One of my longtime friends, who also happens to be an expert writer and consummate marketing expert, has always been fond of saying “In America, you are what you say you are until proven otherwise.” I love that line because you can apply it to just about any facet of life, politics certainly but also your personal or business life as well. But for me, I always pull it out whenever anyone wants to talk about their value proposition and price.

Money talks

That’s because the price you set says a great deal about what you think of your value proposition. For example, when I was back in graduate school one of my professors gave us all a “price test”. It was a list of bicycles with various descriptions for the type of wheels, gears, shifters, seats, etc. that they each included. Plus, each bicycle had a list price.

Our task was very simple. Rate the various 20 or 30 bicycles on the list by quality on a scale of one to five; five being the best and one the worst.

At the next class the professor returned with our test results. As we guessed, there were no wrong or right answers.

Instead, he had run a regression analysis on the variables or descriptions of the various bicycles along with each bike’s price to determine which variable influenced our ratings the most.

Guess which variable won? Price. By a wide margin.

People often use price as a proxy for value

What none of us had realized (or at least most of us), was that the descriptions often repeated (or nearly so), and in those cases only the price changed. This fact was pretty well masked by the professor’s use of narrative descriptions that were lengthy and didn’t follow a set pattern. That is, one might start out touting it was a 10 speed (this was some time ago), while another would start by stressing its superior brakes.

In short, for a lot of the students, the list of features became a blank wall of text, so predictably we fell back on price as the best or only available gauge of quality. The list of bikes became what a lot of marketers would call a “blind item”. That is, something that the buyer typically doesn’t really know how to rate on a real quality scale, so they look to other clues that rightly or wrongly (but hopefully) give them a good measure.

Diamonds are often given as a perfect example. (I mean seriously, how many of us really can see that slight flaw, with or without the jeweler’s loupe? We just nod our head to avoid looking like we don’t get it.)

But, even “difficult to evaluate” products have a price ceiling

So what does that say about price and your value proposition? Well, if you take this concept to its ultimate conclusion, you might assume that the highest end of the market is the limit, since the higher you set your price the higher your product’s perceived value.

Alas however, we all know that it doesn’t work that way. First, there is a limit to the “blindness” of even the most difficult to evaluate products.

Value becomes evident with experience

But further, while quality may be hard to gauge up front, most products become much less so over time. That is, use has a way of showing the buyer their purchases’ true value.

So for example, while the class as a whole might have rated the most expensive bikes as the best on paper, if a number of us had actually purchased a few bikes we very well might have discovered our error and undoubtedly word of how we had been duped would get around. We also had limited time and to some degree, limited interest.

True buyers might be willing to put in a lot more time before drawing a final quality conclusion that was sealed with our hard earned cash. Hence, the second part of my good friend’s quote, “… until proven otherwise.”

Think twice before cutting price

So where does this story most often apply? I bring it up whenever I’m speaking with someone who is playing with an urge to price their product low.

Perhaps they are enamored of the freemium to premium concept. Perhaps they are hunting for ways to shorten their sales cycle for a while, or maybe they are simply looking for a way to move a few more “units.”

Price reductions can backfire

Now, there are a whole lot of reasons to look at any of those moves a bit sideways. After all, not every product fits a freemium/premium model and not all sales cycles can be forced to go any faster regardless of the price. But as my little story tells, one additional reason is that it might just say your product stinks.

Douglas McCartney is a revenue-focused sales and marketing executive with more than 15 years of senior leadership experience at start-up to mid-sized B2B software companies. You can find Doug via his LinkedIn Profile here: http://www.linkedin.com/in/dfmccartney

Have you determined the highest value your company can offer?  Download the “Do it Yourself Guide” for developing compelling value propositions.

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1. Price or customer experience–which matters more?

Shortly after I got up this morning, I strolled over to Marketing Over Coffee for a quick shot before heading off to work and found this great article, entitled How to restore the faded luster to marketing by Rich Guha.  In my opinion, it’s a “must read” for anyone looking to build a business or aiming to build a career in marketing.

It’s about the big picture

Referencing management heroes such as Peter Drucker and Ted Leavitt, the article discusses what companies have lost as marketing becomes more specialized. Guha advises marketers that wish to add significant value to the business to:

• Step back from tactics and understand the “theory of the business.”
• Understand what are the ways to measure performance which drive market value.
• Understand which levers in the business will increase market value.
• Regard tactics as components that can only be used with an understanding of the entire business plan.
• Understand the customer and end user intimately.
• Focus on Product, how it is priced, presented, and where it is available to customers.

It takes intimacy and integration to hit the mark

In short, he emphasizes the importance to successful businesses of a) understanding customers’ needs across the spectrum (yes, back to the 6 Ps*) and b) understanding which levers in the business will increase market value.  Without these important capabilities, front and center, companies often end up missing the mark and spending way too much on “marketing”.

Guha quotes Drucker as saying, “If Marketing were to do its job perfectly, Sales would not be needed.”  In other words, if you really understand all aspects of a prospects’ needs , products would sell themselves.

This is not the same as “build it and they will come”.  The needs to which Guha and Drucker are referring, go way beyond the product features and benefits.

Upfront investments in market intelligence save money

Nevertheless, Marketing can’t do the job perfectly.  That would require mind reading.   Still, an upfront investment in marketing research can save a lot of money down the road–if either the product, or its promotion and distribution, will cost a lot to accomplish.

There  are many ways to gather prospect  information from surveys to customer shadowing to watching click streams.  The key is knowing what you’re looking for, and how to use the information you get.

Else, you’re likely to miss the market window.  Or, if you’re “lucky” spend a lot of money on  rework until you get it right.

Start with deep customer insights

Therefore, a lot of companies are investing in developing buyer and user personae before making the much larger investments in product development and content. They capture the “voice of the customer” and then create archetypes for the three to five most important roles at the companies in their target market.

To bring these archetypes to life, many companies give them names.  These examples help multidisciplinary teams discuss and figure out “What Jane would do” or how “Mike would like to receive information”.

Test, iterate, refine

The most successful companies do this in an iterative fashion.  They gather information, form hypotheses, test their hypotheses, and then refine their hypotheses until they hit the measures they’ve set as goals.

Use high-fidelity prototypes

In the development world, see Eric Ries and Cindy Alvarez’ work on lean start-ups (although there is broad applicability for other product development groups).  In the usability world, see Jared Spool’s and Carolyn Snyder’s work on high-fidelity prototyping.

Watch customer behavior

As for communications, hypothesis testing is now the province of analysts that study click streams.  There, however, companies are still working out the timing .

Since digital communications are relatively inexpensive to produce and deliver,  many companies delay testing until after they launch.  It’s too early to have definitive data on how early missteps affect branding, or the extent to which upfront research could have prevented extensive rework.

Marketing never stops, always changes

Nevertheless, it’s not a perfect world.  You can’t anticipate all customer needs upfront.

Things are always in flux.  Economic conditions improve. Regulators introduce new rules.

Technology innovations make the improbable possible. Competitors’ actions cause priorities to shift.  For these reasons and others, it’s essential to gather information on an ongoing basis.

Assess which actions will have the greatest impact

As mentioned above, however, it’s equally important to know how to use the information you gather–or as Guha notes know which levers will increase business value.  This is especially important in a tight economy where companies can only afford to take the most effective actions.

Too often, companies focus too much on one of the “P’s”, to the detriment of the overall marketing effort.  Engineering firms will sometimes focus all their efforts on fine tuning the product, while “marketing organizations” expend too much on a particular type of promotion, relative to the return they’ll get on that investment.

Embrace diversity

This is where true marketers, who work with multidisciplinary teams, add their greatest value.  By understanding the whole customer, his/her environment, and impending change, he/she can help the company optimize the resources it takes to unite customer and solution.

Wondering where to start?  Test your preparedness by drawing on your market knowledge to create a compelling value proposition.  Or, learn more about the value creation process, first.

*Product, positioning, packaging, pricing, promotion, placement (sales channels or distribution)

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I have a friend with a son who is a sophomore in high school.  This morning, she told me that she can’t believe how many money colleges waste precious funds on expensive direct mail communications.  She described the quality of the paper, the outsized packaging, and the heft of the packages they’ve been receiving–all of which she tosses in the waste bin.

Direct marketing mail campaigns are often cost-effective

As a marketer, I told her that her would-be correspondents may not be wasting their money.  After all, college tuition for four years is now in excess of $100,000–perhaps more than her fully loaded salary as a manager at a Philadelphia-based research organization.  If only 1 or 2 students that they contact eventually enroll, a school can easily justify the cost of the mailing.

Success depends on a compelling value proposition

I suggested she open a few to see if they had a message that would compel her to act, something that was important to either her or her son.  So, she opened one that arrived yesterday.

Sell, don’t tell

As she expected, it was just like all the others.  It started by pointing out that her son ranks higher than most students in the country.  They knew that.

The letter said that they are seeking students who want the types of challenges and experiences, from which others shy away.  Then, the letter told him they were looking for students.

Response mechanisms can erect barriers

Finally, before closing by asking that her son visit their website or send them a card, they said they were a prestigious liberal arts college–even though they confided, they prefer to think of themselves as a school that nurtures collaboration for big results.  The Admissions Director included his phone number under his signature.

Good design contributes to the message

The collage of pictures on the letter didn’t seem to add to the message.  In fact, if one just saw the pictures, he or she would be hard-pressed to guess what the sender was advertising.

Most prominent was one of the Dalai Lama.  Another was of clinicians in an operating room.

Others were of people talking, a building, an outdoor snapshot, a row of apartments, and kids kicking a soccer ball.  There were also headshots of people of different races and national origins.

Calls to action must resonate

The calls to action encouraged students to give the school a chance to get to know them before they apply–and offered to provide advice that would help them apply to any school.

She threw the package away.  Now perhaps there are students with whom one of these marketing messages will resonate–but I think the schools can do a better job of convincing their correspondents to take the next step

Capitalize on the data you have

Clearly, this school was able to get students’ names, PSAT scores, and zip codes.  Even without additional information, they could probably guess the student’s sex–and assume that he or she was a sophomore in high school.

Think through the implications

From just the zip code, they knew that her home is in a middle-class community several hundred miles north of the school.  From that they could have discerned that the recipients likely weren’t aware of the school and would probably require financial aid.  Yet, nothing in the communication addressed either concern.

Step into the buyers’ minds

The letter writer had sufficient information to recognize that the main marketing messages wouldn’t resonate.   Having had no previous interaction with the school, which didn’t have a national reputation, neither mother or son was likely to care that the school was seeking students–or wanted a chance to get to know the son before he applied.  Moreover, there was no reason to believe that the family would contact a complete stranger for help applying to other schools.

The letter also didn’t speak to the son’s needs.  In March of his sophomore year of high school, the son wasn’t seeking out more challenges.  Instead, like most boys his age, he’s focusing on the here and now:  his schoolwork, his friends, his extra-curricular activities, and sports.

Timing is everything

Unless the school could obtain information from the PSAT administrators that would enable them to speak to his current needs, a letter to the son was premature.  Also, the chances are slim that any teenage would call an adult and this marketing communication didn’t offer an email option.

I had to agree with my friend’s initial assessment.  Even organizations that seek small response rates can’t afford scattershot approaches.

Create campaigns that generate leads

How much more effective would this lead generation campaign have been if the sender had:

• Focused on its most promising prospects
• Spoken to their needs and concerns
• Tailored its message to where prospects were in their buying process
• Tested its calls to action
• Offered multiple response mechanisms

My guess is that the college could have gotten a far better return on their marketing investment–if only they’d thought a little more about the audience–rather than focusing exclusively on their own goals.  The question is how often do businesses make many of the same mistakes?

Need help confirming assumptions about your audience?  Try our Revenue Accelerator Quick Start program.

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Value is in the eye of the beholder

Although not stated explicitly, it is essential that marketers define the value proposition with the target audience’s perspective in mind–and that the content directly contributes to the delivery of that value proposition.

While these points may seem obvious, there are many websites that start by describing what makes the company unique without making the connection to the value their target audience seeks to derive.   The content of these websites, when they highly optimized for search engines, attract attention but  fail to convert prospects into repeat visitors or customers.

Start with deep customer insights

The implied “step zero” of Kristin’s process is gaining deep insights into the “who”, “what”, “when” , “where” and “how” of your prospects’ buying process.  Do this  by developing detailed buyer personae of your most promising prospects–and the individuals they involve in the buying process. It is this knowledge that enables development of compelling value propositions–and “remarkable content”.

Create content that addresses needs on multiple dimensions

Content is only remarkable when it squarely addresses content consumers’ needs and preferences.  In addition to speaking to their most pressing concerns, what makes this content remarkable is that it appears where intended audiences look for it–and in the form they prefer to get it.

Engage with frequent and consistent communications

When their requirements are met, audiences find the content so remarkable they come back for more, they share it with their friends.  It is this process that ultimately induces them to engage with the individuals and companies that produce it.  So, when executing the 6 steps that Kristin recommends, also make it a goal for each of your communications to contribute to the delivery of the value that your products and services will ultimately provide to your most promising prospects.

Tailor communications for each audience and buying stage

Here are two examples that pertain directly to the medical device companies attending the upcoming meeting.  To reach patients, especially at the early stages of their “buying process”, medical device companies may want to deliver content via health education websites, in addition to their own.  To address physicians’ needs, nearing the end of their “buying process”,  these same companies may want to create instructional videos that demonstrate how to use these devices in their practices.

Tools and tips for value creation

Need help getting started with your own marketing efforts?  Use the value proposition formula to help you develop marketing messages that capture attention and compel action.   Then, read this post for ideas about how you can discover the  content that captures attention.   Then, before you post, double check to ensure that everything you’re about to publish is tightly integrated with the value your best prospects seek to obtain.

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1. Shortening the sales cycle starts with getting into buyers’ minds

Software value proposition for health care providers

Here’s the value proposition:

[Our medical record reporting system] helps [hospitals] [attract physician referrals] by [making it easy for physician offices to produce reports on demand].  Whereas [getting data out of medical record systems typically requires custom programming], our system [enables office administrators to produce reports themselves using a few simple commands].

Starting this year, physicians need to demonstrate “meaningful use” of medical records to qualify for financial incentives.  [Sign up for our system today and attract more referrals by becoming the hospital that helps physicians increase the reimbursement they receive from insurers.]

Inertia favors the status quo

For many organizations, purchasing new solutions represents risk. For this reason, there are strong motivations to maintain the status quo.

These organizations, therefore, will only act when they believe that doing so will give them a significant edge–or that failing to act will take them out of the game.  Therefore, it is incumbent upon vendors to persuade prospects that circumstances have changed–and maintenance of the status quo is no longer acceptable.

Look for change that will disturb the status quo

In this example, the vendor that created the above value proposition, looked for change that would disturb the status quo.  He found it in health care reform.

As of today, more than 50% of physician practices have implemented EHRs.  The ubiquitous installation of medical records will once again change the status quo.

Disturbances to the status quo create opportunity

Once physicians have electronic access to patient data, they will want applications that will help them improve the quality of the care they provide–or streamline operations and reduce costs.  The problem is that most EHRs deliver only standard reports, thereby creating an opportunity for a vendor that can help physicians access the information they are now collecting.

Follow the money

To help physicians unlock the data in their new electronic systems for other applications, the vendor in question created an “ad hoc” reporting system.  Because the average physician practice is relatively small, the company decided to target hospitals and hospital systems, in competitive markets, with its new solution.  Following the lead of the EHR vendors, their aim is to sell hospitals on subsidizing physicians’ purchases–to increase loyalty and referrals.

Developing a value proposition that compels action

To develop a value proposition that compels action, look for economic, social, cultural, regulatory, or technology changes that have the potential to disrupt the status quo.  Then, compel your prospects to action, by raising their awareness of the implications of this disruption for their business–and offering them a solution that will capitalize on the opportunity or minimize the associated risk.

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2. Health care reform: people, processes, data, oh my!
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4. Putting health care EMRs in the cloud

Here’s an example of how a professional service provider can apply the do-it-yourself guide for creating value propositions in 3 steps.    It uses the same formula as the green value proposition example I posted last week (immediately below).   This time, I’ve used it to describe the value I offer my clients as a B2B strategic marketing consultant (below the value proposition formula).

The value proposition formula

We help [your most promising prospects] that [need help with the pressing concern you address] succeed by [providing the material improvement you will deliver].  Unlike [the alternative solution], [your solution] [describe the reason why your company is a better choice] as demonstrated by [evidence that you will deliver as promised].

A B2B strategic marketing consultant’s value proposition

BB Marketing Plus works with [B2B companies that have long sales cycles] to [increase sales productivity].  Unlike [companies that make cold calls for you or develop lead generation campaigns], we use [our Revenue Accelerator Methodology] to[ help you get the right message to the right person at the right time about the right solution--and motivate them to act] as is evident from our [our clients' testimonials].  [Start today with a free consultation to discuss your situation and the marketing strategies and marketing programs] [it will take to speed the sale].

In the last post, I promised to elaborate on one aspect of the value proposition with each new example.  In that post I focused on how to ensure that your value proposition captures attention.  In this post, I discuss the importance of adding a call to action.

Motivate prospects to act to receive the value you offer

The purpose of your value proposition it to elevate your organization, and its solution, above the competition.  Nevertheless, your ultimate goal is to get your best prospects to self-qualify by “raising their hands”.

Use a call to action to get qualified prospects to “raise their hands”

Without a call to action, your value proposition is just information.  Your call to action accomplishes two objectives.

One is that it tells prospects exactly what you’d like them to do–and how they’ll benefit.  Providing people with a specific request increases the likelihood that they will act.

In this example, the requested action is that prospects “start with a free consultation to discuss their specific situation”.  The promised benefit is that they’ll get ideas about marketing strategies and programs that will help them speed the sale, thereby improving sales productivity.

Use your call to action to test your value proposition

The other objective that a call to action accomplishes is that, if you set up a way to capture their responses, you can use your call to action to help you test the efficacy of your value proposition.  If prospects don’t take the desired action, your value proposition may not be effective.

On the other hand, the problem may be with your delivery or with your call to action, rather than with your value proposition.  In a future post, we’ll discuss how you can use digital marketing campaigns to quickly get to the heart of the matter.

What’s your company’s value proposition?

Every successful business delivers value.  Please feel free to use the comment area of this post to test your value proposition and call to action.  I’ll post any comments that use the formula to describe the value that one business offers to another in a professional manner.

Looking to improve your company’s sales productivity?  Download 5 actions you can take today to generate sales-ready leads.

Related posts:

1. How to create a compelling value proposition: Do it yourself in 3 steps
2. Green value proposition example
3. Capturing buyers’ attention: What makes a value proposition compelling?
4. Software value proposition for prospective health care customers

Businesses today are seeking products, services, and solutions that will directly or indirectly improve their competitive advantage.  As part of the sales process, buyers expect to hear how sellers’ products or services will materially contribute to the buying organization’s success–and why the seller is uniquely qualified to deliver that value.  This post outlines how to step into buyers’ minds, and create value propositions that compel them to buy.

What is a value proposition?

A value proposition is an offer from a seller to a buyer that promises to materially improve the buyer’s situation by offering a specific benefit or set of benefits.  A compelling value proposition induces the buyer to act on obtaining the promised value.

What makes a value proposition compelling?

The most compelling business-to-business value propositions are those that address high-priority concerns–and reduce the risk associated with the purchasing decision.  They are clear and concise, promise quantifiable outcomes, clearly distinguish the value the seller is offering from the value the buyer could obtain elsewhere, provide evidence that supports the sellers’ claims and/or a guarantee that makes the seller “whole”, and provide a reason or incentive for acting right away.

Here are three steps for success:

1. Answer the following questions

Below, you’ll find a list of questions that will help you develop a compelling value proposition–and a call to action that you can use to test it.

2. Fill in the blanks in the “Value Proposition Formula”^TM

We help [your most promising prospects] that [need help with the pressing concern you address] succeed by [providing the material improvement you will deliver].  Unlike [the alternative solution], [your solution] [describe the reason why your company is a better choice] as demonstrated by [evidence that you will deliver as promised].

3. Test your value proposition with a call to action

Test your value proposition on your website, in your marketing campaigns, or in your sales pitches to induce prospects.  Add a call to action in the format: [Perform this action] and [the advantage they'll reap or the consequence of inaction].

If prospects respond, you’ll know you’ve succeeded in developing a compelling value proposition.  If prospects fail to take the desired action, conduct interviews to determine why not.  Then, decide whether you need to refine your value proposition or start over.

Need a fresh perspective?

Sometimes a small shift in how you define and communicate the value that your solutions offer makes a huge difference–but it can often be hard to pinpoint that shift on your own.  Want to change your results dramatically, contact us.

Put your value proposition to work now

We’d appreciate your comments including the value propositions you create using the “Value Proposition Formula”^TM.  In the next few posts, we’ll provide examples of our own.

Related posts:

1. Capturing buyers’ attention: What makes a value proposition compelling?
2. Developing a compelling value proposition: What you need to know
3. Value proposition example for a professional service provider
4. Software value proposition for prospective health care customers

Program description

Unlike traditional software business models which are based on one-time license sales and lump-sum cash payments, the SaaS model is predicated upon building annuity-type revenue and cash streams. Over the long-term this business model is highly attractive, but especially for early-stage companies ramping SaaS revenues poses a unique set of challenges. MassTLC has gathered a panel of accomplished SaaS operating executives to share their insights on getting the initial revenue ‘flywheel’ turning and building sustainable SaaS enterprises.

The panel

Skip Bestoff, General Partner, at Castile Ventures did a great job of moderating the discussion–asking all the questions we hoped he’d ask.  Fred Mather, Global Head, M&A and AI Sales at IntraLinks and Richard Turcott, CMO at RatePoint drew on a wealth of experience to share best practices, lessons learned, and advice about how to get the revenue flywheel going.

Determining market positioning and value propositions

Skip asked, “How do you find the sweet spot for your business?”

Advice:

• Understand your market and follow through–too often people find their target market and then later ignore what they’ve learned.
• Meet with prospects to gather market insights.  Nothing beats seeing someone’s reactions as they talk about what’s important to them.
• Ensure that the opportunity you’re pursuing addresses a significant problem
• Tie your value proposition to cost and/or time savings.
• To ramp quickly, aim for those who already recognize they need a solution to the problem you’re addressing

Tips:

• Accelerate your learning by using pay-per-click ads to test various terms you’re considering using to market your solution
• Then, apply what you learn to other channels

Skip asked:  What’s the impact of the subscription model on the value proposition?

• SaaS enables you to target the economic buyer, since you don’t need to put anything in “on premise”
• The sale is more transactional.   When the entry point is just $/month, perceived time savings and ease of use often trump classical  ROI
• Customer centricity is more important than ever.  You need to deliver a great customer experience if you lead with a trial.

IT’s involvement in the sale

Comments:

• The IT budget is shrinking, so you need to attack the operating budget if you want to make a lot of money
• IT is still involved for enterprise sales, that require custom development such as integration with other applications the customer is using
• You need to tell IT what’s in it for them
• Although it’s all over the place, most IT departments today are economic buyers
• If IT approval is needed, there is one more step in the sales cycle, and the company tends to grow less quickly.

How much should you pay to acquire a customer?

Advice:

• Start by determining the lifetime value of a customer (LTV).  The calculation is (1/attrition rate)*Average sales price
• In the beginning, you may need to pay more than the LTV because you haven’t proven your value or developed a brand.
• In the long term, you need to pay less than LTV to achieve profitability

Best practices for acquiring customers

• Depend on prospect and customer anecdotes to get your messaging right.
• For small price point products, you’re conducting focus groups every day (as you watch online buying behavior)
• Leverage the community: start with those who wield the greatest influence with the target market
• Then, focus on getting customers that are willing to serve as spokespeople for your case study
• Work your network:  with the advent of social media, no one needs to make cold calls
• Set limits and success criteria to ensure that your trials encourage conversions:  give prospects just enough time and functionality to experience value
• Hone your process by analyzing the sales pipeline:  key metrics include visitors to trials, trials to conversions, time to progress through cycle, level of discounting

Customer support strategy is essential to success

• Having a well thought out support strategy is essential to success
• Business users are less technically savvy and require more handholding
• To scale, you need to make people comfortable with on-line support
• To maximize profitability, you need to bake support into the product over the longer term.
• Initially, however, it’s likely you’ll need to  provide personal support to compensate for gaps in the product and/or training materials

These are some of the insights I gained from the panel this morning.  What have you done to get the revenue flywheel turning for your SaaS business?

Looking for more ideas?  Download  5 actions you can take today to get more sales ready leads.

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Where there’s sales activity, there’s an unmet need

Our clients find that one of the best ways to find out where to concentrate their firepower is to follow the money. They do this by studying recent activity—their own, the competitions’, or those of the companies that are succeeding under current market conditions. Why? Because where there’s activity, there’s an unmet need.

Use knowledge about wins and losses to replicate success

Next our clients look at outcomes. Who won? Who lost? Why? Once they have the answers to these important questions, they know what they need to do to replicate success–their own or that of others who were more savvy or more fortunate.

Follow the money

Here are concrete actions you can take to follow the money and capitalize on opportunity in a tough economy. Start with your own experiences, but don’t stop there.

If your business has won any deals recently, find out what caused these accounts to purchase when everyone else is sitting on the sidelines. What about their situation was different? What compelled them to act now? How did they find your company? What caused them to seek you out? How did they justify their investment?

From market intelligence to marketing strategy

Depending on what you hear, the answers to these questions may shed light on what characteristics separate the prospects that are likely to buy, from those that are not. You may also find out who you need to reach at these companies, where you need to place your marketing messages, or what you need to emphasize in your marketing literature and on your sales calls to capture attention and motivate action.

Competitive intelligence can uncover opportunity

If you haven’t won any deals recently, try to find out whether anyone in your target market has bought from anyone else. If so, you may be able to turn to them for answers to these important questions. Then, you can use that information to remove obstacles to the sale—and replicate their successes.

If neither you, nor your competition, have won any deals lately, don’t despair. You may just be targeting the wrong prospects or using the wrong message.

Validate assumptions to uncover new value propositions

The next line of attack is to go back to your existing accounts—especially those that are actively using your goods or services. Find out not what caused them to buy originally, but how they are deriving value from your solutions today.

It’s not uncommon for companies to buy for one reason, only to learn later that their purchase is more valuable when deployed to meet an entirely different need. If you find that’s the case, ask them how they discovered the new application—and try to quantify the value that they’re deriving. Then, if the value is significant, you’ll want to figure out who else might have similar needs—and rewrite your marketing messages to reflect the value these accounts have discovered.

Keep following the money

Still no success? Then, it’s time to go further a field. Where are companies in the industries you target spending money? Which ones are spending? What needs do they believe their purchases will address?

Once you know which needs are at the top of prospective buyers’ lists, you’ll know where to focus your efforts. Perhaps you can reword your messaging to demonstrate how you address these same needs—or perhaps you can develop a solution that does. If not, you may be able to partner with someone who is addressing those needs to enhance—and add value to their solution.

Change can create market opportunity

When times get tough, the business environment changes, and buyers’ needs and priorities change. Approaches that worked last year—or even six months ago—may no longer work. Nevertheless, strategies that never worked before may be effective now.

But you can only capitalize on market opportunities if you know where they are

The only way to find out what those strategies are is to turn to those that are still spending. Only they have needs that are so pressing that they bought in this economy. Only they know what worked—and what didn’t at every stage of the buying process. And only they know what ultimately caused them to purchase—and why they selected the vendor they did. On the other hand, once you know what they know, you may just be able to get a leg up on the competition.

Where is the money?

Let us know what you’re seeing. Are businesses still spending? Are they spending on similar solutions—but just cutting back? Or are they spending to address entirely different needs?

Related posts:

1. What role does market intelligence play in your company?

In recent posts, we’ve discussed the characteristics of a compelling value proposition, and the importance of concentrating your firepower on those companies that most value your capabilities. This week’s post discusses concrete steps you can take to identify, validate, and test your value propositions.

Begin by gaining deep insights into buyers’ needs and purchase preferences

As Steven Covey said, “Start with the end in mind”. To develop a compelling value proposition, you first need to validate what matters most to prospective buyers. Else, if you make inaccurate assumptions, you’ll miss the mark and potentially end up wasting lots of money on ineffective marketing programs.

This can be a lot harder than it seems because there are lots of important questions you need to answer first. Approach this assignment as journalists do when researching a breaking story. Start by inquiring about the 5 Ws and the H.

Who are your most promising prospects?

As we discussed in the past, the most promising prospects are those that value your solutions most and will therefore pay top dollar, buy more quickly, and/or motivate others to also buy. To find them, first list all the market segments that need your capabilities.

Then, eliminate less desirable segments. Examples include market segments that are too small to meet your revenue goals, are so competitive that they will drive up your cost of sales, and market segments that don’t especially value your organization’s unique strengths.

To rank the remaining segments, and identify your target market, interview key stakeholders in each. Key stakeholders include everyone that the decision maker involves in the buying decision–from external advisors to the internal personnel who will use and implement your solutions.

When will prospective buyers need your capabilities?

The need for many solutions is event-driven rather than ongoing. For example, companies are more likely to seek out insurers when they are contemplating taking on new risks, marketing agencies when they are launching new products, or a new accountant when they are dissatisfied with their current service provider.

Often knowing what events trigger demand for your solution can help you develop a more compelling value proposition. To find out ask about last time they purchased similar services: What caused you to purchase then—rather than six months sooner or six months later?

What do key stakeholders value most?

The only way to ascertain whether you solutions provide sufficient value to garner sales is to first find out what matters most to decision makers. Ask: What are their goals? How are they measured?

Then, ask the same questions of the remaining stakeholders. Although only one person can approve a purchase decision, others can block it if their needs are not met.

In fact, you may need multiple value propositions in order to win the company’s business. For example, the decision maker may be bent on achieving market share. Finance may require a certain return on investment. Supporting departments may care about the cost and ease of ongoing maintenance. Users may focus on ease of use and access.

Where do decision makers get their information?

Some decision makers learn of new solutions through trade journals or trade association meetings. Many expect those that work for them—and have subject matter expertise—to make them aware of the need for new solutions. Others turn to trusted advisors and colleagues for recommendations.

Where ever your decision makers turn for information, that’s where you need to place your marketing messages. Else, you run the risk that you will not even make the short list when it comes time to evaluate new solutions.

How do stakeholders decide whether or not to recommend your solutions?

Not only do different stakeholders have different goals, they often require different evidence to reassure them that your solutions will meet their goals. They seek this information to address their reservations and mitigate risk.

Some will require media coverage in marquee publications, others will require references and/or testimonials from industry leaders, and still others will require demos or tools that will help them calculate the return on investment they can anticipate. Again, whatever their preferences, you need to do it their way. Else, they may never access your value propositions—and you may lose the deal to the competition.

Developing a value proposition is an iterative process

Once you’ve identified a few value propositions, do some testing. Send out a direct mail piece and see how many people respond. Develop google ad word campaigns that offer a free demo. Offer a free webinar and see how many people attend.

If people show interest you’ve probably discovered something of value. If people invest time in learning more, you may have a compelling value proposition. If not, you need to go back to the drawing board.

Validating your value proposition helps you make the most of your marketing investments

Remember, it’s not what you think that’s important; it’s what matters most to your most promising prospects. That’s why industry leaders always invest in marketing research despite the fact that they have ongoing experience with existing customers.

With the marketing investments they’ve made in product development—and plan to make in promotion–large companies know they can’t afford to miss the mark. Chances are neither can you.

What surprising information has your organization learned when validating your value propositions?

Ready to try your hand at strengthening your value proposition?  Download our free do-it-yourself guide now.

Related posts:

1. Capturing buyers’ attention: What makes a value proposition compelling?
2. How to create a compelling value proposition: Do it yourself in 3 steps
3. Getting top dollar depends on first determining who values your solutions most
4. Value proposition example for a professional service provider