We covered the importance of identifying your audience in last week’s email. The next step is to creating a value proposition that resonates with the target market which, incidentally, is one of the hardest things to achieve. Especially if the route to market is an unpaid one (i.e. growth hacking your way to sales and glory). This is where your valueproposition must not only resonate, it must sell.
Creating effective value proposition information is vital and one should be careful not to underestimate the depth of knowledge required by an audience to understand the critical information that you’ve so carefully crafted into a brief marketing message.
Time, or lack of it, is the first aspect of a value proposition one should consider. In today’s increasingly hectic world no one has time to decode ‘clever’ headlines or contrived puns. The old saying “It does exactly what it says on the tin” has never been more apt. Ramit Sethi, an expert on self improvement, is particularly blunt in his value proposition; “are you ready to live a rich life?”
After brevity, knowing what’s important to people is also key. The core value propositionmust tap into a real need. The head of Silicon Valley incubator Y Combinator, Paul Graham said; “just make stuff people want” and while this isn’t a value proposition it is a good rule of thumb to work with. I strongly believe that success comes in business when society rewards you for providing something that they really, really want.
The identification, distilling and crafting of a value proposition is one of the toughest challenges companies face and creating an authentic one takes time. However, it has a measurable ROI and even if you throw in a few rounds of pizza and beers to incentivise a lengthy whiteboard session to nut it out – the cost to payoff ratio can’t be beaten.
So what makes a good one and how do I go about creating it? Let’s look at a few examples of real companies;
Good value prop: Dropbox: we store your files and you can share them
Not so good value prop: Box – we store your files, and have collaboration tools for individuals, teams and enterprise and also content management tools
Here are some others:
- Opera: Made to discover. Download the fastest and free alternative web browser.
- iTunes: You’ll never be so easily entertained.
- Pintrest: A few million of your favourite things.
- Salesforce: No hardware, No software, No boundaries.
- Evernote: Remember everything.
- Skype: Wherever you are, wherever they are, Skype keeps you together
As Liam Gooding, founder and CEO of Trakio writes: “I’m humble enough to say Trakio’s product vision in 2013 was vague and naive. We were going to help SaaS companies with their customer lifecycle marketing in some kind of way, because we had decided to build this cool customer analytics database, and it seemed like a good thing to do with the tech, as part of our vision to solve “Every and any problem a subscription company might have…”
Sadly for Trakio, they initially thought that adding more features would make their product easier to sell. They quickly found out, to their chagrin, that the added features which cost $150,000, were not only not wanted by the customer but actually made it harder to sell as their value proposition was more difficult for consumers to identify.
Is a value proposition a snappy headline? No, it goes deeper than that. A value propositionisn’t a strapline or positioning statement. A value proposition is a statement of relevancy, value and differentiation. It’s not a laundry list of features, nor is it a company mission statement. The value prop is just that – VALUE.
The default position of most sales people I have worked with is “just answer the customer’s pain points and we’ll arrive at the value prop!” Pain points are good, but can sometimes cause a gap between the product as it is and what the customer wants. There are many tales of a customer leaping up after a sales presentation, high fiving the rep and yelling “fantastic, you’ve solved our biggest challenge. It’s almost too good to be true!” And it usually is. The pain points were well recognized and articulated, but they weren’t the product’s value proposition. Pain point reduction follows after a value proposition, it’s not always the value proposition itself.
The value prop needs to resonate both internally and externally and if a company’s employees can’t succinctly explain what the company does it’s in trouble.
So what creates a value proposition and how do you know if it’s any good?
The elements of a good value proposition are fundamental:
- Is it measurable?
- Is it customer focused?
- Is it crisp?
- Is it compelling?
The path to defining a value proposition is somewhat harder. The elements need to be put through a second filter:
- What is the one thing you are really, really good at?
- What situation are you going to improve?
- What’s the end benefit to the customer?
- What is the vehicle you have to tell your story?
The last element is often overlooked. If you have the luxury of a 30 sec tv commercial, you can inform, and entertain prospective customers. However, even if you have the scope that tv offers, the key to success will always be simplicity. If you are a B2C company relying on social media, internet display, SEM and email, you don’t have the luxury of long winded explanations of why you should be chosen over your competitors. If you are in B2B, whether a medium sized business or enterprise, the same rules still apply. Be brief, be compelling, use simplicity as a tool – don’t be scared of it.
Companies, especially B2B, too often cling to complexity and the comfort it provides. Complexity may produce questions, but will unlikely provide answers or sales. A typical sales cycle can be anything from a few weeks upwards of 12-18 months. During which there will be a fair amount of chasing by the sales rep and much ducking and weaving by the prospect. Once BANT (Budget, Authority, Need and Timing) has been clearly established being lumbered with a complex value proposition and the materials required to support it create unnecessary time and resource suck. This is often when the CTO has to be wheeled in to explain the product, which if done well causes the customer to buy into the vision. That should act as a warning bell. Meeting customers is great, but actually having to sell it to them because no-one else can properly articulate the product is a huge negative.
Invariably, the customer gets carried away by the CTO’s vision (and who wouldn’t, that’s probably why you got funding in the first place!) and the relationship continues. Sadly, in most cases, while the meetings add up the customer fails to commit to the purchase. While the sales pipeline reports have the customer in a late stage for contract the inevitable signing never seems to materialize. When you boil it down, it’s usually because the customer still can’t understand or articulate the product to their higher ups and/or they don’t intrinsically believe you can deliver what on your promise.
That’s the qualitative way of developing a value proposition. There is another way which helps the business to focus, and understand, what value they are adding through a data driven approach.
But we’ll look at that another day.