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Do people really understand the value of a value proposition?

In working with start-ups and new business, I have noticed that no one is really helping them understand the value of a value proposition. This is an area I spend a lot of time on. I have a very clear view of that goes in one ... what do you think makes one up?

I would also be interested in hear examples where working one with a team changed how they viewed what they were doing.

Thanks

Nigel

18 Replies

Pierce Wetter
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Pierce Wetter Entrepreneur
Front End Principal at Skyport Systems
We are all in sales. :-)

Here's an article I wrote on Linked In to explain how to use a Value Proposition to sell someone an idea internally:https://www.linkedin.com/pulse/20140802015520-4044-promoting-your-ideas?trk=mp-reader-card

And here's a great book on building VPs:Value Proposition Design
Charlie Garland
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Charlie Garland Entrepreneur
Presenter: "Cognitive Buoyancy®: The Trigger to Innovative Thinking" at ISPIM
Nigel, one of the world's leading authorities on Value Proposition design is Dr. Mohan Sawhney, who is (or at least used to be) professor of Innovation and Marketing and Kellogg School of Business. If you Google him -- or, better yet -- search for him and/or Value Prop's on YouTube, you'll see some very helpful videos that discuss various aspects of his VP framework, which gives you (and entrepreneurs you may be trying to counsel) a rich, tangible way to assess and enhance any VP. I've helped clients do this, so if you have any specific questions, I'd be happy to chat with you about it...
Jesse Noyes
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Jesse Noyes Advisor
Director of Product Marketing & Inbound at Kahuna
Hi Nigel,

This is just personal experience, but I've noticed a strong correlation of internal buy-in for a value prop and the level of competition in the startup's market. When the startup is truly novel, sales and marketing are primarily focused on winning logos and closing deals, and feel a value prop is too high level to be useful. (This is particularly true in early stages when each deal involves a ton of personalization.)

As the competition heats up, however, sales and marketing start to realize they need to sell more than current capabilities, pricing flexibility, etc. They need to provide the customer with a vision for the value the company will provide, and will continue to innovate on. This is when they start begging for a value prop.

The way I've sold this internally in the past is by offering examples of market leaders in highly competitive markets, pointing specifically to how similar their products/features might have been early on, but how the value propositions differentiated them as the market grew. This gives people a reason to think ahead and create consistent value props now and planting them in the head's of their future customers.
John Currie
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John Currie Advisor
ITERATE Ventures - Accelerating Science & Technology Ventures www.iterateventures.com
Nigel,

Great point! (I agree) and good question. Here's one of my real-world examples of how the same technology/product produces THREE very different value propostions ...

The core technology is a low cost-3-camera device, with some elegant recognition software, that recognizes sporting events and requires no human interaction for filming.

VP #1 - Schools would want this to capture their games. CapX budget item, out of reach for the masses, but would work for the top tier. Pain point is that the school needs more & better capturing of events.

VP #2 - Sports Production Firms can lower their production costs of events. Bigger players, licensing & CapX models discussed. Pain point is that production costs are too high.

VP #3 - Sports Networks can create an exclusive content network - think high schools - very easily. Pain point - enablement of lost cost content + exclusive.

All three are viable btw. All three have very different business plans/financials.
Jeff McCreary
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Jeff McCreary Advisor
Business Growth Expert and Independent Board Member
The best way I have found to address this is to get the folks focused on "Benefits" as opposed to "Features." I find Feature Focus to be VERY prevalent in the high tech world (noted your SW background). Not nearly enough time and energy is spent addressing how the product/solution deliver benefits (value) to the user. Great companies learn how to quickly, succinctly, and compellingly articulate the benefits that a user receives from their product/solution. I feel it starts with an understanding that the entire point of business is to convert KNOWLEDGE (you know how to create a product/solution that delivers compelling value to a user) into ECONOMIC VALUE (Money basically That is, you will get paid for the value you deliver). Cheers: jsm
Mary Anderson
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Mary Anderson Advisor
Advisory Board Member at Choix LLC
I'm also a strong believer in getting clear on your value proposition. If this is done properly it should not only help to build compelling messaging but help you truly reach your audience. Value proposition is also a great tool for building a strong road map.

I was helping one of my startups with this and it really changed the way we were messaging the product and who we were going to target. Our GTM plan was modified to reflect our new value prop and with a refined audience allowed us to be more efficient with our marketing.
Martin Omansky
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Martin Omansky Entrepreneur
Independent Venture Capital & Private Equity Professional
Nigel: there are of course many ways to fairly describe a value proposition. Our way is to estimate the relative improvement in efficiency over the existing product or service. We look for increases of performance or efficiency or price that is an order of magnitude better. We then cut that estimate in half, to factor for chutzpah and expected shortfalls. Of course, this approach is not as effective for electron-based innovations. Our focus is on innovations involving atoms and molecules. There are actually very few innovations that meet our criteria. Incremental improvements do not make for impressive value propositions. Sent from my iPhone
Jim Dixon
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Jim Dixon Entrepreneur
President & CEO at Cartbound Corp.
Nigel, I believe that the "value of the value propostion" is often misunderstood. Often I hear startups describe their value proposition as "what we do", rather than how their customers receive real and perceived value. Also, how does the value proposition relate to the brand promise that firms need to articulate to their prospects? Does Marketing think carefully about how they tie their brand promise to the value proposition?
Nigel Dessau
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0
Nigel Dessau Entrepreneur
Chief Marketing Officer at Wellsmith, LLC
Thanks. I did an episode on this for my 3 Minute Mentor series. You can find it here:http://www.the3minutementor.com/episode-24/
Ron J. Williams
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Ron J. Williams Entrepreneur
Entrepreneur. Digital Strategist.
I think this is a great question and part of a larger discussion about value. In my experience, teams tend to have an idea of what they think their customers (or more often in early stage companies their prospective customers) should value. The result is a sales pitch and product roadmap that reflects these aspirational and potentially ungrounded values. So even if they can articulate the value they are proposing, they may still have a problem.

If, by definition, the value proposition ("value prop" for short going forward) is the clear articulation of WHY what is being offered is important to and relevant for a target, then the value prop is only good if it lines up with two other kinds of value:

  • True Value - The direct fix for the way in which a customer's pain manifests itself in their workflow (e.g. Look, this new analytics package finally lets me pull in data from tweets and facebook posts into reports)
  • Perceived Value - The way in which the customer values the solution in their own very real life...and usually the thing a person PAYS for (e.g. Holy CRAP! This new reporting is beautiful and gives my micro-managing boss a way to scan a screen and see how hard I'm working)
Teams need to appreciate that to succeed they've got to understand 1) how their prospects/customers live, work and hurt, 2) which specific pain point they're tackling, 3) how their solution is better than what's already on hand and finally 4) be able to convey 1-3 crisply.

That IMO is where good value props come from.

A good example of refining value prop: I was consulting a sports-facility organization that successfully was getting its best customers to make multiple purchases each year over multiple years. Upon closer inspection of the data and through customer interviews we helped them to realize that what their most prolific spenders were paying for was not each individual program (i.e. afterschool, summer camp, outdoor league) but access to the facilities and great coaching staff. We helped them test into an exclusive VIP tier of membership-type all you can eat pricing for their best customers.

Result: actually take pain out of spending AND increase predictability of revs in highly profitable segment. The we realigned the value prop around convenience and perceived value of exclusivity.
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