Blog

There Are Two Types Of Value Propositions

Have you ever heard the story about the six blind men and the elephant? The one touching the trunk thinks its a banana tree trunk, the one touching the ears thinks its a large hand fan, the one touching the legs thinks its a pillar, the one touching the stomach imagines it to be a wall and the one touching the tail said it was a snake. Value propositions depend on your viewpoint, and the best one is the one that aligns with the customer’s situation.

A few years ago, I was conducting a series of opportunity reviews for Cisco. One of the highest profile opportunities they wanted my help on was Hertz, the rental car organization. The opportunity size was significant, but internal visibility had become a negative. The forecast item had slipped from month to month for several months and senior sales leadership was pressuring the entire chain of command for closure. Needless to say, the sales team was very interested in getting this engagement off of the table.

After covering the background and the history of activities with Hertz, I peeled back the onion with questions about the value proposition. The person in charge of the account was very confident in his reply, “We have documented a significant reduction in their cost of ownership with our solution”, he explained. He went on to detail numbers that were quite impressive. When he finished, I asked, “is this your value proposition or theirs?”

The quizzical look on his face answered my question.

I put my pen down and dug in. I suggested he pretend he was the CEO of Hertz. “As the CEO of Hertz,” I continued, “tell me what the single biggest issue is that you were banging your fist on the table about during your most recent executive staff meeting.” I was trying to create a scenario that he could envision. He looked at me and nodded his head, “That’s easy, its market share.” He continued, “They want to be number one in their industry, but are stuck in the number two position.” I asked him how he developed this perspective, and he explained that he had read about it in multiple articles and verified it through conversations with different stakeholders in the Hertz organization.

I was quiet while I let his observation sink in.

I could see the revelation roll over his face. Then he shook his head and concluded, “Cost savings is our value proposition, not theirs.”  

I continued, “So what’s the risk to your sales cycle if we’re pushing one value proposition, but the decision maker is on the lookout for another?” The account manager nodded his head and replied, “it’s probably going to get pushed out until the business issue I cited is relevant, or the primary issue has been resolved.”

I followed the train of thought, “Now tell me, how does your solution help them with improving market share?” He curled his lower lip under his teeth and proceeded to rationalize the connection to their interest in providing a better Internet shopping experience, directly connecting to problems with their current network architecture.

The two different value propositions both have their place in the sales process. The selling organization should use their value proposition, in this case – reducing total cost of ownership, to establish credibility and generate interest, but they should use the buyer’s value proposition – increasing market share – to harness their motivation to change. This seller was using the selling value proposition for both. Unfortunately, if they don’t happen to align, it can result in no decisions or delayed decisions, as was the case here.

In my previous post on buyer behaviors, I revealed the six questions decision makers will want answered before they sign off on large purchase requisitions. Two of the questions, “Why change?” and “Why now?” are intended to tease out the relationship of the purchase to the current business issues demanding the decision maker’s attention. If the seller or the buying sponsor miss this connection, the decision maker tends to put the decision on hold, while they look for other recommendations to address the current business issues at hand.

The Cisco team went back to Hertz with a revised proposal highlighting market share as the key driver for the purchase. They were happy to report they closed the order later that month.

Kevin Temple guides sales teams to be more agile and improve revenue outcomes. He can be contacted at kevin@enterprise-selling.com. The Enterprise Selling Group is a leader in delivering sales training, coaching and project oversight to improve the agility of sales teams around the world.

Leave a Reply

Your email address will not be published. Required fields are marked *