Why You Need Three Different Types of Value Propositions

Like many things in life, it is sometimes easier to identify poorly written value propositions than it is to write good ones. A review of value propositions found on the Websites of major services providers reveals these common pitfalls:

• Inside-out focus. Have I told you enough about me?
• Too much jargon. Marketing-speak and technobabble.
• No unique differentiation. Heard one, heard them all.
• No statement or quantification of value. Where’s the beef?

According to ITSMA’s definition, a value proposition is:

A clear and simple statement that reflects the essence of the unique value a business will provide to a client or target market through a combination of benefits and price.

Look at some major technology services providers’ Websites. Nine times out of 10, every sentence will start with “we” or the name of the company. The language is so full of jargon that everyone seems to be saying the same thing. It is not that what they are saying is wrong; it is the way they are saying it. Finally, value propositions are meant to provide a statement of value. Value exists when the benefits outweigh the costs. Therefore, the statements should make it easy for the reader to determine the benefits. What will clients get for the price paid? Again, 9 times out of 10, the value is undeterminable.

The Three Types of Value Propositions
Most sales and marketing professionals understand the need for value propositions. However, what many don’t appreciate is how the nature of the value proposition must change with the stage of the buyer relationship in terms of its depth, quantification, and precision.

As services providers and buyers move through the relationship continuum from epiphany through loyalty (see The Epiphany Stage: The Missing Link in the Buying Process), the interactions become more intimate. In this process, more information is exchanged between the two parties to make the value propositions more precise for each client. Three types of value proposition are needed to cover the various stages of the buying process:

1. Segment-based. In the epiphany and awareness stages, with minimal client information, the value proposition is defined to address the needs of a specific market segment. The segment-based value proposition is not designed to sell. The purpose of the statement is to get potential buyers to take action to learn more. That action can be going to your Website, picking up the phone to call you, attending a Webinar, or reading a white paper.
2. Role-based. Moving from the awareness to interest stages, the value propositions become more targeted to subsegments and specific roles within organizations, such as CIOs, sales management, or business unit leaders. Such individuals often have different perceptions of value based on their roles and responsibilities. Role-based value propositions resonate when they address the specific business needs of the people or personas the company is trying to reach. They require a deeper level of understanding of the like-minded groups of people the company is communicating with, including their needs, desires, motivations, expectations, goals, fears, skills, and biases.
3. Client-specific. These value propositions are designed to move prospects from interest to confidence or buy mode. The client-specific value proposition addresses the particular needs of actual, not archetypal, clients. However, knowing the client goes beyond defining the decision influencers’ and makers’ titles and roles. It also means knowing the client’s educational background, personal pursuits, association memberships, business goals and how they are measured, the client’s definition of success, and, of course, the client’s pain points.

In our work with clients, we have discovered that there needs to be more science applied to the art of writing value propositions. We see few companies that start the value proposition process with extensive research-both primary and secondary. But this research is critical. Over the years, ITSMA has discovered that the best value propositions are those that are built from the outside in, based on a deep understanding of the target markets, buyers, and competition.

Research is at the core of ITSMA’s six-step process for articulating value propositions that deliver results.

• Step 1. Understand the market and clients.
• Step 2. Determine your true differentiators.
• Step 3. Articulate unique value based on customer need.
• Step 4. Quantify value.
• Step 5. Elicit internal and external feedback and revise.
• Step 6. Collaborate with sales to communicate value propositions.

ITSMA clients can download this report that explains our six-step process for developing effective value propositions and offers a proven template for creating value propositions that deliver results.

One Response to “Why You Need Three Different Types of Value Propositions”

1. An Interesting Piece on Value Propositions from ITSMA | Lustratus REPAMA Says:
   September 25th, 2009 at 4:41 AM

   [...] [...]

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ITSMA specializes in helping companies market and sell services and solutions more effectively. We work with the world's leading technology, communications, and professional services providers to generate increased demand, strengthen customer relationships, and improve brand differentiation. ITSMA annual program clients include business leaders such as Avaya, BT, Cisco, Deloitte, Hewlett-Packard, IBM, Microsoft, and Tata Consultancy Services, among others. Our comprehensive research, consulting, and training on topics including ITSMA Account-Based Marketing℠, Brand Positioning, and Solutions Development provide the insight and experience companies need to improve business results. ITSMA is based near Boston, and has offices in London and Tokyo. Learn more at www.itsma.com.