How to Develop a Value Proposition

By Julie M. Hansen

A value proposition is a clear statement of the results that the prospect can expect to receive from your product or service. Because your sales presentation will be organized around this value proposition, spend the time necessary to get it right.

A weak value proposition leads to a weak presentation with very little persuasive power, whereas a faulty value proposition can lead your prospect right into the waiting hands of your competition. Here, you discover what goes into a strong value proposition, how to customize it for your audience, and how to avoid falling into the typical value proposition trap.

Eyeing the qualities of a compelling value proposition

A value proposition needs to resonate instantly with a prospect in order to be successful. It does this by connecting the benefits of your solution to your prospect’s unique goals and objectives using the following qualities:

  • Relevancy: A good value proposition is always seen from the prospect’s eyes and is relevant to his goals and objectives, not a simple rehashing of your marketing positioning statement or a list of your strongest benefits. For example, if your prospect’s goal is to increase sales, the fact that your company provides tools for greater sales productivity isn’t relevant as it stands. If you reposition it to say that “We can help you increase sales by giving your reps tools that allow them to respond to leads 25 percent faster,” then you have shifted the focus away from your company and to your prospect’s interests, making your value proposition much more relevant and compelling.

  • Specificity: Vague statements of improvement aren’t sufficient today. Your value proposition should include a specific claim in order to get your prospect to sit up and take notice. Sophisticated decision makers roll their eyes at general claims like, “We can save you money” or “We help improve your bottom line.” Questions leap to mind: How much can you save me? In what time period? Where does that savings come from?

  • Uniqueness: Because most presentations answer not only the question “Why should I buy?” but “Why should I buy from you?” your value proposition needs to point out why you’re superior to your competition in areas that are important to your prospect. It’s true unless you’re the exclusive vendor in your industry (and even then keep in mind, you’re often competing with the status quo).

  • Believability: A strong value statement provides proof. In other words, your prospect wants to know, “How do I know what you’re saying is true?” You need evidence which can come in several forms:

    • Testimonials: Independent third parties, customer stories, or business case results can all help substantiate your claims.

    • Proof of concept: Although often expensive to implement, the ability to test drive your product or service in the prospect’s own environment can be the best way to prove value for skeptical prospects.

    • Tangible results: External or internal research that shows actual data or ranking around the area of value can help prospects feel confident that you can do what you say you can.

Tailoring your value proposition

A much more robust value proposition that delivers on all of the qualities discussed here is tailored for your specific prospect and aligns your benefits with the prospect’s goals to arrive at value. Here are the areas you want to customize to reflect the true value of what your product or service can do for your prospect’s business:

  • The prospect’s goal or objective: During your discovery process you’ll have defined what your prospect’s goal — or goals — are. If your prospect has several goals, rank them according to their importance for your prospect and your ability to impact them.

  • An action verb: This is what effect you have on the prospect’s goal: Increase, reduce, drive, eliminate.

  • Outcome: For your value proposition include the outcome of the area(s) that can have the most impact helping the client reach his objective(s). For example, employee retention, speed to market, sales revenue.

  • Figures or statistics: Prospects want to see concrete results, not vague promises. Quantify what outcome they can expect to see from your solution. When you uncovered your prospect’s goal, it was likely expressed in some type of key performance indicator (KPI), such as revenue, year-over-year growth, cost-per-unit, and so forth. Be sure to speak in the same terms that your prospect uses.

  • Competitive advantage: Where do you outperform your competition? In almost every case your prospect has other choices when it comes to achieving his goal or solving his problem. Therefore a strong value proposition also states your key competitive differentiator, answering the question “Why should I buy from you?”

  • Proof: Saying that you can solve the problem isn’t always enough. High ranking executives demand proof. Claiming “we can increase your ROI by 10 percent” can raise healthy skepticism, but following it with “as recently achieved by one of our customers” provides assurance that you didn’t just pull it out of the air. Letting your prospect know early on that you can justify your claims is a strong differentiator.

Refer to the following figure for an example of a slide illustrating a tailored value proposition

A tailored value proposition. [Credit: Illustration by 24Slides]

Credit: Illustration by 24Slides
A tailored value proposition.

Comparing a tailored value proposition with the typical formula for value

Many feature and product statements masquerade as value propositions. These typical value propositions often follow the fill-in-the-blank formula:

“We do X for Y so that they can Z.”

Here are two examples of typical value propositions compared to tailored value propositions:

  • Example 1:

    Typical value proposition: “We keep your data safe in the cloud so that you can provide increased security for your customers.

    Tailored value proposition: “We keep your data safe in the cloud, which allows you to increase security for your client’s data by as much as 90 percent (added figures) as our audited report will show you (added proof).”

  • Example 2:

    Typical value proposition: “We help financial institutions reduce manual reporting, which allows you to reduce costly errors and cut administrative time spent creating reports.”

    Tailored value proposition: “We help financial institutions reduce manual reporting, which allows you to reduce costly errors and cut administrative time spent creating reports by 20 percent (added figures) based on the results our current customers are achieving (added proof).”

When you compare these two you can see that the typical value proposition isn’t as relevant, unique, specific, or believable as the tailored version. In other words, it lacks the qualities of a compelling value proposition.