Struggling to Articulate your Cloud Value Proposition?

People don’t buy products and services. They buy a solution to their problem.

In my experience reviewing hundreds of websites featuring cloud solutions, I’ve found that very few technology companies have a strong value proposition clearly identified for prospective customers. Most of the time I have to weed through lists of product features to find anything that even remotely feels like a value or benefit statement. Tech solution providers seem to be obsessed leading the sales conversation with “what” language aka a long list of product features and functionality. So, I’ll attempt to help you quickly identify your solution or company value proposition here.

What is a value proposition?

A value proposition is simply a description of the value your company or product promises to deliver.

How do you define value?

1. This “value” needs to be important from the customer’s perspective, not from your point of view. For example, you may offer 24-hour customer support, which you see as delivering great value, but if the client never needs to call after 5 pm then there is no extra benefit from their perspective. This is a “feature” of your service, from your vendor perspective. WHY do I want 24×7 support? What problem does this solve for me as the customer? “Never again experience painful and expensive down time” speaks to me in a more emotional way that has much more value than “24×7 support”. Use your customers’ language to describe your value and benefits, not your vendor language.
2. The value needs to be relevant, significant, and critical to the prospect. It needs to promise something that is desirable enough for them to take the time and energy to purchase. In an economically strained world when customers want to preserve capital and have multiple competing IT needs and projects fighting for funding, they will only invest in a “must have” solution, not “nice to have”. Remind customers what will happen if they don’t invest in your technology or what they are missing out on if they put it off. Fear, risk, loss and control drive technology buying decisions. Why do you pay for life insurance every year which gives you no ROI? Its emotional. You want to sleep at night and not worry.
3. The benefit needs to be specific, observable, measurable, and tangible. Customers don’t trust technology company vague promises such as “be more productive or efficient”. Be specific, i.e. 80% of our custmers who implement our CRM system gain a 10% higher increase in revenue in the first 12 months of implementing. Abstract, high level phrases such as “transform to the cloud” don’t resonate with customers. Statement like “don’t get left behind your competitors” creates more urgency and buying motivation because they are anchored in emotions such as fear or risk. Make your value statement as tangible as possible and quantify with data if you can. “We help large manufacturers reduce their operating costs by 20% or more within the first 6-12 months of deployment”. Prove you can deliver on the value you promise with proof. Data, case studies and customer quotes can help with this.
4. Your value needs to be unique and differentiated. If all your competitors promise to provide the same value, then your value proposition is weak. For example, having talented, technically skilled, Microsoft-certified professions is only valuable if your competitors have uncertified professionals in comparison. What has taken you years to learn that would be hard for a new born in the cloud competitor to know? Industry domain expertise is the new differentiator in a highly commoditized cloud SaaS world.

What are the possible types of value a product or service can deliver?

Most marketing experts will agree that there are really only four different types of value propositions for you to choose from. I will explain them here:

1. Save you Money (low price)

Wal-Mart is a great example of a company that has built its entire company based on this one simple value proposition. However, I strongly advise against being the lowest cost provider or helping cusotmers save money as your core value proposition. This is a difficult position to defend and sustain long term, as you are likely not big enough to control your input costs nor to underbid all your competitors. Tech resources are increasingly more expensive. If you are in a high labor cost business like technology professional services, this is the worst value proposition to choose. It also requires an investment into operations, efficiency, repeatability, and scale to executive effectively. I have seen very few technology companies successfully use the low price value proposition effectively, even when they outsource offshore. Even Microsoft does not try to be the lowest priced vendor – even with their dominant market position. While this is the easiest and most compelling value proposition to explain to prospects, it is a risky position to take as you are only the lowest priced until your competitors lower theirs further. Dropping your price erodes already strained margins. Saving customers money is emotional and valued, but I do not recommend using this are your primary value statement. You can simply say “and yes our solution is competitively price” or “yes our solution will save you money or help you cut operating costs, but that’s a bonus”.

2. “Best Solution for your Needs” – Product/service leadership

This value proposition is based on your product or service being uniquely better, if not the best solution. My guess is that this is the value proposition many of you are trying to articulate. You may believe you have the best ERP or CRM product or solution or the best technical people and services. Best can mean most features/functionality, best quality, most reliable, etc. The key to executing this value proposition is that you need to invest heavily into innovation and R&D or if you are a services business, training and certification. To say you have the “best” product or service you need to be ahead of competitors in terms of features and functionality or domain/technical expertise. If you are going to claim to have the “best” solution, make sure you have the capital needed to sustain this type of value proposition. If we were being honest, my guess is that you can say “our solution can do everything that competitors do” or “our solution is as good as competitive products” but not necessarily that it is much better or superior to your closest rivals. Microsoft can defend this value proposition, but most of its channel partners and resellers can’t. So leverage the Microsft best of breed technology value proposition and then determine what YOUR value proposition is. Understanding your unique customers’ business processes and needs can be a huge differentiator.

3. “We make life easier for you” – Convenience

This is an excellent value proposition that most technology reseller and services providers can hang their hat on. The claim is that “we do the same job as everyone else, but we do it better, faster, easier, more conveniently, etc.” Avis may not be number one, but they “try harder”. 7-11, for example, offers less selection and fewer items than you would find in a grocery store, at a higher price, but they sell the most needed items 24 hours a day, and within a few short miles from your house. This “convenience” in terms of accessibility, location, and long opening hours allows them to win market share and sustain high margins long term. When Amazon came along they offered 24 hr shopping, increased breadth of product selection, and delivery right to your door (or laptop if downloading an ebook). They provided the same products (books), just in a more “convenient” fashion. Customers will pay a premium to get things done quicker or more easily. Simplicity trumps complexity in this world. Time is our most scarce resource and constraint in business. If you can tangibly save customers time and effort and show it equates to money saved, this has a high-perceived value by your customer. This is a great value proposition that can differentiate your company or offering from competitors. If you could include an app with your accounting system that allows employees to quickly take pictures of expense receipts with their smartphone and their request gets automatically routed to their manager for electronic approval and deposited into their personal account within a day, this saves time, increases compliance, reduces hassle and frustration and increase employee satisfaction – all which have perceived value.

4. Customer Intimacy

This value equates to a ‘we can do it for you better than you can do it yourself” position. Your customers are trying to streamline their business and focus on their core competencies. If you can position your company to be their strategic technology partner in one or more core areas of their business (which they aren’t experts in) you have a winning value proposition. However, you can only do this if you focus on key vertical industries or become experts in one or two business process areas, or specialize in solving a specific problem. You must not only know as much about your customer’s businesses as they do but MORE. Your value is that you can teach them things they don’t know about that are critical to their success and help them avoid costly mistakes and stay ahead of their competitors. They learn from you, and you contribute to their growth. Universities should focus on engaging and educating students, hospitals on saving lives, they should leave the technology problem to you to solve. You become a valued and trusted partner. By narrowing and focusing your solutions and the problems you solve, you end up knowing more than they do because they only do this once for their own business, whereas you do this repeatedly in multiple and challenging environments across diverse situations. You leverage what you learn from working with customers in a similar situation or industry to help them avoid mistakes or implement proven best practices. You can also start to benchmark your customer’s performance against competitors so they know how well they are or aren’t doing in key areas. This approach positions you firmly as a strategic partner, not just a commodity product or service provider. To offer this type of value proposition it is essential to specialize. It is often not feasible to be horizontal and have this level of emotional differentiation. The goal is to become critical to their business. This value proposition is highly defensible and allows you to charge a premium and maintain high margins. You become so valuable to them, that they can’t live without you (leading to high stickiness in the cloud). Horizontal, less strategic competitors don’t stand a chance against you.

Need help articulating your value proposition now?

Use the free tool to craft a succinct value proposition statement here: Value Proposition Generator | Neural Impact | The Neuroscience of Emotional Engagement

Live learning via video? See this related value proposition Video blog Vlog – How to Define Your Value Proposition – (neuralimpact.ca)