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    4 Steps to Make Your B2B Value Proposition More Compelling

    As part of our ongoing series of blogs on what B2B marketers can learn from B2C, this new article focuses on the heart of strategic marketing: What can we offer our customers that will be perceived as valuable, compelling and worthwhile enough to consider purchasing, or the VALUE PROPOSITION. This article reinforces key principles from earlier blogs on "Building Stronger Customer Loyalty" and "Value Pricing".


    goodvalue

    Another area in which B2B marketers can learn from B2C practices is researching and improving their "Value Proposition". This concept has always been a predominant strategic tool for marketing in B2C categories, and is now becoming more ubiquitous in B2B industries. What has driven the importance of this principle recently is the recession and how customers today view and judge "good value". Their biggest concern for the future lies overwhelmingly in the economy. This macroeconomic reality is impacting the behavior of all decision makers, in two critical ways: (1) a reduction in consumption in many categories (e.g. entertainment), delay of major purchases (e.g. home improvements) and/or resorting to cheaper products, and (2) for more essential goods and services, people will trade down to stretch their money, demonstrating higher price sensitivity and decreased usage.

     

    Everyone is simply more sensitive to what they will be getting for their money or the price they pay. The underlying concept of "value" in this context for a value proposition is based on a basic formula: "Value = Benefit/Price". The term "proposition" implies a promise of value, or what can be offered and delivered to the customer to enhance the product/company brand equity (e.g. essentially the perceived value of the brand) and customer loyalty.  While there are many definitions of "value proposition", the one I prefer is more customer-driven and very appropriate for B2B companies:

    "It is a clear statement about the tangible business results customers can get from using your product, service or solution. Busy decision-makers don't care about what you're selling. They only care about what it does for them." [1]

    In other words, a value proposition defines the primary reason why a customer or prospect should buy from you and not the competition. A company must find a relevant and credible way to differentiate its offer from competitors, and ideally identify at least one key element of value where they need to excel.

    Importance of Being Customer Focused

     

    A good value proposition must be customer-driven, not based solely on a product's attributes. In his book "Building Strong Brands", David Aacker refers to the "Product-Attribute Fixation Trap", where the strategic and tactical management of a brand is focused on product attributes, with the assumption that these are the only relevant bases for customer decisions and competitive dynamics.

    technology

    This is a common challenge for technology companies in particular, who are obsessed with the intricacies of the product functional performance. The key is to focus more on the reasons why your customer could use your offering, or what they really care about when making decisions. Understanding the formulaic definition of value will help. A concerted effort to diligently research customers will help identify new insights and ways to enhance the perceived benefit/solution. This will enable B2B marketers to then establish an optimal price point that will accurately reflect the relevance and importance of the perceived quality of this benefit.

    What to Ask Yourself (and Customers) To Identify Opportunities for Improvement

    When developing the value proposition to maximize the perceived value of your offering, here are some useful questions that we ask B2B clients internally and/or customers in research.

    • Why do people buy from our company in the first place? What value do they seek? Expect? Hope for?
    • What are we doing to meet their expectations? What are we not doing?
    • What are the customer's true "pain points" or problems?
    • What is our "niche/specialization" or area of excellence? Do customers recognize this?
    • How do customers actually think and talk about our business? What must they be convinced of to start buying from my company.
    • What can I add to my value proposition to cause my customers to say, "I would have to be crazy to do business with someone else"?

    How to Overcome Common Issues to Enhance Your Value Proposition

    Solutions must begin with smart research that validates typical customer problems or complaints that can adversely impact this balance between the perceived benefit and the price. For example:

     

    1. "The superior benefit is not worth the price premium" 

    a. Add or enhance an emotional element to the end benefit

    b. Leverage the price as a signal of quality

    c. Create new copy to elevate the perceived worth

     

    2. "I already have the same benefit with my cheaper choice"

    a. Question the cheaper option to shake the customer's complacency

    b. Focus on your superiority, perhaps with a credible endorsement

    c. Offer an extra reason to support the benefit and to buy it

     

    3. "I can't afford it, - it is way too expensive for me"

    a. Reframe the absolute price - e.g. change the unit of measure or perceived price point

    b. Emphasize any side savings

    c. Highlight the risks of not buying it

     

    4. "Sure it's cheap, but I doubt the quality"

    a. Reassure the customer on the quality - e.g. leverage product strengths, brand history or special ingredients/components

    b. Use others to sell the quality - e.g. spokesperson who epitomizes value, or how everyone else thinks it's high quality

     

    Creating a relevant and credible value proposition will be meaningful only if it is consistently used to guide all marketing and sales initiatives, from phone calls, emails, voice mails to advertising and actual presentations to customers. The concept of optimizing value is too important for your success to treat lightly when defining the ideal value proposition. We suggest you address 3 fundamental questions which will help you determine whether your current value proposition needs improvement:

     

    1. Have the market conditions, including competition, changed enough during the past 3 years so that your value proposition warrants a new review?

    a. Yes, so should consider whether/how to strengthen it

    b. Not sure, but it makes sense to re-assess these market dynamics to validate it
    c. No, am positive my value proposition is still solid and relevant (if this is your answer, there may be a risk in this assumption?)

      

    2. Do your primary customers recognize, appreciate and are still motivated by the promise in your value proposition?

    a. Yes, because we get feedback from them all the time that confirms its viability

    b. Not sure, because we don't spend enough time or resources getting objective, comprehensive feedback

    c. No, doubt it, because we have been getting mixed signals and more pressure on our pricing from them

       

    3. Do your marketing and sales teams consistently and convincingly communicate the same message, based on your current value proposition?

    a. Yes, at least that is what my senior managers convey to me

    b. Not sure, as we don't always monitor their messages carefully

    c. No, don't think so because the coordination and communications between our marketing and sales personnel can be improved

     

    If any of your answers introduce a hint that improvements are needed, we would be happy to talk with you. Please refer to our Marketing Team Effectiveness programs.

     

    what b2b marketers can learn from b2c

     

    [1] Konrath, Jill. Selling to Big Companies. Chicago: Dearborn Trade Pub., 2005. Print.

    Image credit: existentialist

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    Written by Jay Gronlund