When I work with entrepreneurs I ask them repeatedly to tell me what their business does. In the majority of cases they talk about feature and function, rather than about the value it delivers to their customers. It’s often the biggest hurdle to growing a business.
An effective value proposition focuses on the value to the customer. It understands the problem that a product or service solves. Why? Because if you can prove a value over and above the sticker price the question of price tends to be a secondary consideration [this presumes the prospect can afford the price – a question of finding the right audience].
Let me give you an example. Tesla announced yesterday it will launch a $35,000 electric vehicle in 2017. Its current Model S sells for anywhere between $60,000 and $110,000. When customers talk about price what do you think the sales representative says?
“Imagine if you never had to buy gas again”.
Gas, the great variable in owning a car right now. Let’s say you spend $100 a week on gas…
$400 a month. $4800 a year. $24000 over a five year period. The car suddenly starts to look less expensive. Factor in that gas prices will fluctuate – and are likely to continue rising…
You also have no expensive trips to the Shop for repairs. No fluids. No oil changes.
Elon Musk is thinking about the perceived value to prospective customers and is looking at the total cost of ownership of a vehicle, rather than just the sticker price. When you think about your product or service, consider what your customers will value most – and sell it to them.