The problem:

The problem with Value Propositions is that everyone claims to know what it is and also uses one. But it is a surprising fact which we see every day that hardly anyone is using Value Propositions correctly.

Definition:

Adding to the above problem is the fact that there are many different definitions of what a Value Proposition is. We concur with the New Solution Selling book who defines it as follows:

Value Propositions are simple, clear statements directed at a specific and targeted customer, the quantifiable benefits they can achieve by solving business problems, and the investment needed to make this possible.

Example:

We believe YOU should be able to increase sales revenue by xy percent each year (valued at $10M of potential revenue and $3.2M in profits annually) by enabling customers to place their own orders, allowing salespeople more business development time provided by our e-commerce offering for a three-year investment of $1.15M.

Template:

We believe [client name] should be able to [improve what?] by [how much?] through the ability to [do what?] as a result of [what enabler, technology, service, etc.?] for an investment of [what relative cost?].

How to use:

The way to use Value Propositions is to create curiosity and serve as a catalyst to start a sales cycle. They can be delivered over the phone, face-to-face, by email, or as part of a direct marketing campaign. The Value Proposition is developed by overlaying/adapting a prospects situation to an existing reference customer story.

When to use:

"We believe" is what has to be said since it will be used early in the sale and is your opinion. Only later, after diagnosis and proof, will your buyer own the Value Proposition. Over time the Value Proposition will be further developed to match the real customer situation. This is done together with the client and serves as part of the proposal and presentation to the decision makers.

Challenges:

If your prospect callenges you with something like "How did you figure that?" then that is great and shows that you have been successfully delivered an initial Value Proposition.

Bottom line:

Key is that you describe a value as quantifiable so Value=Total Benefits - Total Investment.