My daughter is a recent graduate who is making waves in the public relations and event management space. I’m incredibly proud of her, and perhaps the best part of my week is when she stops by to “talk shop” with me. Kait recently shared that she’d learned about a company that was struggling to get traction despite some amazing work they were doing in their segment.
I asked her what their value proposition was.
She responded that they were passionate and committed to the service they were providing, which was unique in a space that was very old and stale.
That’s not a value statement, I responded, that’s what they do. They’re having a difficult time building traction in their space because they’re focused on the deliverable and not the benefit. If you’re a company building widgets, a deliverable is great. But if you’re a company selling services, you have to define the value that you’re providing the company in exchange for the funds they’re paying you.
This was a problem in my own business years ago. I continued to sell websites, web applications, site optimization, and content services. It was a race to the bottom because you’re just an SKU on the service counter next to all of your other competitors. We continued to get turned down for projects that we priced out competitively based on our internal costs. And when we saw the results of the agency we were going against, we were even more irate.
A decade behind us, we no longer promote that we build websites despite the dozen or so we design and develop each year. Our value proposition isn’t building a website. Our value proposition is that, for a moderate investment, we can create a digital presence that delivers measurable business results for our clients. The end results included a website but expanded well beyond with integrations, landing pages, optimization, analytics integration, and anything else necessary for our clients to build their businesses online.
An analogy that works is the difference between the grocery store and the restaurant. You can go to a grocery store and grab a frozen pizza for a few bucks. Or, you can go to an amazing New York-style pizza shop and get a masterpiece. Both are pizzas. Both are sustenance. But the value of the restaurant expands well beyond the frozen pizza — with service, a variety of beers on tap, a great atmosphere, some garlic knuckles for the appetizer, no dishes to clean up, and leftovers for tomorrow. I’d gladly spend $40 for a pizza at my favorite pizza shop because of the value it brings.
People and businesses are willing to always spend more based on the value proposition of the company. The exception, of course, is if your value proposition is the fact that you’re inexpensive. Unless you’re Walmart, that’s most likely a race to the bottom.
If you look at the millennials, they are the first generation now who are willing consciously to spend more for better quality, for sustainability, for traceability.Peter Brabeck-Letmathe, chairman of Nestlé, told CNBC
He’s correct. Of the 30,000 respondents to Nielsen’s 2015 global online survey, 66% said they would be willing to pay extra for sustainable goods. An American Express survey found 73% of consumers were willing to pay more for a better experience with the brand they did business with. In fact, Podium research found that 68% of consumers would be willing to pay 15% more for the same product or service if they could be guaranteed a better experience.
How To Build Your Value Proposition
- What is the pain that you will relieve for your clients?
- How will you relieve that pain?
- Why are you different?
- Where have you accomplished this before?
Even with these four characteristics in a value proposition, you’re missing one essential attribute that will conquer all others. Branding coach Thaddeus Rex denotes this as unconscious attribution in The Science of Charisma, his process for businesses and individuals to develop their brand. These expectations are set with words, visuals, body language, clothing, and charisma.
More important than what your value proposition is, is how you present your value proposition. The value of your proposition is the value that’s determined by your prospect or customer — not you. So a value proposition must start with understanding your prospect and what their pain is. Listening is the key element in delivering your value proposition.
How To Deliver Your Value Proposition
- Listen to your prospect and customer to determine what their pain points are.
- Determine whether or not you can help alleviate their pain within the timeline and budget you discuss.
- Personalize your value proposition to their pain points, explaining how you will do it, why you are different and where you’ve accomplished this before.
- Get to a no so you don’t waste any more of your prospect’s time. A simple question like, “Would you like to schedule a time when we can finalize a plan and budget around this?”
I’m going to leave negotiation for the next topic, but a value proposition should end in whether or not your prospect or customer shows interest in the products or services you are providing. If it doesn’t, go back to the drawing board.