1: What is the Value Proposition?
Value proposition does not mean delivering the product/service to your customer rather it an important tool for your business that solves the problem of a customer. Value proposition helps you to understand 3 things:
• If your product or service is solving a problem or improving the current situation.
• If your customer is getting the benefit.
• Why should the customer choose you over competitors?
The value proposition is not a tag line or positioning statement of a company.
For example, the tag line of Apple is ‘Think Differently’ and their value proposition is its:
- Innovation
- Features
- Services
- Looks
- Style
2: What is the Importance of Quantifying Value Proposition?
When you assign a metric and quantify the benefit your customer is getting, i.e. you can measure this value, then your customer can see more value and understand it faster. Therefore, QVP is very powerful.
Let us understand QVP with an example.
For example:
• A company that makes printing ink has developed a new type of ink and wanted to sell it across the country.
• Now, their sales team was divided into 2 teams.
• The pitch of first-team was based only on value proposition and tells about the benefits a customer will get from the ink, the technology used in the ink, and how it is different from other inks.
• The pitch of the second team was prepared with quantifying data like the ink is giving 6% less ink-based errors and dries 67% faster than other inks and it is 12% cheaper.
• Therefore, after quantifying the above points in the pitch of the second team, the customer has clearly understood why this ink is better than others and how much benefit he will get from it.
• If you listen to both the sales pitch, you will purchase the ink from the second team.
• Also, if the claims of the second pitch are verified, the customer will become your repeat customer.
In QVP, you calculate quantitative metrics to make the customer understand the value of the product. By keeping the benefits measurable, the trust of the customer builds faster. There are 3 factors to evaluate Quantifying Value Proposition:
• Better: How is your product better than the other products available in the market? What benefit does the product bringing in customer’s life?
• Faster: How much less time does the customer taking to perform a task using your product?
• Cheaper: Is the product cheaper as compared to the other products?
3: How to align Quantifying Value Proposition(QVP)to your target customer’s priorities?
There are 2 ways to align QVP to the priority of your targeted customers:
• Focus on persona:
• This means that you should focus on the top priorities of your ideal customers.
• If you have understood the full life cycle use case of the customer, i.e., how a customer uses the product, then the focus of the value proposition should be on the top priorities of the customer.
• For example, SensAble technologies is an industrial designer in the toy industry and deals in the B2B market. The top priority of their customer is that the toys should reach the market as early as possible especially when they are based on movies or game characters.
• Also, the toys based on movie or game characters should reach the market early because if a new game or movie comes, no one will buy old toys.
• Therefore, the company focused on the first priority of the buyer, i.e. making the toys reach the market faster.
• If the company would have made cheaper toys but taking more time to deliver, it won’t have any benefit for the client.
• However, with the help of technology, if the product reaches the customers 3 weeks before, which means it is taking 40% less time in this process, then the customer will come back to the company as his priorities are fulfilling and the company is also focusing on his priorities.
• ‘As-Is’ State V/S ‘Possible’ State:
• ‘As-Is’ state is today’s situation, i.e.:
• Current state of process
• Gaps or issues a customer is facing
• Reasons for the customer not getting full benefit or value
• Better solutions you can provide to the customers
• When you will understand the current situation, you will be able to focus more on the things you can achieve in the future.
• Therefore, you will have to make a comparison between the current situation where your product is not being used and the possible state when your product will come in the market and what happens when the customer will use it.
• In both cases, you will have to make it quantifiable by applying metrics and the difference between the values will be your quantified valued proposition.
• Also, if you make a diagram of QVP and tell the customer about the earlier situation and the change in the situation after the product is launched, the customer will be able to understand it better.
4: What are the benefits of Quantifying Value Proposition?
• Clarity:
• The customer gets the clarity of the product as he is able to understand it easily.
• You also understand that your customer is more interested in value rather than function or technology.
• Communicate specific result:
• It communicates the specific result of the product to the customer.
• Product:
• It easily tells why the product is better and different from others in the market.
• Diagram:
• When the customer sees the comparison diagram that what is the situation earlier and what it is today, he is easily able to understand the advantage of the product.
For example:
• InTouch is a company that makes a hardware/software product for pregnant ladies.
• As pregnant ladies wish to stay connected with the child inside them, so, as per the ‘as-in’ state, there were patches or belts available in the market that had sensors. These sensors help the mothers to know about the heartbeat and pulse of their child. This information is fed in the system and based on this data, mothers get to know
that their child is healthy and happy.
• If pregnant ladies know which things make their child happy, they will do that.
• Here, the priority of the target customer is that they should know that their child is healthy and happy and stay connected with them.
• But, at that time, there were only expensive and uncomfortable heart monitors in the market that sometimes, showed inaccurate reading.
• Therefore, InTouch has used the possible state and made a high-level brochure of its product and showed it to the customer. The QVP of this product was it was easy to use, showed accurate rating, and not very costly.
• The customers showed interest in the product, it got designed and was launched in the market.
QVP is important to understand your product better and to increase its sales. In addition, QVP is important because:
• Far more compelling:
With the help of Quantifying Value Proposition(QVP), you have an army of facts and figures and you can impress customers by making him understand the value of the product through facts. So, it is more impressive.
• Selling ammunition:
It is a weapon for your sales time and if you are not doing it, your team will not be able to convert your 5% potential customers. Also, it is very important in the case of B2B clients.
• Easier to price:
When you create the QVP, it is easier for you to tell if there is a similar product in the market or not. Therefore, it becomes easier for you to price its value as you can justify the value-based price easily.
• Differentiator:
It differentiates you from the rest of the products in the market. A personalised QVP made while keeping all the factors in mind gives a great impact on the customers.
Now, you have reached a very interesting stage in your startup journey as you know about your customer and the value that the product will deliver to the customer.
At this stage, you must have the overview and knowledge to build your product. This much progress will also help you to understand your go-to-market strategy and how you are going to launch the product in the market.