Excerpted from "Exceptional Selling: How The Best Connect and Win In High Stakes Sales" by Jeff Thull. This material is used by permission of John Wiley & Sons, Inc. All rights reserved. For more information, visit Wiley Publishing.
Commoditization of the Value Proposition
The roots of this problem are anchored in the widespread misunderstanding and misuse of value propositions. Companies create these propositions to articulate the value they plan to offer customers. These statements become the basis and guiding force of the collateral materials that marketers develop for the sales organization—sales messaging, brochures, PowerPoint decks, and so on. The salesforce dutifully takes all of this collateral and presents it to the prospect. They are selling value, right?
Not exactly. The salesforce is presenting the value proposition itself, a generic statement of value that requires the customer to translate that value into terms relevant to their businesses and their job responsibilities. For example, "Our adhesive agent bonds at a lower temperature. It does cost three cents per pound more, but the resulting energy savings make this the most cost-effective, environmentally friendly product on the market." That certainly sounds like value, at least in terms of the overall marketplace. However, we have no idea if our value has relevance with this customer.
Often, the customer doesn't either. In fact, the idea of depending on a value proposition to do the job is another example of the same error that we discussed regarding presentations in Chapter 1. It too frequently is an answer to a question that hasn't been asked.
This problem is magnified when value propositions are poorly conceived. The concept of the value proposition has been distorted and stretched well beyond its originally intended role. Given the emphasis that companies place on value propositions, you would think that they have been around since the dawn of business. Actually, a former McKinsey & Company consultant named Michael Lanning coined the term in a 1984 white paper. Lanning said that a business was a value delivery system and that this system could be articulated in a "value proposition." Fourteen years later, in his book Delivering Profitable Value (New York: Perseus Books, 1998), Lanning defined a value proposition as:
This was solid thinking, very coherent and comprehensive. But as usually happens, Lanning's concept has been misused and diluted in its real world use.
I worked with a major company in the industrial automation business that fell into this trap. This company was very focused on selling what I call sources of value— these are the elements of the solution that are capable of creating value for the customer. When their salespeople talked to customers, they proudly described how their company manufactured a high-quality product, a product built so efficiently that it could be sold at the best price on the market. That's a great thing: a high-quality product and a low price. You would think it couldn't be beat, but, as we'll see, that turned out to be an erroneous assumption.
The second thing that happened was that value propositions evolved into value clichés. Instead of being specific about the customer problems they could resolve and the "experiences" they could deliver, sellers began articulating value in generic, ultimately meaningless terms, such as high-quality, fast, and world-class. How frequently are you using words like this? As a self-check, compare your value proposition and sales collateral to those of your top three competitors. Shuffle them and reassign them. Can you tell the difference? I'll bet you can't. (And if you can't, what are the odds that your customer can?)
In highly competitive industries, which are now the majority of industries, the value propositions and sales collateral of various companies are indistinguishable from one another; and, too often, undistinguished to boot. When you communicate value with words like "rapid response" and "limited breakdowns," you are using the same words that all of your competitors are using. These are examples of what I call loaded words and customers use them, too. We'll talk more about their negative consequences and how to deal with them later in the book.
Now, let's go back to Lanning for a minute. By 1998, when he wrote the book on value propositions, the concept had become so misused that he felt the need to add another clause to its definition. He added that value propositions were "not the trivialized and garbled notions that have been wrongly ascribed to this term."
The consequences of the trivialization of the value proposition have flowed directly down the strategic chain to you and your customers. A value proposition might or might not be relevant and credible to a specific customer. For that matter, it might or might not have any basis in reality. Nevertheless, the vast majority of marketing communications and sales professionals are relentlessly presenting value propositions.
Read the rest of this excerpt and download Chapter 2: Nobody Buys a Value Proposition
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This was first published in October 2006