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December 14, 2020
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Struggling to Articulate your Cloud Value Proposition?

Reading Time: 6 minutes

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

In my experience reviewing hundreds of technology websites, I’ve found that very few technology companies have a clear value proposition 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 or listen to a 3-minute long explanation without really hearing a compelling value statement. We are obsessed with leading with product features and functionality when asked to speak about our solutions. 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 (product) promises to deliver.

How do we define value?

  1. This value needs to be important from the customer’s perspective, not from your view. For example, my business may offer 24-hour customer support, which I see as delivering great value, but if the client never needs to call after 5 pm then there is no benefit from their perspective.
  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 invest money to obtain. To be instrumental in getting them to a new, highly desirable state. In a pandemic world when I want to preserve capital, I am not going to invest in a “like to have” solution, only essential.
  3. The benefit needs to be specific, observable, measurable, and tangible. We have a trust issue with customers. They don’t believe our claims. 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”. You need to prove that you can deliver on the value you promise.
  4. Your value needs to also be unique. 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 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. Lowest Price (Save you Money)
  2. 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. 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. If you are in a high labor cost business 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 lowest price value proposition effectively by outsourcing offshore. Even Microsoft does not try to be the lowest priced vendor – even with their size and scale potential. 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. 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”.

  3. “Best Solution” – Product leadership
  4. 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 product or solution on the market. Best can mean most features, best quality, most reliable, etc. The key to executing this value proposition is that you need to invest heavily into innovation and R&D. To stay 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 leadership based 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.

  5. “We make life easier for you” (Convenience)
  6. This is an excellent value proposition that most technology 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) without ever having to leave the house. 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.

  7. Customer Intimacy
  8. 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 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. 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 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 and across diverse situations. You leverage what you learn from working with customers in a similar situation or industry. 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

Value proposition Video blog Vlog – How to Define Your Value Proposition – (neuralimpact.ca)

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Sharka Chobot
Sharka Chobot
Sharka Chobot is the creator of the CRM product category (1995) and Chief Transformation Officer of Neural Impact. Sharka applies research from behavioral economics, neuroscience and persuasion psychology to help technology providers develop an effective customer acquisition and go to market strategy. She has over 30 years of technology-specific expertise and teaches behavioral marketing at universities in Canada. Sharka has worked with hundreds of tech companies on six continents to develop their cloud product, packaging, pricing, and vertical market strategy and to accelerate their transition to a SaaS business model.

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