Why Value Propositions are Overrated

Freud famously wondered, ‘what do women want?’

B2B sales people wonder, ‘what do buyers want?’ Unlike Freud, however, they think they know the answer.

The received wisdom is, of course, that buyers want “a compelling value proposition.” As John Caddell puts it in “Another kind of value proposition”

The term “value proposition” has been in vogue in business-to-business sales for twenty years or more. In short, it means that a product for sale must, in essence, create more money (in increased revenue or reduced costs) that it costs to purchase. “If you buy my widget for $x, you’ll get $5x back over the next 10 years,” or something like that.

…The value proposition is a very logical concept. That is its beauty and its limitation.

Just one problem, as Caddell points out: it’s demonstrably not true.

Or, to be more precise, it explains far less about buying behavior than most B2B sellers like to believe. So—truth notwithstanding, the economic form of a “value proposition” remains front and center in B2B sales.

Jeffrey Gitomer puts it nicely: “People buy with their heart—then justify it with their brain.”

The late Bill Brooks, with Tom Travesano, neatly summarized a brilliant survey of several thousand buyers thusly: “People prefer to buy what they need from people who understand what it is that they want.” Not much said there about value propositions.

What “value proposition” doesn’t usually convey is precisely this sense of emotional connection. Caddell notices this too in his recent “customer anthropologizing:”

I haven’t heard one customer say, “I would recommend Company Y because we were able to increase our inventory turns and thereby reduce working capital requirements.”

Instead, they say things like, “I really like that they are easy to reach and work hard to solve my problems when I have them.” Or: “They could have nickeled-and-dimed me when I had to make some changes during implementation, but they didn’t do that.”

In other words, what sticks with customers, and makes them recommenders, are things like “reliability,” “caring about my business,” “saving me time,” “making me smarter.” In other words, the deeper, emotional, fuzzy stuff.

Exactly.

Yet, there’s even more. Sellers can be persuaded they need to be more emotional. But then they confront a next-level problem.

They think being friendly is the opposite of making money, and turn a simple concept into an unnecessary, fake ethical dilemma. They say either:

1. I can’t get too close to them—I have to make the sale, or
2. If I get the sale by being close to them, then I’ve conned them.

Such unnecessary angst.

It seems we may need Freud after all.

Stay tuned for the next installment in the story of Value Propositions gone astray.

This post is written by:

Charles H. Green

Charles H. Green is founder and CEO of Trusted Advisor Associates LLC; read more about Charlie at http://trustedadvisor.com/cgreen/You can follow him on twitter @CharlesHGreen

A personal note from Charlie: For a free eBook on Selling to the C-Suite, email me with your full name and email address; I’ll be glad to send you a copy. Just send the request to: [email protected], and ask for the Selling to the C-Suite eBook.

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Christopher Rollyson

Charles, thank you for voicing something I’ve felt for years but hadn’t put my finger on it. I find your Trust Equation a fantastically useful way to think about it.

I have been in professional services, and have led marketing part of that, for 25 years. I believe that the relevance on relationship has had a battlefield promotion in the current megashift to the Knowledge Economy. The receding Industrial Economy produced unprecedented wealth and engraved the human psyche profoundly. It was born in an era of material scarcity. It was an economy of things. Products. Features, Four Ps. The true “crisis” now in the “wealthy” economies is that the dance is over. Many of the past lessons for creating wealth don’t work the way they used to. People don’t understand it yet. More here: http://bit.ly/geog30

The Knowledge Economy is about experience and relationship. Products are a dime a dozen and will soon be a nickel. Getting into the trenches with clients and working things out when exceptions occur is what most people want. In complex B2B situations, exceptions are the rule rather than the exception, so trust is the gold standard.

Thanks again, I love reading you!
http://www.trustedadvisor.com/trustmatters Charles H. Green

Christopher, thanks for that very nice compliment, I do appreciate it. And that’s an impressive link back to the piece on Geographies – impressive because it dates back to 2008.

The Four Ps. I remember learning about those back in the day. And to be clear about what day that was, that was the day before Visicalc had been invented; our CFO still did monthly P&Ls by hand; the secretaries used white-out on their Selectrics; and a guy pitched me about this cool way you could set up punch cards so if you pushed a rod through, only the cards with a particular attribute would fall through, so you could keep track of things like people’s skills and competencies.

As others have said, everything’s a service now. And as you note, everything’s a relationship now. But while everyone’s noticed that Selectrics are gone, not everyone has noticed it’s a New Game out there in terms of trust and relationships.

Thanks for helping preach the gospel.