​Knowing Your Value Proposition

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Business leaders should be able to recite facts about customers, competition, and costs in their sleep, but in the daily routine of running the enterprise they mustn’t lose sight of one of their most powerful assets – the specific value they bring to meet customers’ needs. 

That knowledge can provide a distinct competitive advantage, including when the competition attempts to charm customers with a lower price. 

Being “lowballed” on price is a fact of business life, and a company may be able to withstand it in the short term if its strategic plan provides a well-reasoned response. But companies that constantly try to match a competitor’s lower price don’t just squeeze their margins, they also risk leaving the impression that their brand is inferior or their product or service is just “good enough.” Sometimes it may be advisable simply to walk away from a price war and save the wear and tear on the organization.

The smarter option is to establish your value as a strategic benefit and cultivate customers who believe that they cannot afford to do without it, no matter how low the competition’s price goes. “This means that [customers] must know [your value] and respect the contribution that it makes to their competitive advantage. They must know you as its source,” state Mack Hanan and Peter Karp in the book Competing on Value.

The authors say customers must come to depend on value (the competitive advantage in terms of lower costs or increased revenues), to factor it into their plans, and to commit to it as a part of their planned business objectives. “Once you have proved your dependability as a value adder,” they say, “your customers will rely on you for value. Once they rely on it, they will not be able to afford to do without it.”

It’s one thing to assume you know the value your company brings to the marketplace, but executives need to listen as well. “Typically, high-performing organizations will perform periodic win/loss analyses to determine why customers bought from them or why they lost the business,” says Nick Kane, senior vice president, sales and marketing, at Janek Performance Group in Las Vegas. “Customer surveys can also be performed to better understand what customers value and how to align the company’s value proposition with this feedback.”

It’s important for not only the C-suite, but for everyone in the organization to understand the value proposition – especially front-line employees.

Armed with knowledge of how they add value to customers, the sales team can work to elevate themselves to the role of advisor, asking questions to gain a deeper understanding of customers’ wants and needs and helping customers prioritize and possibly uncover other needs that they may not have realized they had – and are willing to pay for.  

“If I’m in a situation where I get lowballed by my competition, I’ve made a mistake because I want to do everything I can to understand what my customer is trying to fix, accomplish, or avoid before I ever get to the pricing discussion,” says Stephen Cadley, managing partner at Sales Xecution, a sales performance consultancy in Atlanta. “I want to be much more consultative in understanding my prospect’s world. At its core, it’s getting into the mind of the customer – what does he or she believe is going to help them sleep better, and how can my solution help accomplish that?”

Sales consultants recommend spending minimal time with procurement departments because buyers are often incentivized to squeeze the last penny out of vendors. “Professional buyers will do everything possible to commoditize your offerings,” says Gerry Weinberg, founder and CEO of Gerry Weinberg & Associates, a sales and management training firm in Southfield, Michigan. “Buyers are also trained to always challenge a seller’s price, and they’re taught to say your price is too high, regardless of what it is.”

“You really need to look at other departments in that organization that affect the purchase decision and create an apples-to-apples comparison,” suggests Kane. "A lot of the times it’s either going to come down to a relationship that’s already been established, or there is some sense of value that Purchasing doesn’t see but other departments may. It could be turnaround times, quality – anything that creates a value proposition and helps them go back to Purchasing and justify why paying a higher price is worth it.”


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