A few weeks back, I had the pleasure of watching 50 IEEE CNET consultants help one of their own develop a compelling value proposition. It was really fun. Here's what happened.
I had just presented "Creating a compelling value proposition: Turning your solutions from a 'so what' to a 'must have.'" Then, I announced that we needed a client who wanted to improve his or her value proposition.
This would be his or her opportunity to benefit from the others' advice. The rest of the group would get a chance to use what they had just learned; and I would have the opportunity to see others try to apply the methodology that I had developed to help my clients ensure their marketing messages hit the mark.
Finding clients can be hard
No one volunteered to be the client. Instead, a wise guy in the back of the room said, "That's our perennial problem, we need clients." And in so doing he raised his hand as a qualified prospect.
I invited him to join me at the front of the room to tell us about his business and take a first pass at articulating his value proposition. The others were charged with helping him develop a value proposition that would meet six criteria: It needed to...
- Speak to a pressing concern
- Focus on a single benefit
- Be specific rather than general
- Be clear and concise
- Create a sense of urgency
- Mitigate the buyer's risk
Good value propositions address a pressing problem
Then, the consultation began. The client told us that he developed fully documented software for embedded systems. The group then had a series of discussions and posed questions.
They agreed that they understood what he did when they heard the phrase "fully documented," but they felt that could address a multitude of concerns. Which was most pressing? And was that concern really more pressing than his prospects' other concerns? And, if so, was that what his prospects worried about most at the beginning of the project when he would need to attract prospects' attention?
Good value propositions are about outcomes, rather than process
For a while, the conversation devolved into questions about his process. That led to the suggestions about how he could incorporate insights about the process into his value proposition. But that violated both the "pressing concern" and the "clear and concise" rules.
They went back and forth for a while and decided that the value he provided was that his methodology "put the customers in control" at every stage of the process. Then, they pushed harder.
Good value propositions elevate a business above its competition
They felt that he still hadn't distinguished himself from other consultants—and that this value proposition wouldn't make him memorable when projects arose. One person pressed him to focus on an industry. Another asked about the specific embedded applications he had worked on.
He said that the solutions he developed always worked when they were deployed. Someone asked about whether he was willing to guarantee that. He said he would. But that raised the question of whether he charged by the project or by the hour? He said he charged by the hour. Was that a compelling guarantee? Wouldn't clients have to bear the burden of repeated attempts to get it right?
Everyone prefers experts
The group pressed harder for distinguishing characteristics. They expressed a concern that if he didn't position himself in an expert in a specific area, he wouldn't get a premium for his services. I reiterated this point by distinguishing between a lifestyle business and a profit-maximizing enterprise.
The conversation went back and forth for about an hour. Over that time, the client continued to narrow his target audience and hone his value proposition.
In the end, the group came up with a value proposition that it found compelling. Their client had extensive experience developing complex real-time embedded systems for clients whose prior attempts to do so had failed.
Good value propositions meet the six criteria cited above
Then, they checked to see whether the value proposition met the test. It did.
It addressed a pressing concern. The ideal prospects had failed before and now really needed to get it right. It focused on a single benefit: "success after failure." It didn't need to create a sense of urgency. These prospects were already in severe pain. Their previous failed attempts had put them under pressure to move quickly.
This value proposition also mitigated prospects' risk by citing the fact that he had extensive experience. While the value proposition didn't include supporting evidence of his past successes, just the mention was enough to capture attention. When prospects asked, he was prepared to provide at least seven references that would validate this assertion.
Good value propositions help others refer business to your company.
Then we did a crosscheck. I asked whether the value proposition caused the audience to immediately think of someone they could refer to the client. It didn't; but they agreed that they now knew exactly who needed his services and would recommend him as situations arose. Fifty new referral sources—now that's real value!
Developing a compelling value proposition can be hard work
Developing a compelling value proposition can be hard work. This one was easier than most.
The client was selling aspirin, not vitamins. The solutions he provides aren't just "nice to have" or merely important. They are essential to his prospects. Nevertheless, people do buy vitamins as well as aspirin.
This client was able to perform research on the spot to determine which of the many benefits he offers is most compelling. Moreover, thanks to the workshop setting, he was able to speak with representatives of 50 companies in his industry at once.
Most companies aren't as fortunate. They often need to conduct multiple interviews—and convene several times to discuss their findings—before they figure out what their customers and prospects value most.
A lot of companies fail to develop detailed profiles of their most promising prospects, and therefore miss out on markets that are more profitable than the ones they are serving. The client in the workshop avoided this misstep because his peers didn't let him off the hook. Instead, they pointed out that those who fail to specialize face a lot of competition and downward price pressure.
It can be hard for companies—especially those that have a steady stream of paying customers—to exert the discipline to explore new markets that may be more profitable.
Compelling value propositions dramatically accelerate revenues
The good news is that companies that do invest the effort to hone and validate their value propositions always get a huge return on their investment.
Because they know exactly what prospective customers want, they can develop "must-have solutions" and compelling marketing messages. Once that happens, prospective clients start calling them rather than the other way around. Now, that's fun.