Solution Selling Essentials: What is a good value proposition?
Parts of this post adapted from the Solution Selling Fieldbook (2005, McGraw-Hill, ISBN 978-0071456074 by Eades, Touchstone, and Sullivan).
Perhaps the most overused phrase in the sales profession is “value proposition.” While most salespeople agree that selling value and being able to express that value to customers is good, few are truly masters at being able to do so effectively.
In fact, CSO Insights recently found that 45% of sales executives believe that their salespeople need improvement in their ability to sell value and avoid discounting. Only 15% believe that their sales teams exceed expectations in selling value.
Sales Teams’ Ability to Sell Value
(Copyright 2009, CSO Insights, used with permission.)
To further confuse matters, the development of “value propositions” has often fallen to marketing professionals, who tend to think of prospects and customers as broad categories, instead of as individual buyers. As a result, value propositions developed by marketing tend to be expressions of general,and sometimes generic, capabilities of the organization’s products or services. While this may be useful in increasing awareness or arousing interest of target market segments of potential customers, it isn’t very helpful to salespeople who must apply value propositions to specific buyers and their specific situations. A broad, general “value proposition” such as: “Buy our state-of-the-art product and you’ll get great benefits!” is actually of no real value at all, for either the buyer or the seller.
So, what is a good Solution Selling, buyer-focused value proposition? There are three guidelines for delivering effective value propositions to prospective buyers:
- The value proposition must not be “value-less.” Value is best defined as benefits minus cost. So real value propositions must suggest a quantifiable benefit to be gained, as well as an estimate of the investment required by the prospective buyer.
- The value proposition should be customized. To be of use to a specific customer, your value proposition should be specific and address a relevant pain of the person you are trying to help. A general value proposition that can’t be applied by the customer to their specific situation is much less useful in their evaluation process.
- The value proposition you deliver should be one you believe in. If you don’t believe in the value that can be delivered, then why should the prospective buyer? As a result, your value proposition must be one that you can back up with proof.
In short, a good value proposition is one that is quantifiable, specific to an individual buyer, and provable.
An effective value proposition is a statement which projects the quantified value a prospect should achieve through the use of your organization’s capabilities. It is intended to stimulate interest and serve as the catalyst to begin an evaluation of your capabilities.
Value propositions can be used at any time with a prospective buyer. The most common use is when you want to stimulate interest. After interest is stimulated (with a business development prompter and reference story), the value proposition serves as the basis for further exploration with the prospect. After the buyer shows interest, the next logical step should be to verify or revise your projections based on further investigation and discussion with the prospect.
In addition, a good value proposition can enhance the credibility of yourself and your organization by showing how you understand the buyer’s business, their specific problem (pain), and the value of helping them to solve that problem. This can help to differentiate yourself from competitive alternatives, not only by what you sell, but by how you engage with the customer.
So, what does a good value proposition look like? Here is one example:
We believe that Titan Games (prospect organization’s name) should be able to increase sales revenue (describe pain being addressed or area being improved) by 10% each year (valued at $10M potential revenue or $3.2M in profits annually) (how much % and/or $) through the ability to have customers place their own (repeat) orders allowing salespeople more business development time toward new accounts (describe primary benefit) as a result of implementing our e-commerce offering (describe primary capability or enabler of offering/s) for an approximate investment of $1.15M (prospect’s relative investment $).
Note that this value proposition is quantitative and highly customized to a specific buyer. But, is it also provable? It is, if you document your assumptions. If the prospect asks, “How did you determine the potential sales increase?” you must have an answer based on your research and discussions with people in that account. Or at the very least, you should have a similar customer situation from which you can extrapolate similar results.
Perhaps the best thing that can happen with a value proposition is when a prospect challenges it. In this case, you can demonstrate your situational fluency by discussing your underlying assumptions. You can work with the prospect to adjust those assumptions based on their comfort level and knowledge, and then re-work the value proposition using new data. At that point, the value proposition is owned by the prospect, since you are using their assumptions!
We are finding that customers are expecting specific value propositions as early as possible in their buying process. The salesperson that can generate these quickly will have a significant competitive edge.
So, the next time you are engaging with a prospect, try using this template to generate an effective value proposition:
We believe that _______________________ (prospect organization’s name) should be able to _______________________(describe the critical business issue being addressed or area being improved) by ________________ (how much % and/or $) through the ability to _______________________ (describe primary benefit) as a result of _______________________(describe the primary capability or enabler or offering/s)for an approximate investment of _______________________ (prospect’s relative investment $).
Good luck and good selling!