The value proposition to a customer is the means by which you converted them to being a customer.
Unless you can demonstrate value to them, in excess of any alternative, including doing nothing, you will not convert.
When you think about it, there are some pretty consistent variables that can be massaged into some sort of quantification of a proposition. While it will never be perfect, it will be better than nothing when assessing the power of your marketing collateral, or perhaps assessing alternative wording.
Having a powerful value proposition is not enough, you must communicate it clearly and effectively to those who may be interested. You also must understand that ‘Value’ is a qualitative term, and will change with context and circumstances.
There are 7 variables I commonly see:
- The strength of the purchase intent of the lead. This will vary enormously on a whole series of parameters, and will vary from time to time. For example, a need expressed to convert IT processes to the cloud from your own server might be a good idea, whose time has come, but when your server blows up, the need increases geometrically. The better you understand the drivers of the purchase intent the better able you will be to make a judgement,
- How closely your proposition matches the need being expressed. When you are trying to sell a 4X4 and the lead is a single bloke who hates camping, you will have a challenge on your hands. Better to offer him the sports car.
- Differentiation. When you are the only one in the market niche, selling to those who need your product becomes easier. When you are one of a number of undifferentiated alternatives, price becomes the major distinguishing factor, and that is never good. Conversion becomes a race to the bottom, and the greatest risk is that you win too often and go broke.
- The clarity of the value proposition to the lead. This is where most fall down in the execution. Look at 100 websites, and see if you can locate the value proposition. While we are learning, the clarity of the proposition to a visitor to a website, which is now the first port of call in almost every purchase beyond the regular and mundane, will be terrible. The key to remember is that the lead, after reading the headline copy on the site, must be able to tell you why they should buy from you, and not someone else, assuming they are in the market you service.
- The level of friction in the sales process. Increasingly as we go on line, friction in the process is becoming more and more important. Off line purchasers are increasingly expecting on line frictionless processes. In B2B sales, the friction is often institutional, the bureaucracy of procurement simply gets in the way. Effective Key Account Management is essential in these circumstances.
- The incentives used to counter the friction. Most often financial incentives are the primary ones used, but tying them to another is common, for example ‘this special lasts only until Sunday’ or ‘Only 5 left’
- Uncertainty caused by the purchase process. Human psychology seeks safety, and that resides in the known, and with the crowd. Asking a lead to do something different increases the risk to them, and the riskier they perceive the solution, the less likely they will be to convert.
So, to the equation.
Conversion potential = Purchase intent + need satisfaction + Differentiation + proposition clarity + (process friction – incentives) + uncertainty.
The way to put numbers on each of these parameters would be to weight each of the parameters in your particular circumstance, then score your lead on a 1-5 scale. The ‘w’ in the formula is the weight you give to each of the variables.
CP = wPI +wNS +wD + WPC + (wPF – wI) + U.
As an exercise, look at your own landing page and score it as a potential customer would when seeking a solution to an itch.
Image credit, again, to Gapingvoid.com
