Developing a compelling value proposition: What you need to know
By Barbara Bix -
With the economy slowing, prospective buyers are scrutinizing every penny they spend. Therefore, it’s incumbent upon sellers to clearly articulate the value that prospective buyers will derive once they buy.
In recent posts, we’ve discussed the characteristics of a compelling value proposition , and the importance of concentrating your firepower on those companies that most value your capabilities . This week’s post discusses concrete steps you can take to identify, validate, and test your value propositions.
Begin by gaining deep insights into buyers’ needs and purchase preferences
As Steven Covey said, “Start with the end in mind”. To develop a compelling value proposition, you first need to validate what matters most to prospective buyers. Else, if you make inaccurate assumptions, you’ll miss the mark and potentially end up wasting lots of money on ineffective marketing programs.
This can be a lot harder than it seems because there are lots of important questions you need to answer first. Approach this assignment as journalists do when researching a breaking story. Start by inquiring about the 5 Ws and the H.
Who are your most promising prospects?
As we discussed in the past, the most promising prospects are those that value your solutions most and will therefore pay top dollar, buy more quickly, and/or motivate others to also buy. To find them, first list all the market segments that need your capabilities.
Then, eliminate less desirable segments. Examples include market segments that are too small to meet your revenue goals, are so competitive that they will drive up your cost of sales, and market segments that don’t especially value your organization’s unique strengths.
To rank the remaining segments, and identify your target market, interview key stakeholders in each. Key stakeholders include everyone that the decision maker involves in the buying decision--from external advisors to the internal personnel who will use and implement your solutions.
When will prospective buyers need your capabilities?
The need for many solutions is event-driven rather than ongoing. For example, companies are more likely to seek out insurers when they are contemplating taking on new risks, marketing agencies when they are launching new products, or a new accountant when they are dissatisfied with their current service provider.
Often knowing what events trigger demand for your solution can help you develop a more compelling value proposition. To find out ask about last time they purchased similar services: What caused you to purchase then—rather than six months sooner or six months later?
What do key stakeholders value most?
The only way to ascertain whether you solutions provide sufficient value to garner sales is to first find out what matters most to decision makers. Ask: What are their goals? How are they measured?
Then, ask the same questions of the remaining stakeholders. Although only one person can approve a purchase decision, others can block it if their needs are not met.
In fact, you may need multiple value propositions in order to win the company’s business. For example, the decision maker may be bent on achieving market share. Finance may require a certain return on investment. Supporting departments may care about the cost and ease of ongoing maintenance. Users may focus on ease of use and access.
Where do decision makers get their information?
Some decision makers learn of new solutions through trade journals or trade association meetings. Many expect those that work for them—and have subject matter expertise—to make them aware of the need for new solutions. Others turn to trusted advisors and colleagues for recommendations.
Where ever your decision makers turn for information, that’s where you need to place your marketing messages. Else, you run the risk that you will not even make the short list when it comes time to evaluate new solutions.
How do stakeholders decide whether or not to recommend your solutions?
Not only do different stakeholders have different goals, they often require different evidence to reassure them that your solutions will meet their goals. They seek this information to address their reservations and mitigate risk.
Some will require media coverage in marquee publications, others will require references and/or testimonials from industry leaders, and still others will require demos or tools that will help them calculate the return on investment they can anticipate. Again, whatever their preferences, you need to do it their way. Else, they may never access your value propositions—and you may lose the deal to the competition.
Developing a value proposition is an iterative process
Once you’ve identified a few value propositions, do some testing. Send out a direct mail piece and see how many people respond. Develop google ad word campaigns that offer a free demo. Offer a free webinar and see how many people attend.
If people show interest you’ve probably discovered something of value. If people invest time in learning more, you may have a compelling value proposition. If not, you need to go back to the drawing board.
Validating your value proposition helps you make the most of your marketing investments
Remember, it’s not what you think that’s important; it’s what matters most to your most promising prospects. That’s why industry leaders always invest in marketing research despite the fact that they have ongoing experience with existing customers.
With the marketing investments they’ve made in product development—and plan to make in promotion--large companies know they can’t afford to miss the mark. Chances are neither can you.
What surprising information has your organization learned when validating your value propositions?