DISQUS

Dennis · 9 months ago

It's not in a book, but this is what I teach:
Product x Price = Offer
Offer X Brand = (Value) Proposition
- which means your proposition must include the the soft & fluffy stuff that you 'promise'

jmcaddell · 9 months ago

Dennis, I agree with you. "Brand" in the B2B space includes all the things you do that customers value (and the things they value negatively as well). If you are really responsive, and customers value that, it accrues to your brand. Funny, though. It seems to me that most initial purchases are dominated by economic value, with "fuzzy" value down the list, or at least not formally considered. But for keeping the business, renewing the contracts, the fuzzy stuff takes precedence (and can even compensate for technical inferiority to an extent).

Thanks for weighing in.

John Caddell

Original Message
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Subject: [caddellinsightgroupblog] Re: Another kind of value proposition

April · 9 months ago

You make some good points here about both pricing and risk.
In this economy, I'm finding that value statements like "improved productivity" just don't cut it. Customers (particularly IT departments) are getting squeezed so badly that helping them reduce costs is top of mind.
I also like the point you make about helping customers reduce risk. Statements like "reliability", "caring about my business", "helping me solve my problem" are really getting at the potential risk in bringing in a new solution. As an incumbent vendor you have a real advantage when you can show that you are meeting a customer's needs because any new vendor might not and that's a risk that companies are afraid of, particularly right now.
April

Denise Lee Yohn · 9 months ago

john -- thanks for affirming something i've frequently argued with b2b clients -- that is, b2b customers make purchase decisions based on emotional (as well as rational) considerations -- often b2b companies ignore the role of their brand because they think their customers only care about rational rfp processes and quantitative purchase criteria and they fail to recognize their customers are human beings. d

camaurer · 9 months ago

I agree with your view if we take the value proposition as simply monetary. It is not sufficient but necessary to get to a buying decision. It is though necessary but not sufficient as in B2B people have to usually rationally justify their gut decision.

Furthermore only few people distinguish between value hypothesis (usually what marketing claims the value is to a targeted customer segment) and a value proposition (what counts for the individual customer). If one takes the hypothesis for the proposition it probably will not work. The danger for confusing the two terms is actually increasing with the use of sales enablement tools wrongly applied. This is why I spend considerable time to help people understand the difference in a sales and marketing alignment workshop I teach with a Swiss Business school..

If you open the concept to perceived value, then you can factor in all this soft elements which probably count more than the economic rationale for making the initial (gut) buying decision. Needless to say that this works only if you apply it to the right person. professional buyers are usually immune to this approach.

Turner DeVaughn · 3 months ago

Value is what a customers get in return for their money and time. Some things can be quantified – and should be. Other things that are intangible cannot easily be quantified. Emotional value is in that realm.

However, the problem is often that the sales staff use a value proposition as a lever to stimulate a transaction by overcoming the financial objections prospective customers have. Many companies don't look beyond the sale and consider the burden of adoption costs placed on customers. They also don't look at the pricing structure and business model as an integral part of the customer experience.

Value creation is really everything a company does for its customers. Part of that value how how customers feel and their willingness to refer other prospects to that brand. Business is not simply built on numbers, but momentum (like the stock market) is built on feelings.