Collaborating on your offer
Every lasting business relationship is based on value. The seller commits to providing some economic benefit to the buyer on a defined schedule to produce a payback using an agreed basis of measurement.
Too many sales conversations never explicitly address the underlying value proposition. That ignores the fact that both buyer and seller are employed precisely to hammer out a deal that’s good for their respective companies.
Anatomy of a B2B value proposition
A true value proposition is similar to a SMART goal. It’s Specific, Measurable, Attainable, Relevant and Time-based. Here’s an example:
- BuyerCo will achieve a 30% savings in order fulfillment costs using OurCo’s ShipPro software solution at a cost of $1,800 per month. Following a one-month implementation, direct labour per package shipped will decrease by 5 minutes as measured by BuyerCo’s costing system. BuyerCo will recover more than 200% of the investment in ShipPro, based on an average of 3,000 shipments per month and $15/hour labour cost.
Collaborate with your counterpart
Make value proposition development the basis of your client conversation. Accurate and complete value propositions can only be developed with information from both parties.
In situations where the buyer is required to obtain competitive quotes, your collaboration will enable you to develop a more targeted and complete offer. NOTE: In two envelope systems, you will have to strip out your pricing and dollar savings calculation, but you can still express value:
- BuyerCo will achieve a 30% savings in order fulfillment costs using OurCo’s ShipPro software solution. Following a one-month implementation, direct labour per package shipped will decrease by 5 minutes as measured by BuyerCo’s costing system, resulting in a return on investment of more than 200%.
In private sector dealings, where there is no mandate to obtain competitive quotes, a well-developed value proposition is often the basis for a sole-source contract. (We’re a bid response company—but not having to bid is better!)
Propositions for different buyer types
The example above shows a value proposition aimed at the economic buyer. In the next two posts, we’ll use the same situation to illustrate value propositions for technical and user buyers.