Value Proposition Examples: the Good, the Bad, the Ugly

Continuing from my last post, writing a strong value proposition is critical to communicating how your product or service is relevant to your customer segment. Now, there’s the easy way and the right way to write a value prop. The easy way is to craft one in half a day that is written well and sounds good, but that doesn’t include any specifics. The right way is to first gather quantified data which proves your value to your customer. From my experience, this is by far harder than the actual writing because you need to be able to make a claim against the competition that you can legally stand behind.

One grand example is Larry Ellison’s announcement in 2001, that Oracle saved $1 billion by implementing its own solution across the company. The easy way would have been to say “Oracle’s solution saves customers time and money.” Not very exciting. But in typical Ellison fashion, he went big. Think about how much resource and focus needed to be dedicated to be able to say four words “Oracle Saved $1 Billion”. He put the entire company behind making that claim. Was it worth it? Absolutely. Was it painful? Most probably.

Let’s take a look at an example of a weak and a strong value proposition.

From McKinsey’s Corporate Finance Site

Our value proposition rests on an unrivalled package of strategic, transactional and financial advisory services, uniquely linked with independent judgement and deep industrial/commercial insight.

Our reward is not “transaction-based”, so we can maintain genuine objectivity in our client’s long-term interest. In negotiating and carrying out an engagement for a client, we participate fully in the client’s corporate thinking, and take into account not just the immediate value and impact of the project, but its context and implications over a longer period of time.

 We work closely with management and other advisors, such as major investment banks, to leverage and complement their knowledge and ensure maximum impact. We try to foster senior management’s commitment to our recommendations and actively support implementation and skill building.

Analysis

  • Above is the type of statement I often see passed off as a value prop, but it really falls somewhere between a mission statement and a description of capabilities. It’s very difficult to write a general value proposition that is not targeted to a specific audience and does not contain examples.
  • It’s missing a quantified value. This could have been added in the form of an example or a claim such as “Our services have demonstrated an average of 20% ROI improvement.”
  • It’s also missing a competitive differentiator. How is this approach better than any other consulting company?

Result: not a value proposition. It does succeed at describing what sounds like it might be relevant to their clients, but it’s missing any quantified results or competitive advantage.

How would we make it better?

Gather the data

  • Brainstorm with the right people in the organization and list as many quantified factoids and data points as possible. (eg. saved xyz customer 20% in operations. Cut time-to-market in half from two to one year.)
  • Run all of these data points through the sieve. Are these defensible, sourced? Are they actually better than something the competitor could do?

List competitive differentiators

  • Create a list of the First, Best, Most, and Only claims your service or product could make.
  • What capabilities do you have that your competitor doesn’t?

Make sure it’s relevant

  • Talk about what you have done for customers, how you understand their industry.
  • Are the values you are citing helping them improve their business by:
    • Increasing revenue
    • Decreasing cost
    • Speeding time to market
    • Improving agility (ie time to react to market changes)
    • Making better use of resources (ie requires fewer people to accomplish something, or resources can be reapplied to more strategic areas)
    • Providing better customer service for their customers
    • Improving organizational intelligence and insight
    • Improving accuracy of forecasts, predictions, market conditions
    • Reducing the burden of compliance

Good value proposition example from VMWare

For IT organizations wrestling with the high cost and inflexibility of the old “one server, one application” model, VMWare can improve the efficiency and availability of IT resources and applications through virtualization.  About 70% of a typical IT budget in a non-virtualized datacenter goes towards just maintaining the existing infrastructure, with little left for innovation. VMWare can free your IT admins from spending so much time managing servers rather than innovating. An automated datacenter built on the production-proven VMware virtualization platform lets you respond to market dynamics faster and more efficiently than ever before. VMware customers typically save 50-70% on overall IT costs by consolidating their resource pools and delivering highly available machines with VMware vSphere.

Analysis

  • This value proposition starts by describing the target customer’s problem their product solves
  • It quantifies the problem: 70% of an IT budget spent towards maintenance
  • It describes the benefits of implementing a virtualized data center
  • It offers a range of IT cost savings from their typical customers
  • The only thing it doesn’t do is offer an advantage over the competition. However, it is using the non virtualized datacenter as the alternative in this case.

Result: This is a good value proposition. Even though it didn’t go into the competition, it called out the customer problem the product addressed, described how it addressed it and offered tangible and relevant results.

If you would like my analysis on your value prop and don’t mind public scrutiny, send it to me and I’ll take a look.

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The Three Ingredients of a Value Proposition

Value Proposition = Benefits - Cost

Frequently in marketing, I hear a product or service’s ”value proposition” confused with a product description or list of benefits… “Saves time and money,” “Do more with less,” “2x faster” are actually not value propositions.   

A value proposition needs to have three key elements in order to be a true value proposition:   

  1. Quantified Value

    I’m sure you’ve heard those packaged goods ads that claim “4 out of 5 dentists recommend Colgate” or “Twice the cleaning power of the leading brand (asterisk).” The most important ingredient of a value proposition is the quantified value of your claim compared with some other quantity. The power of the value you are claiming depends on:

    1) How relevant the metric is to your audience
    2) What you are comparing against

    For example, if you are claiming your product runs “twice as fast.” A relatively weak comparison - yet, frequently used – would be against your previous model. The strongest comparison would be against an appropriate competitor’s performance or the industry benchmark. Of course, the metric has to be relevant. If you’re talking to a CEO, s/he may care less about how fast your product goes. Instead, the CEO might be more interested in how it helps his/her company reduce operational cost, or improve return on assets.

  2. Relevance

    A value proposition is only as valuable as it is relevant to the audience you are targeting. If you have decided that your primary product or service benefit is that it lowers the cost of operation, that may be music to the ears of a airline CEO concerned with razor thin margins, but the CEO of a Telco may be more interested in deploying new mobile services to increase revenue per subscriber. Therefore, your lower cost pitch may not be as relevant or valuable to a Telco customer. Your value proposition needs to be tuned appropriately for each marketing segment.

  3. Unique Differentiation

    The final ingredient is whether your competitors can make the same claim as you. If you claim your product can reduce their operating costs by 40%, and your competitor can claim 50%, you have a weak value proposition. This is why claiming a lower price is often a weak quantified value – your competitor can easily match your price, then you’re sunk.

 

If you’ve got all three of these key ingredients, and each is strong, you’ve got yourself a solid value prop. Of course, what makes a value prop even stronger is to weave it into a customer story or elevator pitch with real live examples. 

In the next post, I’ll provide some examples of good value props and a template to help you make sure you’ve capture the key ingredients…

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