller budgets or less urgency about buying?