Will the Real Value Proposition Stand Up?

The “Bad” – trying to market a
product/service without having a clear, well-written value proposition

I’ve worked
at some great companies but have been amazed at the lack of understanding
around the term “value proposition.” Try
this at your office … ask a bunch of different people in marketing, product management,
sales and R&D to define a product’s value proposition. I’ll bet that you get very different answers. The most common answer I’ve heard explains the value of the product by describing the main feature/benefit. For example, this security software helps users keep their data secure
as it is sent over the Internet, and thereby prevents identity theft. Unfortunately, this, and most other
descriptions of value like Wikipedia’s, don’t go far enough to describe the real value of using the product.

I like the structure of the Wikipedia approach but it is more appropriate for B2C products.  In B2B marketing it is critical to explain how the product enables the
customer to 1. avoid costs, 2. lower costs, 3. protect revenue, 4. increase
revenue.

For
example.

By
protecting sensitive information from online theft, the xyz software enables large financial institutions to:

1. Avoid
   costly government penalties for privacy breaches and damages from class-action
   lawsuits.
2. Lower your labor
   and communication costs since IT, legal, and marketing do not have to spend as
   much time fixing breaches or mailing communications to customers whose data has
   been stolen.
3. Improve
   loyalty / reduce defections (protect revenue) by marketing the fact that your
   service protects customers from identity theft better than the competitors.
4. Increase
   revenue by offering new high-value products online that you could not offer
   previously due to security concerns.

Of course this is a greatly abbreviated version and a proper value proposition contains a lot more elements, but it is essential that you focus on the financial values. They are
what your customers care about and are measured on…top line growth and bottom
line growth. Therefore, smart B2B
marketers write up detailed value propositions for each of their products and
communicate them to all internal audiences as the basis for all
marketing activities. If your employees
don’t understand the real value of the product, how are they going to
communicate it to customers?