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.

9 replies
  1. peter vajda
    peter vajda says:

    Nobody goes to Home Depot because they want a 24" drill bit; they go to Home Depot because they want a 24" hole – the metaphor for "hear me, hear what I want and what I need"…not features but (emotional, psychlogical and practical) benefits. That’s value

    Reply
  2. Charlie (Green)
    Charlie (Green) says:

    Peter, that is value indeed.

    James, B2B and B2C refer respectively to business-to-business, and business-to-consumer.  When Amex sells to General Electric, that’s B2B.  When Walmart sells to you and me, that’s B2C. 

     

    Reply
  3. Gary
    Gary says:

    Interesting concept . . however I believe the trend is for professional purchasing people to be more cerebral and less emotional.  Furthermore, if you have a concise powerful, resonating value proposition than you can indeed break through the emotional layer.  Secondly, simply because some purchasing folks are telliing you that they purchase for certian reasons does not mean that is indeed the cas e .  .  . much would depend on exactly how the question is asked.  Furthermore, the purchasing person is not always the only decision making unit.  Lastly, speak  to customers today in this economic time and I think you will hear quite different responses . . this suppplier saved us this much . . this supplier cut down net working capital etc.

     

     

     

     

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  4. Ian Brodie
    Ian Brodie says:

    Charlie,

    Increasingly I’ve found that although buyers generally decide "emotionally" – they often have to justify it rationally to others. Their trust in and support of you personally will drive their motivation to do that justification – but often they need rational tools to help them when "the CFO is slashing all the discretionary projects" or "corporate are demanding a high ROI from every project".

    Of course, if they are good influencers, they will sell emotionally too. But often a strong value proposition for a purchase can help as one weapon in the armoury – allowing, for example, a tick in the ROI box and just making it easier to get approved.

    Ian

    Reply
  5. Christopher Rollyson
    Christopher Rollyson says:

    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!

    Reply
  6. Charles H. Green
    Charles H. Green says:

    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. 

    Reply
  7. Mary Poul
    Mary Poul says:

    Who says the emotional connection isn’t part of the value proposition? Even the primary part? Nordstrom’s key value prop is that their store clerks will go to any lengths to make sure you are happy. And they support the delivery of that value prop through stories like the clerk who accepted a merchandise return of tires when Nordstrom doesn’t even sell tires and the clerk who had a new outfit ironed for a customer in a rush to get to a wedding. B2B people may confuse functional and economic value as the core of what a value prop is, but that doesn’t mean that people don’t buy a value prop. It just means the company hasn’t clearly derived what their real winning value prop is.

    Reply
    • Charles H. Green
      Charles H. Green says:

      Mary,

      One can argue, persuasively in my view, that a look at the customer-relevant variables must include the emotional component; and the Nordstrom’s example you give is indeed a good one.

      But to answer your question directly, “who says it isn’t part of the definition?” Answer: Wikipedia and Neil Rackham.

      To be fair, I don’t think Michael Lanning excludes it, and Neil Rackham is far from ignorant about the value of emotional benefits, but the fact is that the phrase “value proposition” as it is commonly used – and of that, Wikipedia itself is a good example – just does not put much weight on emotional benefits, and certainly doesn’t put them first.

      You can argue – fairly in my view – that it should, but “should” is a normative term. By contrast, “isn’t” is an empirical term, about the way the word is actually used in the world. To steal a phrase, we go to conversation with the dictionary we have, and it is a dictionary dictated by common usage, not by what we wished it might say.

      Reply

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