Marketing Strategy · Business Strategy

Do people really understand the value of a value proposition?

Nigel Dessau Chief Marketing Officer at Wellsmith, LLC

February 11th, 2016

In working with start-ups and new business, I have noticed that no one is really helping them understand the value of a value proposition. This is an area I spend a lot of time on. I have a very clear view of that goes in one ... what do you think makes one up?

I would also be interested in hear examples where working one with a team changed how they viewed what they were doing.



Bob Fucci Sales and Revenue Growth, Strategy, Advisor, Speaker

February 12th, 2016

We all answer this question from our own professional "prism".  As a revenue producer, the value proposition of my solution always needs to be clearly articulated by my client.  In all too many revenue sales reviews sales people guess what the value proposition is or simply repeat the internally marketing messages. 

This is no criticism of marketing - its critical to start the conversation with well designed and impactful value propositions, but those messages only serve to start the conversation with the client.

The way sales happen is the client determines the value proposition will align internally to their investment options and move to the top of the investment list.

Top revenue producers ask the client to define the true value proposition and make those discussions educational, collaborative and transformative.

Jeff McCreary Business Growth Expert and Independent Board Member

February 11th, 2016

The best way I have found to address this is to get the folks focused on "Benefits" as opposed to "Features." I find Feature Focus to be VERY prevalent in the high tech world (noted your SW background). Not nearly enough time and energy is spent addressing how the product/solution deliver benefits (value) to the user. Great companies learn how to quickly, succinctly, and compellingly articulate the benefits that a user receives from their product/solution. I feel it starts with an understanding that the entire point of business is to convert KNOWLEDGE (you know how to create a product/solution that delivers compelling value to a user) into ECONOMIC VALUE (Money basically That is, you will get paid for the value you deliver). Cheers: jsm

Jesse Noyes Director of Product Marketing & Inbound at Kahuna

February 11th, 2016

Hi Nigel,

This is just personal experience, but I've noticed a strong correlation of internal buy-in for a value prop and the level of competition in the startup's market. When the startup is truly novel, sales and marketing are primarily focused on winning logos and closing deals, and feel a value prop is too high level to be useful. (This is particularly true in early stages when each deal involves a ton of personalization.)

As the competition heats up, however, sales and marketing start to realize they need to sell more than current capabilities, pricing flexibility, etc. They need to provide the customer with a vision for the value the company will provide, and will continue to innovate on. This is when they start begging for a value prop.

The way I've sold this internally in the past is by offering examples of market leaders in highly competitive markets, pointing specifically to how similar their products/features might have been early on, but how the value propositions differentiated them as the market grew. This gives people a reason to think ahead and create consistent value props now and planting them in the head's of their future customers.

John Currie ITERATE Ventures - Accelerating Science & Technology Ventures

February 11th, 2016


Great point! (I agree) and good question. Here's one of my real-world examples of how the same technology/product produces THREE very different value propostions ...

The core technology is a low cost-3-camera device, with some elegant recognition software, that recognizes sporting events and requires no human interaction for filming.

VP #1 - Schools would want this to capture their games. CapX budget item, out of reach for the masses, but would work for the top tier. Pain point is that the school needs more & better capturing of events.

VP #2 - Sports Production Firms can lower their production costs of events. Bigger players, licensing & CapX models discussed. Pain point is that production costs are too high.

VP #3 - Sports Networks can create an exclusive content network - think high schools - very easily. Pain point - enablement of lost cost content + exclusive.

All three are viable btw.  All three have very different business plans/financials.

Mary Anderson Advisory Board Member at Choix LLC

February 11th, 2016

I'm also a strong believer in getting clear on your value proposition. If this is done properly it should not only help to build compelling messaging but help you truly reach your audience.  Value proposition is also a great tool for building a strong road map. 

I was helping one of my startups with this and it really changed the way we were messaging the product and who we were going to target.  Our GTM plan was modified to reflect our new value prop and with a refined audience allowed us to be more efficient with our marketing.   

Asdrubal Romero Director at The Founder Institute

February 12th, 2016

I think that the majority of startups are not *business savvy* but *techie savvy*. In that sense, they have not developed the understanding of what "value" means, specially because there is no clear value in the startup industry! Startups with no value proposition but millions of "downloads" believe are doing good. Not true. It is just a hype. 

Compare that to my earliest startup, the technology implemented in a call center increased its efficiency in 28% within 15 days of implementation and resulted in +625.000 US$ ROI that year. That is real value, traceable to dollars also. And we are just starting to understand the power in this technology we are implementing. I will be glad to discuss this with some experts of big corporations as you.

Startups really need the "green-hair + gray-hair" mixture.

Rob G

February 12th, 2016

it never ceases to amaze me how many tech startups get all the way through MVP and often rev 1.0 product development and still cannot articulate a value prop. It's mind boggling!  Bob Fucci has keyed on an important point - you can articulate what you feel is the value of your product, but you are always better off when the buyer helps define that VP in their vocabulary.  That's why PMF (product/market fit) work up front is so critical.  
What goes into a value prop depends to a significant extent on who your prospect is - this goes back to Bob F's point:  you can generalize a VP from collecting feedback from many prospects/customers across all your market profiles, but "the" value proposition is always best articulated in the buyers words.  That's easier to do in the b2b world than b2c.  All b2b buyers (i use that term generically here) prioritize expenditures in this order: 1) those that increase revenue, 2) those that decrease expense (this includes those that decrease risk), and 3) those that improve community perception (feel good stuff).  So if a company has $x to spend the products/projects that will increase revenue will always float to the top.  If they have 100 projects they are considering and yours is the only one with a value prop that focuses on helping them increase revenue you are in the right spot.  the opposite is also true.  FAR too many startups and even mature small companies tend to focus solely on cost reduction benefits.  Prioritize the points that make up your VP in line with the way your prospect/customer prioritizes them - revenue first. Boiling that down to real $$ figures helps that much more. That's why you need to understand your customer very early in the life of your startup.  
I worked with a tech startup  not long ago that had built a MVP+ and had a couple of active product trials in place, but they couldn't seem to get real traction - they really struggled to get more customers.  The company was a very smart and experienced software dev and a part-time 'marketing' guy.   The dev had quit his job an was working FT on the startup.  They had a built an on-premises customer survey kiosk focused on the restaurant market.  He had heard that my startup had a couple of commission-only sales people on our team and committed customers before we had a finished product and he wanted to know how he could do that - he assumed that would solve his problem. They could articulate their features and benefits pretty well, but had never taken the time to really understand the monetary value to what they thought was their target customer.  We spent a couple hours on a white board drilling down on pricing and cost models and he soon discovered that he couldn't make a profit trying to sell to 1-off or small chain restaurants and there was no way he could attract a sales person to sell his product on commission. The numbers just didn't add up.    It became clear that his capital and support costs couldn't justify a price at which they could make decent margin, pay commissions and grow let alone pay their own salaries.   They felt pretty dejected.  We re-worked their sales and pricing model to show then at what pricing they would need to make this work.  It turned out that 1 of his 3 trial sites was a small restaurant in a busy airport and it just so happened that he and his co-founder both worked for an airline.  By focusing on the value of their offering to the airport with secondary value to every vendor (who paid money to have a presence at the airport) and the buying power of the airport and the exposure they would get in the airport and leveraging his contacts with the airline they worked for, they could at least make the numbers work much better than before and the value prop finally had real legs. It became clear to them that their current mode had little to no chance.  We completely changed their entire sales, marketing, financial and operating models in a few hours and it all started with taking some time to really understand and articulate what they thought was their value proposition to what they thought was their target market. Why that wasn't the first thing they did before building their product is a topic for another discussion!  They were 1 of about 25 tech startups at the same incubator and all but about 2 of them had the same issue - didn't really take time to truly dig into PMF and thus had no real idea how to sell their products.  Sound crazy, but it happens more often than not. 

Ron J Williams Dad. Product and Strategy.

February 11th, 2016

I think this is a great question and part of a larger discussion about value. In my experience, teams tend to have an idea of what they think their customers (or more often in early stage companies their prospective customers) should value. The result is a sales pitch and product roadmap that reflects these aspirational and potentially ungrounded values. So even if they can articulate the value they are proposing, they may still have a problem.

If, by definition, the value proposition ("value prop" for short going forward) is the clear articulation of WHY what is being offered is important to and relevant for a target, then the value prop is only good if it lines up with two other kinds of value:

  • True Value - The direct fix for the way in which a customer's pain manifests itself in their workflow (e.g. Look, this new analytics package finally lets me pull in data from tweets and facebook posts into reports)
  • Perceived Value - The way in which the customer values the solution in their own very real life...and usually the thing a person PAYS for (e.g. Holy CRAP! This new reporting is beautiful and gives my micro-managing boss a way to scan a screen and see how hard I'm working)
Teams need to appreciate that to succeed they've got to understand 1) how their prospects/customers live, work and hurt, 2) which specific pain point they're tackling, 3) how their solution is better than what's already on hand and finally 4) be able to convey 1-3 crisply.

That IMO is where good value props come from.

A good example of refining value prop: I was consulting a sports-facility organization that successfully was getting its best customers to make multiple purchases each year over multiple years. Upon closer inspection of the data and through customer interviews we helped them to realize that what their most prolific spenders were paying for was not each individual program (i.e. afterschool, summer camp, outdoor league) but access to the facilities and great coaching staff. We helped them test into an exclusive VIP tier of membership-type all you can eat pricing for their best customers.

Result: actually take pain out of spending AND increase predictability of revs in highly profitable segment. The we realigned the value prop around convenience and perceived value of exclusivity.

Pierce Wetter Front End Principal at Skyport Systems

February 11th, 2016

We are all in sales. :-)

Here's an article I wrote on Linked In to explain how to use a Value Proposition to sell someone an idea internally:

And here's a great book on building VPs: Value Proposition Design

Charlie Garland

February 11th, 2016

Nigel, one of the world's leading authorities on Value Proposition design is Dr. Mohan Sawhney, who is (or at least used to be) professor of Innovation and Marketing and Kellogg School of Business.  If you Google him -- or, better yet -- search for him and/or Value Prop's on YouTube, you'll see some very helpful videos that discuss various aspects of his VP framework, which gives you (and entrepreneurs you may be trying to counsel) a rich, tangible way to assess and enhance any VP.  I've helped clients do this, so if you have any specific questions, I'd be happy to chat with you about it...