What is your Value Proposition?
“The aim of marketing is to know and understand the customer so well the product or service fits him and sells itself.” – Peter Drucker
Actually there are two types of value propositions. The first is what you offer the world and how your stakeholders value what you have to sell. The second is what you are looking for – what you need. Another way of expressing this – it’s what you are buying from others. In this short essay we will explore both types. However, this is not an essay about writing a value proposition. It is about addressing the notion of a value proposition from both the seller and buyer perspective.
“The ability to simplify means to eliminate the unnecessary so that the necessary may speak.” – Hans Hofmann
Value Proposition Defined
In keeping with the principle that simplicity begets clarity, here is my definition of a value proposition:
“A value proposition (VP) is a statement that clearly identifies the benefits a customer will receive by purchasing a particular product or service from a particular vendor.”
There are two things that stand out from this definition. First what are the benefits to the customer or user of the product or service? Second, who is providing the item of value?
The Value Proposition You Offer to the World
Let’s take a business offering as an example. I think an individual product/service (the offering) creates value and/or prevents value destruction. Sometimes the offering’s value can be expressed in monetary terms but often there is some non-monetary value involved. For example that round-the-world cruise will cost and while the price is posted, most people would be hard pressed to express the value only in monetary terms—but some inventive soul has probably created a measurement tool or an App for this. The trip is likely something that maximizes utility, a concept that economists created to deal with things that can’t be expressed in monetary terms. Often mentioned is the increase in pleasure or the decrease in pain. For many big-ticket sales, the diminishment of pain is often a leading benefit to identify and address as part of the sales process.
It seems that the value of almost any specific offering will decline over time. Some of the reasons may be technological developments, a vast increase in suppliers or alternative ways of buyers doing things. You can pretty much count on changes occurring over time that will reduce the value of anything you sell. One significant development that I have seen in selling to large corporations is a complete movement of buying decisions to the purchasing department, a corporate role that was relegated in the past to buying physical items like equipment, raw materials or inventory. Now it seems that almost everything purchased by big companies runs through the purchasing department first, sometimes keeping you away from dealing with the users of the goods or services in the company until you get the contract. You can count on the purchasing department putting you on a spreadsheet with competitors who offer the same goods or services that you offer. The bottom line: those suppliers with the lowest price get the contract unless you do something to differentiate yourself from the competition.
Some of your customers will go to extraordinary lengths to commoditize what you offer. It is your task to unearth, explain and sell value. It is more than features and benefits. It is demonstrating your worth to them as their supplier, even in a commodity situation. In order to do this, you have to listen very well looking for issues, opportunities and challenges that they are witnessing in their world. That information enables you to package your offering in a unique way such that you are different from the competition. You can’t do that unless you are dedicated to unearthing the value that is not readily apparent to the untrained observer. If you do not have an opportunity to do that level of analysis then I suggest you walk away from the sale and concentrate on those markets, customers and prospects that understand the importance of being served by you. I think the real value proposition is the relationship, not necessarily always expressed but something that is witnessed. This is what generates trust between the customer and you, the supplier
What Value Proposition are You Looking for?
“I'm living my life, not buying a lifestyle.” – Barbara Kruger
It makes sense to me that having explored the value proposition from the seller’s perspective, it would be useful to explore it from the buyer’s perspective—and you are the buyer. We know there are tons of products and services you buy. How do you determine value? What is your value proposition as a buyer?
If you are like most consumers you have bought a lot of offerings that you really didn’t need and that, after a point in time, your really didn’t want. By the way, thank you for supporting our economy but my commentary doesn’t end there. In a world of much unconscious behavior and confusing communication I beseech you to value your role as a buyer and to significantly upgrade the buying process, and have some fun along the way. How? Think twice before you hand over that credit card!
Think about engaging with the sales agent at a deeper level, not necessarily because I want you to like him but so that you enable him or her be better at what they do. Get them to talk about their offering and the value it provides. Are they going through the motions or are they a believer in what they represent? Are they phoning it in or are they the real deal? Do you have any idea why you would buy from this person or the company he represents? I am arguing for engagement rather than closing the deal prematurely even if you know that you want to buy what is being sold.
“Many a man thinks he is buying pleasure, when he is really selling himself to it.” – Benjamin Franklin
I am also asking you to be intentional about your role as a buyer. Most of us know we have bought too much stuff yet we continue to do it. Why? Is it “monkey see, monkey do”? Is it ego driven or needs driven? Are you looking for external approval for what you own or are you simply trying to keep up with or out-do the next guy?
I think our relentless pursuit of things at the lowest prices cheapens us. We are often looking at buying the next thing as something that will make us happy. We know, however, that our compulsion to buy is a mild addiction, and in some cases it is a very big addiction. It is sort of like eating too much. We just can’t seem to rein it in.
How about putting some purpose behind your purchase? I recommend you reward yourself for a job well done whenever you purchase something of significance. Honor a thoughtful purchasing process. Let it have as much meaning as most of your accomplishments where you were proud of the results. Then, as an informed buyer, take that mindset into your world of selling so that you can better relate to your buyers.
In the previous section I talked about how the buyers at many companies commoditize your offerings. That is their prerogative. However, it does not mean that you should cheapen your decision making process by operating in a wholly reactive or compulsory purchasing mode. The purchasing department buyer at least has a well-defined process. Shouldn’t you have a well-defined process as well? Is it possible that if you have a well-developed decision process for purchases you may better serve your customers and prospects?
“Lives, like money, are spent. What are you buying with yours?” – Roy H. Williams
And, there is more, there always is.
Be genuine.
Copyright 2014 © John J. Trakselis, Chicago CEO Coaching
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