The Value Proposition
May 13, 2010
The Grand Valley Business Times- by Tom Sawyer
At Ryan, Sawyer & Whitney we strongly emphasize the integration and relationship between sales, marketing and profitability.
A key sales tool in this integrated process is the Value Proposition.
Wikipedia Definition: A value proposition is an analysis and quantified review of the benefits, costs and value that an organization can deliver to customers and other
constituent groups within and outside of the
organization. It is also a positioning of
value, where Value = Benefits - Cost (cost
includes risk).
Your company must develop the ability to articulate your unique value proposition on an ongoing basis while developing and maintaining the metrics to specifically substantiate your claims of value.
Presenting Three Types of Value Proposition
At Ryan, Sawyer & Whitney we have adopted a value proposition model developed by Anderson, Narus, and Wouter van Rossum. This model defines three types of value propositions, listed below. Each type answers an increasingly probing question by the customer and correspondingly requires a different level of understanding of the customer’s business.
All benefits:
This is the value proposition form that we encounter most frequently in consulting with our clients. It consists of a list of all the benefits that are believed to be delivered to our client’s target customers. It answers the customer question, “Why should our firm purchase your offering?” The pitfall is that the list often asserts advantages and features that have no benefit to the target customer. In fact, many of the benefits may be points of parity with the next best alternative. This type of value proposition ignores points of difference from competitors. All that is required to develop this type of value proposition is knowledge of your own product.
Favorable points of difference:
This form of value proposition is developed with the understanding that the customer has an alternative. It answers the customer question, “Why should our firm purchase your offering instead of your competitor’s?” To develop this type of value proposition, you must have a detailed understanding of your competitor’s products and be able to articulate all favorable points of difference between your product and theirs. The pitfall to this type of value proposition is that, without a clear understanding of the customer, it may stress points of difference that have little value to the customer. This type of value proposition is a significant improvement over the all benefits type. An in-depth understanding of competitor products and capabilities is required to deliver this form of value proposition.
Resonating focus:
This is the Gold Standard of value propositions. This form of value proposition answers the customer question, “What is most worthwhile for our firm to keep in mind about your offering?” This value proposition delivers a simple, yet captivating, message of what makes the product offering superior on the few elements that matter most to the customer. It focuses on the one or two points of difference that deliver the greatest value to the customer. A company that can deliver this type of value proposition has demonstrated that they fully grasp the critical issues that face their customer. This form of value proposition requires that you understand what the customer values. Dedicated resources are required to garner this type of customer information. We work closely with our clients to create relationship-based sales and marketing strategies that result in the delivery of resonating focus value propositions. In this new day, where the rules of sales and marketing have markedly changed, nothing less will do.
About Ryan, Sawyer & Whitney
Ryan, Sawyer & Whitney is an integrated marketing, advertising and business development firm based in Grand Junction, Colorado. For more information, visit www.rswpartners.com or call 970-241-4773.
