Time to Polish Up Your Value Proposition?

In a recession or downturn customers cut back - if you don't believe me, read the headlines of major firms 'Hitting The Wall' and making severe cuts - most companies will be watching cost far more carefully. So now is not the time to have a nebulous argument about your products and/or services having a Return on Investment, it needs to be real, clear and provable or else you may find your sales start to fall or dry up. Crucial to your success in proving the worth of your product or service is the Value Proposition - the short, snappy, realistic and demonstrable argument that it will make an instant, positive bottom line impact to your customer.

What is The Difference Between Value and Cost

In a rather famous if pathetic demonstration worthy of David Brent, I once showed the difference between cost and value. At a company I worked at I had instigated a quarterly award for the top ranked salesperson. At an all-hands sales meeting we used to highlight that person's performance and hand out a genuine glass award complete with the person's name lavishly etched onto the glass.


I argued to the salesteam that the cost of the award plus engraving was no more than £30. Yet the Value was potentially hundreds of thousands of pounds. In a complex, mathematical proof, I calculated that in the right hands and expertly presented, the person who receives one or more of these awards could highlight it in their CV and job interviews for the future and demonstrably prove they were better than all other salespeople at that company. This, I argued, could put an extra value on their next sales compensation package anywhere from zero to say £10,000 per annum. Multiply that over 20 years as it will reset their earnings capacity from the moment they argue this and get their next job, and QED we have £200,000 extra earnings.

I proved an object which COST no more than £30 had a VALUE of £200,000.

Smoke, Mirrors & Targeting

It can work both ways and it's very much about the skill of a presenter, strength of argument and where you pitch it as equally I have argued that if you take a £100,000 Porsche to a disease infested, arid land it's value is no more then an object to sleep in. Take it to Wall Street and at bonus time it could be worth double its cost as it is instantly deliverable whereas most of the traders will have to wait for their toys.

The Value Proposition of anything has a specific and distinct meaning depending on where and to who you apply it.

So when working on your Value Proposition you need to be absolutely clear about how it is applied and works with every different type of customer. And in recessionary times, I would argue that means you need to apply it to the customers who a) are most likely to get the MOST benefit from your product or service and b) those customers who are more likely to AGREE with you.

There is a strong message here. In tough times, choose your target customers very carefully as diluting your sales effort will only decrease your chances of sales. Make sure you focus on the targets most likely to buy your wares.

Constructing Your Value Proposition

Your products/services mean a lot to you and so your perception of their value is potentially very different from what a customer may think or perceive - so the first step is to take off your rose-tinted glasses and put yourself in your customers' shoes.

Step 1 - understand your target customers' businesses.

Step2 - make sure your product/service is applicable

Now is not the time to be selling 'nice to haves' or non-essential things - make sure there is a clear need within the business you are selling too.

Step 3 - profile your target customer

By understanding your customers' businesses and comparing them to those you had success in, you can more accurately describe or profile not only the type of customer you are likely to be more successful selling too but even home in on the job function of the person most likely to be swayed by your argument. This is very critical to avoid wasted time being fanciful about your prospects. These are tough times, maximise the use of your resources and make sure you minimise the cost of customer acquisition - cash is king, remember.

Step 3 - review your current pipeline in detail and compare the current prospects with your target customer profile. Be ruthless, those that do not match discard and make very few exceptions. Salespeople are optimists by nature and guilty of wishful think - you don't have the luxury to indulge them in tough times.

Step 4 - Create your Value Proposition

• Ask - what does my product/service do for companies/people?
• What difference does it make?
• What would happen if a customer chose not implement my product/service - would it have a detrimental effect?
• What is the tangible benefit my customer receives from my product/service?
• Quantify that tangible benefit in terms of actual perceived benefit like cost saving or boost in profits. Remember a boost in profit might be reclaiming lost revenue or profit as well as finding new revenue or profit.
• Avoid Return on Investment arguments as they can often lead to long periods over which the return is realised. In recessions and downturns, companies are focused on the short term - weathering the storm. Only things that Return on Cost will really attract attention.
• Is the argument on benefit real and clear? Make sure you are not picking on contentious areas where the customer may question your assumptions - make sure you understand their business and how they account for costs to be sure.
• Research each customer before you call or visit - make sure you are hitting topical notes as business conditions are changing fast.
• Use references - make sure you can back up your benefit claims by referencing names of customers where you have already provided these benefits and where the customer is happy to either substantiate your claims or allow you to use their name and the quantified benefit. Try to get references n exactly your target customer areas to provide greater credibility.
• Try not to make general claims - using a general benefit statement like 'Use my service and I can save you 60% on your Opex' is contentious as a) how do you know that 60% saving is achievable and b) do you know exactly what is included in every customer's Opex? Be specific and avoid losing credibility early. Try things like 'By using my service Bloggs & Co who in your industry saved 60% on their IT maintenance Opex, I believe I can do the same for you' and have one of more ready for use.
• If you can, create a Compelling Event. This is really hard and what maybe a compelling event for you may not be the same in the customer's mind. It's about creating a point in time beyond which by not using your product/service a customer may actually quantifiably lose out. It could be specific legislation has been passed, a compliance or governance issue, a cost impact comes into effect (everyone uses a price rise, try something creative).
• Your biggest competitor is no change - remember the strength of your Value Proposition must address this.
• Be able to articulate the Value Proposition in a short paragraph or long sentence. Either by email, phone or face to face you will have very little time to gain impact and get someone's attention. The American 'Elevator Pitch' where you have less than the time it takes a lift to go up a few floors in which to grab the attention of senior people. If you cannot articulate the Value Proposition and the key benefit in that short period of time, you are highly likely not to get the attention of the individual you are selling to. In writing, it must b short, sharp and full of impact as most new emails are discarded before the first sentence is finished.
• Make sure the 'Elevator Pitch' is known by heart by EVERYONE in your team or company. There is zero point in not having consistency or not sharing the belief. Everyone must be both bought in and be able to articulate it at will. Everyone is responsible for the delivery of the Value Proposition.
• Test your Value Proposition - make sure you 'road test' your value by bouncing the Value Proposition off existing customers or external contacts. Adjust it if it does not resonate.
• Follow up - back up your short, sharp Elevator Pitch' with succinct material that explains the Value Proposition fully, graphically if you can and fully referenced to corroborate it.
• Pitch this Value Proposition to as many people as you can - make it a company mantra.

Your Value Proposition is your unique difference and your ability to articulate it is your passport to sales in a recession. Now is the time to make sure it is succinct, clear, quantifiable and proven.