Value Propositions That Sell

March 03, 2016

Customers do not buy features, they buy solved problems. So why do product teams still struggle to communicate coherent and differentiated value propositions that focus on solving the customer’s business pain?

A major challenge for product teams prior to launch is the ability to translate features into customer-centric business benefits. We tend to fall back on feature-talk because it’s relatively easy; it’s something we’re intimately familiar with, having spent countless hours developing those features. And, since features are tangible items, it makes it easier for the sales team to sell. You can readily show features in a product demo or slides. Marketing also loves them because it’s easier to promote features than to prove ROI to the customer. But when buyers demand evidence of how your product will yield business benefits, you will not gain any credibility if you reply with common tech-speak: “Um, well, our system is based on an event-driven SOA.”

It’s unfortunate that after hundreds of hours of market research, requirements development and product design, we place so little importance on messaging. Instead of creating value propositions that sell, we sell our product short. Rather than explaining benefits that address the business problem, we provide messaging laden with incomprehensible tech-speak, jargon and vapid feature-talk. The goal should be to clearly differentiate ourselves, not to inadvertently position ourselves as me-too products.

Product professionals frequently come from a technical background and often lack the training and know-how to speak to the market in customer-centric language. Worse, we often fail to think from a customer’s perspective. And, we commonly insert ourselves into the buyer persona: “Well, this is how I think about it, so it must be true for everyone.” This is a fundamental mistake. Don’t assume that the users think about it the way you do. Even if they do, how do the buyers think about it? Users and buyers are often different people with distinct, even contradictory, buying motivations.

Many value propositions are not designed to sell because they are not written with the right target audience in mind. Creating the right value propositions requires implementing a defined and structured methodology.

The Value Propositions Methodology

Successful value propositions explain how specific products solve customer problems. A structured value proposition methodology addresses four topics:

1. The broad context
2. The buyer persona
3. Business benefits
4. Competitive differentiation

The Broad Context

Customers rarely purchase technology for the sake of the technology itself. They’re probably not buying a system because they want to be more efficient, either. They want to solve an underlying business problem; becoming more efficient is merely a means to get there.

It’s important to think about the context in which the customer seeks a solution. What is the fundamental problem the customer wants to solve? What business problem keeps the CEO awake at night? Something is prompting the customer to buy in the first place, and efficiency gains are rarely the principal reason.

“But my customers say they want to speed their processes,” you say? Remember, Henry Ford’s customers also told him they wanted a faster horse. If they can solve their underlying business problem without becoming more efficient, they will.

To understand the customer’s business pain—the impetus for a solution—you must take a more holistic view of the broader business context. Is their industry growing rapidly, or is it stagnant? Must they meet regulatory compliance requirements? Are external disruptive forces affecting revenue? Is the competitive landscape or buyer behavior changing? What do the economy and labor markets look like? What challenges face the customer’s customers? Are those end-users becoming less loyal to your customer? This broader contextual awareness is a foundational requirement and, unfortunately, an area where product teams may fall short.

The Buyer Persona

Users and buyers are often different people with distinct motivations. This is important when developing value propositions. Are the users also the buyers, are they influencers, or do they simply provide initial requirements with no further decision-making authority? Which department holds the budget? Who makes the ultimate buying decision? Is procurement involved? Is legal a stakeholder?

Each person or department will evaluate their choice of solutions through the unique lens of their own buying motivations, requirements or concerns. These contradictory requirements often negate the needs of end users and can lead to decisions that are not in the organization’s best interest. Therefore, value propositions must be developed not only to convince decision-makers, but also to help them overcome possible objections from the other, tangential stakeholders.

Business Benefits

Once you understand customers’ underlying motivations and business pain, it is time to think about how your product solves their needs. At this point it’s acceptable—indeed, necessary—to think about product features, on the condition that they are translated into tangible business benefits. Identify the overlap of your market’s unmet need with your solution’s capabilities. This represents the value proposition, or the motivation for customers to purchase from you.

The challenge is translating feature-function into business benefit. Perhaps a particular feature or capability makes the customer more efficient, but so what? The customer needs to know what that means in terms of the business problem they want to solve. It’s possible that the efficiency improvement increases revenue by a certain percentage, maybe it defers future labor costs, or maybe it reduces risk of litigation or regulatory action. Or perhaps it helps the customer improve their end-users’ experience. If you can quantify these business benefits, you’ve made a straight-line connection between your solution and customer ROI.

Competitive Differentiation

Chances are that the competition will have similar products and solutions. If the customer does not see any tangible difference between you and other vendors, the decision to purchase will fall back on price, a scenario you want to avoid. Competitive differentiation is a clear business imperative.

Communicating a differentiated value proposition is perhaps one of the most difficult aspects of this entire methodology. It is no surprise that sales reps frequently complain that they are ill-equipped to explain differentiated benefits.

One effective solution is to reposition yourself relative to the competition by broadening the value proposition beyond the product. Sometimes, there is simply too much similarity to differentiate on product alone. In that case, look for other factors to differentiate on, such as contracting and account management, exceptional customer service, a strong and loyal user community, extraordinary subject-matter expertise, a track record of perfect and proactive regulatory compliance or a strong brand.

This type of repositioning is what creates your unique value proposition. To truly differentiate, you will likely need to identify at least two, and ideally three, specific elements. On their own, each creates a challenge for the competition. Combined, the cumulative effect can create an obstacle that makes it difficult for other vendors to successfully compete. The beauty of this approach is that when you articulate unique value propositions, you do not need to compete on pricing.

Put the Methodology Into Action

Creating a unique value proposition is not something that can be churned out on a Friday afternoon. It requires an investment of time and resources. Getting it right means organizing a structured workshop with a defined format and methodology, perhaps at an off-site location. It can require anywhere from half a day to a whole day, or more.

Product marketing should own this effort (or product management, in the absence of a product marketing function.) It requires active participation from a customer-facing, cross-functional team that intimately understands the market, the larger context, the customer’s pain, the competition and the sales environment.

In practice, participants will include the product manager, a marketing representative and a sales rep. It is also helpful to have a sales director involved. By giving the sales director a stake in message development, you will have more credibility (and an ally) when it’s time to train the sales organization. Also, consider including subject-matter experts, such as implementation consultants, since they are down in the trenches with customers and can advocate as a customer voice.

Once the team is assembled, set clear expectations. Try to speak with each person ahead of time to ensure their understanding and get buy-in. To ensure everyone is focused on the value propositions, ban computer and phone usage, unless directly related to the topic.

A successful workshop needs a leader who will ensure that the team is focused on explaining business benefits, not features. This is easier said than done. Customer-facing teams have been so conditioned to sell features that sheer inertia will keep taking them back to this route. When the discussion inevitably veers toward features and functions, the leader must steer the group back on track.

While it is possible to conduct a virtual workshop, I discourage it, because participants tend to be less focused. Your company has already made an enormous investment in building the product, so make the additional small investment to get the value propositions right. Now is not the time to take shortcuts.

Finally, you will need external validation of your value propositions. Start with a channel partner and a close customer or two. Once you have gathered initial feedback, float a trial at a couple of prospect sales opportunities and start to gather the larger market’s feedback. Sales reps will need to gauge the audience’s reaction. This is tricky, because no one wants to risk jeopardizing a sales opportunity. Ideally, sales team members who participated in the workshop will test the new messaging.

The Output—The 3x3 Value Proposition Matrix

What does the output from a workshop look like? Aim to generate a set of three focused, customer-centric messages about how your solution addresses the business problems. Your differentiated value proposition will make you the clear, logical choice; the other vendors will resemble banal clones of each other.

More than three value propositions will dilute your message and confuse the audience. However, not every customer is identical, so you want to give yourself some flexibility to massage the message.

Here are some examples of customer-centric benefit statements that explain the business benefit. With each main bullet point, provide specific proof points of how your product or company delivers the stated benefit. Ideally, these proof points will include metrics that make a direct connection to ROI for the customer (e.g., X% process efficiency leads to Y fewer FTEs hired next year, which translates to $Z reduction in labor costs).

Increases customer satisfaction through consistent data, simplified processes and accurate billing
• Proof point 1
• Proof point 2
• Proof point 3

Enables fast, evidence-driven decisions
• Proof point 1
• Proof point 2
• Proof point 3

Maximizes revenues with a more efficient and productive sales organization
• Proof point 1
• Proof point 2
• Proof point 3

The 3x3 matrix represents the core of your differentiated value proposition and should inform all messaging. You will use it to train the sales and marketing teams, for collateral, the website product description, as talking points for executives, for public relations, and for customer-facing sales slides and demos. All messaging should revolve around these value propositions. It’s the best way to demonstrate your ROI, ensure consistent messaging and help customers understand how your product will solve their business pain. Even better, it will set you apart from your competition.

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