The Problem With B2B Sales?
This blog highlights some of the challenges in B2B sales and a way to reduce the sales cycle. It then suggests ways to mitigate these challenges while shortening the sales cycle and increasing the Lifetime Value (LTV) of your customer.
The first major challenge is B2B sales is the sales cycle. If you’re lucky it might only take a few weeks. If you’re unlucky, it might take months or even years. The second challenge is the LTV of your customer.
Alone, these challenges are problematic enough, but if you have a long sales cycle AND a low LTV then you have a real problem. Here, it’s critical to shorten the sales cycle and increase the LTV of your customer.
How do you do this? Read on…
What Is A Value Proposition?
Before you’re able to write your own compelling value proposition, you need to know what a value proposition really is.
“A value proposition is a clear and concise statement of the value or outcomes an organisation’s product or service can provide to it’s customers.”
Typically, customers don’t want an organisation’s product. The customer wants to fix a problem they have and an organisation’s product or service will help them achieve that outcome. The classic is example is a person who wants to hang a painting. In order to hang the painting they need a hole in the wall for the hook. In order to create a hole, they need a drill. The outcome isn’t an organisation’s product or service i.e. the drill. The outcome is the hole in the wall to solve the customer’s problem of wanting to hang a painting.
When a value proposition focuses on the outcome it delivers for the specified customer segment, instead of the product’s benefits and features, the value proposition has a much better chance of attracting and converting customers.
The Value Proposition Design Summary
The book, Value Proposition Design, was written some time ago by Alex Osterwalder et al. It’s a couple of hundred pages “how to guide” about creating a value proposition. To save you the trouble of reading it and to help you create a better value proposition so you can shorten your sales cycle and increase the LTV of your customer, I’ve summarised it. Before getting into value proposition design, the Business Model Canvas (BMC) needs to be mentioned. In short, it’s a model that breaks down a business into nine sections. Two of those sections are Customer Segment and Value Proposition. The Customer Segment section is where you begin by defining your customer and your customer persona. The Value Proposition section, as the name suggests, is where you write a unique value proposition for each of your customer segments.
Before the Value Proposition Design book, Steve Blank wrote the “Four Steps to the Epiphany” and “The Startup Owner’s Manual,” which are all about the BMC. The Value Proposition Design book takes the concepts from both of Blank’s books and applies the Value Proposition Canvas (VPC) to it. The BMC is a tool to look at the whole business in one place. The VPC is a tool to us to look at a customer archetype.
The Value Proposition Design book is split into two sections. The first section provides the theory and the second section provides instructions on how to develop a value proposition. A value proposition describes the benefits customers can expect from a product or service. Great value propositions focus on jobs, pains, and gains that specific customer segments are trying to solve or achieve. The VPC is a way to visually represent customer wants/needs and the value chain thought the business. The VPC is designed to give organisations a unified language when discussing VPC when creating new value propositions or iterating existing ones.
“Value Proposition Design shows you how to use the VPC to design and test great value proposition in an iterative search for what customers want.”
The Customer Profile side of the VPC (the circle divided in three) allows for the clarification of customers. The Value Map side of the canvas (the square divided in three) allows for the delivery of value to customers. The Customer Profile side of the VPC has three sections; Customer Jobs, Customer Pains, and Customer Gains. Customer Jobs describes what a customer aims to get done on a daily basis. The jobs could be functional, social, or emotional. Each job has a different value according to the customer. Some are critical, while others are inconsequential. Customer Pains are risks before, during, or after a job the customer is trying to get done. The pains could be functional, social, or emotional. Each pain has a different value according to the customer. Some are critical, while others are inconsequential. Pains should be measured quantitatively not qualitatively. Customer Gains are outcomes or benefits which range from required and expected to things that delight and surprise customers. Each gain has a different value according to the customer. Some are required, while others are nice to have. Gains should be measured quantitatively not qualitatively.
An organisation should understand “the day in the life of their customer” as best they can. An organisation should determine what jobs, pains, and gain their customer has and rank them in importance according to the customer. Ultimately, an organisation is looking for the top three pain points or gain creators that occur on a daily basis, where the customer has tried to solve the problem themselves, and they have a budget. This information should be captured in a customer persona document. There should be one value proposition for each customer segment.
The Customer Value Map side of the VPC has three sections, Products and Services, Pain Relievers, and Gain Creators. Products and Services represent all the products and services an organisation offers. The products and services should relate directly to the jobs, pains, and gains of your customer segment. The more accurately this is done via a value proposition for a specific customer segment, the closer the Product-Market-Fit. Again, with pain relievers, an organisation is looking to solve at least one of the top three pain points or gain creators that occur on a daily basis, where the customer has tried to solve the problem themselves, and they have a budget. The Customer Value Map will clearly and succinctly outline how the products and services create value for a specific customer segment. As with the customers jobs, pain, and gains on the Customer Value Map side of the VPC, an organisation should list the customer’s product and services, describe the pain they are solving or gain they are providing for the customer, and list them in order of priority according to the customer. The closer an organisation’s products and services map to the customer’s top 1 – 3 pains and gains the better the Product-Market-Fit.
Product-Market-Fit is the ultimate aim of value proposition design. The better an organisation’s products, services, and value propositions meet the needs of a customer segment’s jobs, pains, and gains, the closer an organisation is to Product-Market-Fit. Product-Market-Fit takes place in three stages. Problem-Solution-Fit, as mentioned in Steve Blanks’ work, occurs when an organisation has evidence customers care about specific jobs, pain, and gains and an appropriate value proposition has been designed. Product-Market-Fit occurs when an organisation’s products and services are adding value to a customer segment by solving their pains and meeting their needs. Business-Model-Fit occurs when a scalable and repeatable business model is found. A template for a value proposition may look something like this:
Our [product/service] help(s) [customer segment] who want to [jobs to be done] by [verb] and [verb] unlike [competing value proposition].
A simpler version is…
We help X accomplish Y by doing Z unlike any other.
Putting Theory Into Practice
Now that you have the theory, it’s time to apply this to your value proposition. Here are some helpful tips and tricks when creating your value proposition.
- Creating your value proposition is not a one time exercise. As you research your competitors, learn from your customers, as technology changes, etc you should revisit your value proposition and make sure it still makes sense to your organisation and your customers.
- Your value proposition has to be succinct and crystal clear. It needs to speak directly to your customer segment and tell them the outcomes you’re providing for them. If your value proposition is too high level or too vague then it’s not going to be compelling to anyone. Examples of poorly value propositions:
- I help small businesses generate income from home
- We help enterprise businesses with sales
- We help you build your dream home
- In the section above I mentioned product-market-fit. That’s when you have a product or service that solves a specific problem for a specific customer segment. You’ll know when you have product-market-fit, when you can introduce your value proposition to your customer segment and they reply “oh, that’s sounds exactly what I’m looking for. Tell me more”… or something similar
- It’s very difficult to be everything to everyone, especially in a world of marketing noise. You need to be able to find your target market, speak directly to them so your value proposition resonates with them above all the other noise. How do you do that. Choose a niche to focus on and dominate that niche. If necessary, you could even go hper-focused and niche into the niche. For example, you might want to target all doctors in the US but realise that’s a competitive space. You could choose to focus on delivering your product or service to a specific subset of doctors.
- Do some competitor analysis. See who is dominating your niche and who is falling by the wayside. Have a look at their value propositions. See how they compare to yours. See if there’s a gap in the market and how you could position yourself to take advantage of that gap.
So, I hope you’ve found this information beneficial and you’re able to refine your value proposition in order to attract your perfect customer. If you have any questions, feel free to get in touch.