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How to communicate your product’s real value to prospects Distill your product’s promise into clear, concise, and credible prose and you have a value proposition. But, according to Wendy Armstrong, values are highly individual, so you may need a small library of them, depending on your audience and their distinctive needs. Citing experiences from different technology product strategists as well as events in her own professional life, Ms. Armstrong walks through the steps in crafting a family of solid value propositions. SmartOps Inc., a Pittsburgh-based maker of multistage supply chain optimization software, can not only claim fantastic returns on a customer’s investment, they can actually document them. Tractor-maker John Deere, an early SmartOps customer, saved a cool billion dollars as a result of using the system. That’s “B” as in Billion. And with such a dramatic example to point to, you’d think all they would have to do is stand back and watch the orders flow in. But you’d be wrong. As impressive as those savings are, SmartOps still faces an uphill struggle in winning new business. Cliff Isaacson, the company’s Vice President of Product Management acknowledges, “We still face a number of obstacles in closing customers, even after proving tangible ROI.” Greg Coticchia, CEO of LogicLibrary, another Pittsburgh software startup, agrees. “We’ve been ROI-ed to death in this industry. People are skeptical when you say you are going to save them money,” he said. “It’s not reasonable to believe that everything you buy will end up saving you money.” Challenges everywhere Every day, your customers and prospects are getting barraged with new technology solutions, each being touted as the Next Big Thing. They are also facing their own pressures to cut costs, increase revenues, and improve efficiency. As a result, you may experience long sales cycles, brutal pricing battles, complicated decision-making, and organizational structures which are nearly impossible to navigate. A persuasive value proposition may be your answer. Well crafted and effectively used, it can stimulate real customer interest, shorten sales cycles, increase revenues, build customer loyalty, and help make you heard above the noise of your competitors. The central objective of a value proposition is to convey to customers and prospects that you understand their needs and that you have a credible and attractive solution to their problem. This requires careful attention to the content of your value proposition, as well as to the approach you take in developing that message, knowing when to revise it for a changing market and, most importantly, how well you live up to it. Product research and value proposition research are not the same Your company may already spend a significant amount of time integrating customer requirements into its product development. Yet it still struggles to close deals. Why? According to Tom Murray, recently VP of Marketing for Marconi and now VP of Product Management for the Haley Enterprise, “there is a big difference between product research and value proposition research. Many people confuse the two.” Product research is centered on the features and functions of the solution you offer. Value proposition research however, should be focused on determining the customer’s strategic needs, their circumstances, their role in decision making, and the resources they have available to execute on a buying decision. Find the value To research where your prospects and customers find value, start by asking yourself a few questions: what does your company, product, or service do to help your prospects and customers achieve their goals? If you don’t know the answer, spend time with your customers. How do they define success for themselves? Is it to reduce production costs, increase revenues, improve efficiency? Chances are good that your customers and prospects already have strategic initiatives in the works to move their business goals forward. Align your solutions with those needs and initiatives and you’ll have a much greater chance of winning their business. Find the pain Talk to your customers and prospects about industry pressures and how those pressures affect their business goals. What concerns do they have? Where do they see their organization going in six months, a year, three years? Ask different customers these same questions and you will start to see market trends and undiscovered opportunities. Most importantly, you’ll know what keeps your customers awake at night. If you can make their problems go away, they will happily pay you for it. TrueCommerce, an electronic data interchange (EDI) solutions provider in Wexford, PA is an excellent example. TrueCommerce didn’t start in the EDI industry; they began by providing application support to small and mid-tier companies in the late 1990’s. At that same time, Wal-Mart and other leading retailers were driving for greater efficiency and relying heavily on EDI to reduce costs from their vendors. As a result, TrueCommerce’s customers – many of them vendors to the major retail chains – faced a great deal of pressure to either jump on the EDI bandwagon or lose business from their large accounts. For companies without large IT departments, EDI was a costly, difficult and painful process. TrueCommerce recognized that problem as an opportunity and provided a solution which was “simple to use, robust and affordable.” Their core value proposition, “We make EDI painless,” directly addressed their customers’ strategic needs under those specific circumstances. Change the Lens Value, however, is highly individual and dynamic – it changes based on the person you are speaking to, the timing and the situation. One customer account alone may present multiple buyer personae: the ultimate user, the manager, the executive, and the buyer – each with their own way of perceiving value. Your job is to adapt your message so it speaks directly to each of them. The engineer using your product has certain objectives he or she needs to meet, but the person who writes the check may be focused on something entirely different. Greg Coticchia’s advice: “Keep the core of your value proposition message, but change the lens.” LogicLibrary, for example, has a core value proposition for their product Logidex: “Logidex enables faster and less costly consolidation, migration and/or integration of enterprise applications.” When they are speaking with lead software architects as their audience, the value proposition changes to language more consistent with a technical listener. When it comes time to talk with venture capitalists, the message changes again. Understand buying behavior It’s a lot of work to craft a different message for each audience. Tom Murray suggests, “Look at how deals have been won in the past. Who were the champions for your solution? And who are the decision makers? Talk with them and ask the tough questions to determine buying behavior within that organization.” Topics to examine include: How does the organization make buying decisions? Who has the authority to sign off on a purchase? Can a higher authority overturn the decision? How are people compensated? Are there incentives in place for reducing costs? For not spending money? These are admittedly difficult questions, but the information is critical in determining how many different buyer personae you’ll need to address and how best to address them. In late 2003, I experienced first-hand how important it is to understand the buying habits of a target audience. I was working as a Project Manager for a solutions partner of a well-known west coast software company. My job was to help implement a Proof of Concept project with a manufacturing company in Pittsburgh. The POC, which was initiated by an internal champion there, lasted for over 6 months. During that time, the product proved itself, demonstrating; that it worked as intended. Beyond that, there was a strong ROI at the Business Unit level that would save the corporation several million dollars. We thought we were in great shape as negotiations began. The prospect, however, decided not to go ahead with the estimated one million dollar purchase. Confused and frustrated, we realized our mistake too late: the decision-maker and the champion didn’t share the same values and we had not changed our message to address the decision maker’s needs. Even more important, we did not understand the buying behavior of the organization we were engaged with. That buyer, we came to learn, had a single motivating initiative in 2003 – to cut $11 million from the budget he controlled as IT Director. This purchase did not move him any closer to his goal; in fact, it hindered him. The ROI to the Business units and the corporation wouldn’t reflect on him, his personal performance, or his department’s performance. So there was little motivation for him to move forward. Not only that, his personal compensation was tied to reducing costs. We should have dug a little deeper. In hindsight we realized, the target should have been the business units which would directly benefit from the ROI and had the resources for the purchase. Understanding buying behavior will help you avoid these types of costly mistakes and create a value proposition that is truly focused and effective. Be believable Once you know your customers, their problems, their values, their buying behavior, and their means, your message has to convey a sense of trust and understanding. Try to avoid using such clichés as best-of-breed, state-of-the-art, world leader etc. These terms are so widely abused and hackneyed that they don’t instill a sense of trust. More likely, your audience will tune you out as soon as they hear them. Instead, the core of your message should state the problem you are trying to solve and how you are going to solve it in a way that is different from your competitors. Focus on areas that are meaningful to your customer based on the research you have completed. Some topics to consider in addition to ROI include convenience, quality, service, domain knowledge and risk tolerance. “It must be believable and quantifiable,” according to Tom Murray. The best way to be believable is to be as specific as possible. If your strong suit is customer ROI, be prepared to back up your statement. SmartOps uses customer statistics, which show an average ROI of 20-40% over a period of months. If the prospect is still not convinced, they are encouraged to engage in a proof of value project – a rapid, fact-based analysis of how their supply chain’s performance could be improved through the use their software. By the conclusion of the proof of value, the prospect can base their buying decision on concrete numbers. Because information technology is so deeply embedded in every aspect of businesses today, claims that were once considered intangible can now be proven. Quality can be measured by tracking returns and repairs. Customer service can be measured with call center statistics. Convenience can be backed up with support infrastructure and services such as EDI, e-commerce capabilities, and special shipping options. Domain knowledge can be illustrated by highlighting the collective experience of your staff. Customers today are all too familiar with companies who make generic claims of value. To stand out from the crowd, make a quantifiable claim and then back it up with specifics your customers can trust. Test your message In many organizations, crafting the right value proposition is the responsibility of the Product Manager. It is unlikely however, that the Product Manager will have final say. As Tom Murray points out, “The Product Manager may own the value proposition, but it must be field-proven before being adopted. Adoption will be more important than approval.” There is really only one way to test your message: get in front of customers, prospects, and evaluators. Greg Coticchia makes a habit of attending face-to-face customer meetings in order to test that message. His theory: “It’s okay to not get your value proposition right the first time or even the second time. Just fail fast so you can make changes and move on.” How will you know when you have it right? Your customers will tell you. Cotichhia notes, “You will see it in your win/loss reports, your revenue will increase, your sales people will be more confident because deals will be easy to close.” Know when to change How do you know when it is time to change your message? Value is dynamic and is directly related to the circumstances your customers are experiencing. If you are diligent with your value proposition research and continually talk with your customers and watch what’s happening in their industries, you will know when it’s time to make a change. If you have lost touch with your customers for one reason or another, there will be unavoidable signs: you may experience a loss of business to your competitors; sales cycles will lengthen; margins will start to erode; deals in general will be harder to close. The message should ring clear; what you are offering is no longer aligned with your customers’ priorities; circumstances have changed and you need to change with them. Execute on the message Actions speak louder than words. The best way to attract and retain loyal customers is by executing on your value proposition. To establish trust, you must follow through on what you promise. Many organizations have a hard time with execution. If your organization is falling down on execution, put yourself in the customer’s place regarding your company’s product or service. If that isn’t possible, revisit your value proposition and determine where the gaps are. It may be necessary to under-promise in order to ensure follow-through. Customers will be happier if you promise less and deliver more. ABOUT THE AUTHOR: |
