At LeveragePoint, we often help product marketing teams craft value propositions for their innovative product offerings. Doing this work makes us appreciate the fact that quantifying value is a completely different task from communicating value. These are distinct skills sets and it’s a rare breed who can do both effectively. And it’s impossible to do them simultaneously.
The chief goal of value communication is to deliver meaningful, compelling messages to the attention-span of your customer. Done effectively, it heightens engagement, shortens the buying cycle and wins better deals for your company.
The best examples of value communication are artfully executed. The word “elegance” comes to mind. Or “crisp” or “straightforward”. Marketing pros will tell you that simple elegance never comes easily; it takes a ton of work to cut out the 90% of content that bogs down the message.
So product and marketing teams beware! You may have constructed a rigorous and detailed business case to justify your value price, but your commercialization plan goes nowhere unless you transform that into a value proposition that sales people can confidently take out into the field.
These are five common mistakes to avoid when creating a value proposition.
- Starting with a half-baked or dysfunctional value model. A solid value model quantifies (in $) how much better your offering is versus the competition. The logic of the quantification should be reasonable and based on a good appreciation of the customer’s business model. Furthermore, the value model should be consistent with the value-based pricing decision and competitive situation. It should clearly state: here’s our competitive edge. This is how much it’s worth to our customer. Here’s how much value we should capture in our price.
If none of that is crystal clear, then you need to iterate your value modeling and strategic pricing decision because the communication must be fully aligned. For example, is your product strategy to disrupt a market leader? Defend your core customer base? Enter a new market segment? Each of these strategic alternative demands its own focused communication. Fuzzy messaging tends to fall flat.
Likewise, if the pricing decision is inconsistent with the value analysis (because the price was set independently of the customer value work) then you are risking a set-up for failure. Slapping value messages onto a traditional cost plus price is hardly ever effective.
- Doing it as an afterthought. Again, our experience tells us it’s impossible to quantify and communicate at the same time. Likewise, it’s a serious mistake to underestimate the effort of writing good value communication. So for example, if you spend two weeks building and iterating a robust value model, don’t assume that writing compelling messages and supporting data charts can be whipped off in one sitting.
Instead, we advocate making the value communication effort a separate task. Enlist other team members with experience in marketing communication to give it the attention it deserves. Also, a little expertise in design and layout go a long way toward improving the final output. Allow time for multiple review/revision cycles.
- TMI Too Much Information is the most common mistake we see. An occupational hazard of building complex value models is the delusion that the entire world is dying to see it. They aren’t. At best, customers are only interested in 20% of what you have. So as a communicator your task is figuring out which 20% you should show “above the fold”- and of course there must be a fold (or an appendix or somewhere else) beneath to park the other 80%.
There could very well be a dozen great reasons to buy your product, but sales has only enough time to connect in just one or two (maybe three) swings. Like in baseball, sales people are called out before they get a fourth. Make some hard choices about what the customer really wants to hear first. One way to consolidate a long list of value drivers is to bucket them into a shorter list of themes, like operational efficiency, risk reduction, or revenue growth.
All value models can greatly benefit from a good clean-up. This involves re-organizing value driver formulas so that they are transparent and easily understood. Well-organized value quantification shows all the logic, but keeps more complex sub-calculations neatly tucked away to prevent needless clutter. We recommend structuring value driver formulas into two or three levels. In addition, complex value models require good variable management where a few key variables are easily accessed, while others can be found efficiently by searching or tagging.
Lastly, pay attention to the look and feel of your data charts. A well designed data chart can tell a compelling, rich story immediately. On the other hand, a cluttered and confusing chart can instantly derail the communication. There are several ways to display value (for more information, see this earlier blog).
- Delaying because of precision anxiety. The worst thing about this type of analysis paralysis is that it can seriously delay or prevent a value proposition from being seen by customers. It exists whenever teams lament about not having enough customer data. This is truly a shame, because all of the effort that went into building the value model is not leveraged by sales people who can really put it to good use.
Precision anxiety is rooted in the false belief that perfect data can magically clear away all sales obstacles – that the analysis should scientifically prove superior value. Although many aspects of technical performance can be proven scientifically in engineered products, customer economic value is not like this. The burden of proof for good customer economic quantification is much lower and in reality a lot more subjective.
So we advise marketing teams not delay when they have reasonably valid customer data in hand. Rather than worrying about precision, be more fearful of losing time to market advantage. Remember, all differentiation has an expiry date. Also remember, the customer has the last word about data . . . Which brings us to our last mistake.
- Working in isolation. A value proposition that is born and raised inside a sheltered conference room tends to have a very short life span once out in the real world. Unfortunately, we have seen this happen and it’s an unpleasant, possibly career-ending, experience.
Value propositions need to be taken out and battle tested early and often in order to toughen them up. They require iteration and the best place to start is with your own sales team. Getting sales input early in the process in quick review sessions can save time and build more confidence in the value selling story. Later, you can begin to test value propositions with selected customers, before deploying to the wider world.
One reason why isolation is common is because value modeling is traditionally a solitary pursuit (a man and his spreadsheet). Many spreadsheet models are indeed personal masterpieces, but these have limited success. Rather, think of value propositions as a community barn-raising activity – many hands working together can accomplish so much more – and quickly.