Value Proposition

The value proposition truly is the cornerston of effective selling. A powerful value proposition will cover a multitude of selling mistakes. It is the language spoken by the CEO. Others in the organization can have motives that have nothing to do with value to the organization but he CEO is focused on the health and vitality of the organization. A sales person might want to bulk up on inventory because his income is based on sales but too much inventory is more often the cause of business failure than lagging sales. The controller might want to trim labor costs to the point of sacrificing customer service which ultimately impacts revenue. But, the CEO can't afford tunnel vision. A value proposition that is based on the CEO's metrics using her numbers is powerful.

A strong value proposition increases the size of sales and increases the margin. A strong value proposition reduces the time in the sales cycle. A strong value proposition increases commissions.

The traditional approach to a value proposition is nothing more than self aggrandizing diction. It is typically some form of "marketing speak" that hovers somewhere around 30,000 feet. It recommends that you find a unique way to say how you are different from the competition. It is as lifeless and predictable as most mission statements, more of an academic exercise than dynamic and persuasive statement. Traditional value propositions can't pass the "So What" test.

A true value proposition is quantified and verified by living, breathing clients. It focuses on busines results that are measurable, specific and tangible. It will demonstrate enhanced revenues, reduced costs or other strategic benefits.

Examples of real value propositions are:

"ABC Company helped us realize a $400,000 increase in cash flow after we enabled them to increase their inventory turns by 25% because of our amazing software package." - Max Bigshot, CFO of Famous National Manufacturer, Inc.

"We were able to eliminate seven full-time positions saving us $250,000 annually after ABC Company implemented their whizbang technology." - John Importanta, CEO of Bigname Retailer, Inc."

You should see that the difference with these value propositions is that they quantify the value and they are verified by the client. In fact, they are posed by the client directly. That is powerful. When you are in the process of developing your value proposition for a potential sale, you should be able to define it similarly.

"So, Mr. Bigshot, after reviewing your billing process it appears that we can cut 5 days out of the process which means you can get invoices sent out 5 days faster. Since you carry a million dollars in current accounts receivable, if we can cut out one business week, we should be able to realize a reduction of $200,000 to $250,000 in your monthly A/R. That will improve your cash flow by up to a quarter of a million dollars. Do you agree with how we arrived at our assumptions?