How to Create Irresistible Value Propositions


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How to Create Irresistible Value Propositions

  1. 1. HOW TO CREATE IRRESISTIBLE VALUE PROPOSITIONS G. David Dodd Point Balance 1135 Holiday Dr Crossville, TN 38555 931-707-5105 September 2012
  2. 2. Why Read This PaperNo one needs to tell you that finding and winning new customers is moredifficult than ever. Business buyers now have access to a wealth of onlineinformation, and they can easily consider a wide range of products or servicesin almost every category.In this competitive environment, compelling customer value propositions areessential for effective B2B demand generation. Without clear and persuasivevalue propositions, your prospective customers will be left wondering why theyshould choose your solution instead of one offered by your competitors.The importance of powerful value propositions cannot be overstated. The 2012Lead Generation Benchmark Report by MarketingSherpa found that, onaverage, companies with clear value propositions produced lead generationROI’s that were 117% higher than companies without clear value propositions. Read this white paper to discover― • Why value propositions are critical for effective B2B demand generation. • What makes a value proposition compelling. • How to develop value propositions that will resonate with Without clear and potential customers. persuasive value propositions, potential customers will be leftWhy Value Propositions Matter wondering why theyA customer value proposition can be defined as a clear statement of thetangible and intangible benefits that a customer will obtain by purchasing and should do business withusing your product or service. The primary function of a customer valueproposition is to explain to potential buyers, clearly and persuasively, why your company.they should do business with your company. Therefore, the quality of yourvalue propositions will largely dictate the success of your marketing and salesefforts.Not only are compelling value propositions necessary for effective B2B demandgeneration, they provide the foundation on which your demand generationstrategy and programs are built. Creating a sound demand generation strategyrequires you to answer several critical questions. • What kinds of business organizations will make my best prospects? • What individuals in these prospect organizations are involved in the decision to purchase products or services like those my company offers? • What “arguments” will we use in marketing messages and materials to persuade potential buyers to purchase our products or services? • How will we demonstrate the value and return on investment that our products or services will deliver to customers?How you answer these questions will define the shape and content of yourdemand generation strategy and thus largely determine how successful yourdemand generation efforts will be. However, without a clear understanding ofCopyright 2012 by G. David Dodd. All rights reserved. 2
  3. 3. how your products or services create value for customers—that is, without aclearly defined set of customer value propositions—it is all but impossible todevelop sound answers to these critical questions.The vital role of customer value propositions can be illustrated with a simpleexample. If you’ve ever watched someone install a tile or hardwood floor on ahome improvement TV show, you may remember that the installer spent agreat deal of time making sure that the first row of tiles or boards is straightand square with the walls of the room. After the first row is in place, the restof the installation goes quickly. That’s because as long as the rest of the tilesor boards “fit” with the first row, the whole floor is almost guaranteed to turnout right.Customer value propositions are like that first row of floor tiles or boards, asshown in the graphic below. They provide reference points for the importantdecisions you make when designing your demand generation strategy andprograms. Having well-defined customer value propositions will make it easierto determine who your best prospects are, who the target audiences are foryour marketing messages, and what themes your marketing messages shouldemphasize. Weak value propositions usually fall into one of three categories: • They are too generic • They focus on product or service features • They lack credible evidenceWhat Makes Value Propositions CompellingDespite the critical role that customer value propositions play in effectivedemand generation, many B2B companies don’t do a particularly good job ofarticulating and communicating how their products or services will create valuefor customers. A survey of decision makers in B2B companies conducted bythe Corporate Executive Board found that only 57% of the “unique benefits”touted by sellers were seen by potential buyers as having enough impact tocreate a preference for a particular seller. (Being Unique Only Gets You So Far,Wide Angle blog, December 1, 2009)Over the past two decades, we’ve reviewed hundreds of the “valuepropositions” used by clients. What we consistently find is that weak valuepropositions usually fall into one of three categories. • They are too generic—Example: Our WhizBang ERP software will make your company more productive. Comment: How? What parts of the business will be affected? How will business processes be improved?Copyright 2012 by G. David Dodd. All rights reserved. 3
  4. 4. • They focus on product or service features—Example: Our marketing automation software fully supports event-driven marketing campaigns. Comment: So what? How will this capability help me improve my marketing results? • They don’t include credible evidence—Example: Our digital asset management software will reduce your marketing support costs. Comment: Why should I believe this? Where’s the proof?Not surprisingly, strong value propositions exhibit the opposite characteristics.They describe specific elements of value, they focus on business/economicresults or outcomes, and they include credible evidence to support their valueclaims. The following is an example of one compelling value proposition thatmight be used by a provider of marketing asset management solutions: Our marketing asset management solution will enable you to dramatically reduce the internal labor costs of processing and fulfilling requests for marketing materials from salespeople and channel partners. On average, our clients eliminate 90% - 100% of internal request processing costs.How to Build Compelling Value PropositionsTo build compelling value propositions, you need a clear understanding of allthe significant ways that your products or services can create value forcustomers. To develop this understanding, you’ll need to answer six basicquestions. Compelling value propositions describe • What are all of the significant reasons that people have for purchasing a product or service like mine? What problems or needs motivate the specific elements of buying decision? value, they focus on • What kinds of organizations are likely to have the problems or needs business outcomes, and that underlie these reasons to buy? they include credible • Who within the prospect organization is affected by each problem or evidence to support their need? Who has the most to gain if the problem is solved and the most claims. to lose if it isn’t? • What specific outcomes are these people seeking? • What features of my solution will provide these desired outcomes? • What will the economic benefits be if these desired outcomes are achieved (lower costs, increased revenues, etc.)?The best tool we’ve found for organizing the answers to these questions is acustomer value map. This tool is a spreadsheet that contains seven columns.Each of the first six columns holds information relating to one of the abovequestions. The last column of the spreadsheet contains potential valuepropositions. Each row of the spreadsheet addresses one way that a productor service can create value for a customer.We can demonstrate how the customer value mapping process works using anexample drawn from our work with several clients. Suppose that yourcompany offers marketing asset management solutions, and you need todevelop the value propositions that will be used to market those solutions. Theillustration on the next page shows what one row of your customer value mapmight look like.Copyright 2012 by G. David Dodd. All rights reserved. 4
  5. 5. The first step to building compelling value propositions is to identify all of the significant reasons that people have for buying a product orReason to Buy—The first column of a customer value map is labeled Reason service like Buy. This column is designed to contain all of the reasons that people havefor purchasing a product or service like yours. Each row in this column shouldcontain one and only one reason to buy. The example Reason to Buystatement is: I want to reduce the time we spend handling requests formarketing materials from our salespeople and sales partners because wagesand the time required to process requests are both increasing. Notice that thisstatement is written from the customer’s perspective. When you developReason to Buy statements, it’s important to put yourself in the shoes of yourprospective customers.Reason to Buy statements contain two parts. The portion of the statementbefore the word because should capture the emotional or “gut-level” essenceof the need. The portion of the statement after the word because captures theeconomic issue that is driving the need.Affected Organizations—In this column, your objective is to identify thekinds of organizations that are most likely to have the need described in theReason to Buy. The information that you include in this column will be a majorfactor in how you define your target market. You can describe AffectedOrganizations by industry, or you can use business characteristics. In ourexample, we say that the types of companies that are most likely to have theneed described in the Reason to Buy are companies with more than 50 outsidesalespeople and companies with more than 50 sales channel partners (dealers,agents, franchisees, etc.).Copyright 2012 by G. David Dodd. All rights reserved. 5
  6. 6. Affected Parties—The objective in this column is to identify the individualswithin the Affected Organizations who are the most affected by the problem orneed described in the Reason to Buy. As we said earlier, these are the peoplewho have the most to gain if the problem is solved and the most to lose if itisn’t. In our example, we identified the Chief Marketing Officer, the Chief SalesOfficer, and the Chief Financial Officer as the individuals who are the mostlikely to be interested in streamlining the process for handling marketingmaterials.Desired Outcomes—This column contains a description of the specificoutcome the Affected Parties want to achieve by addressing the problem orneed identified in the Reason to Buy. In some cases, the Desired Outcome willbe very similar to the Reason to Buy. In our example, the Desired Outcome is:I want to reduce what we spend to process and fulfill requests for marketingmaterials from our salespeople and sales channel partners.Solution Component(s)—In this column, you identify the specific features ofyour product or service that will produce (or enable a customer to achieve) theDesired Outcome. The previous parts of the customer value map have focusedon the prospective customer. This column is where you link your product orservice to what prospective customers want to accomplish. A typical marketingasset management solution reduces internal request processing costs byproving an online ordering system for marketing materials. Most MAM solution The six components of aproviders also assume responsibility for fulfillment. Therefore, these are the customer value map:features we’ve included in the example.Economic Benefits—This column of the customer value map contains a • Reason to buydescription of the economic benefits that the customer will obtain if theDesired Outcome is achieved. The key here is to be very precise when • Affecteddescribing the benefits. This information not only helps you develop a organizationscompelling value proposition, it also provides valuable input for thedevelopment of an ROI calculation for your product or service. • Affected parties • Desired outcomesValue Proposition—The final column in the customer value map contains thevalue propositions. At this stage, you create a value proposition for each • Solution componentsReason to Buy, although you may later decide to combine some of these value • Economic benefitspropositions. Don’t worry too much at this point about the exact wording ofyour value propositions. You can “massage” them before you actually use • Value propositionsthem with prospects.We’ve found that an effective way to write these value propositions is to beginby restating the Desired Outcome and then add a reference to the SolutionComponents. So in our example, the Value Proposition is: Reduce your costsof processing and fulfilling requests for marketing materials by using ouronline ordering system and fulfillment services.When we work with clients to develop customer value maps, we find that theyusually identify 10-20 preliminary value propositions for each major type ofproduct or service they provide. By eliminating overlaps and combining similarvalue propositions, the number can usually be reduced to between 5 and 10strong value propositions, which become the foundation of their demandgeneration programs.Copyright 2012 by G. David Dodd. All rights reserved. 6
  7. 7. For More InformationIf you’d like to learn more about how to create compelling customer value Point Balancepropositions, or if you’d like to discuss other issues relating to demand 1135 Holiday Drgeneration, contact G. David Dodd at 931-707-5105 or via e-mail Crossville, TN 38555 (931) 707-5105To read more of our current thinking, take a look at our other white papers. • What is the Real Value of Sales Leads? • Keeping Prospects Engaged from Curiosity to Close • Two Powerful Ways to Make Your Marketing More Relevant • Cracking the Growth Code: Winning Profitable Growth from New Markets • Lead Nurturing Plugs the Leaks in Your Sales Pipeline • Is a Marketing Asset Management Solution Right for Your Company?About Point BalancePoint Balance helps B2B companies design and implement buyer-focused andtechnology-enabled marketing programs that will connect with prospects andconvert those prospects into customers. Our marketing services include: • Marketing strategy development • Buyer persona development • Content audits • Content marketing programs • • Marketing content development Lead nurturing programs Point Balance • Lead scoring system development 1135 Holiday Dr • Marketing technology selection and implementation Crossville, TN 38555 • Marketing supply chain optimization 931-707-5105Copyright 2012 by G. David Dodd. All rights reserved. 7