Your Value Prop

Why should partners and customers choose you?

  1. Why you’re better than the competition: Even if a prospective partner or customers thinks that you can deliver (you’re credible) you have to convince them to pick you over all the other credible companies (many of whom they’ve worked with in the past).
  2. The competition is fierce: We looked at the last 5 years of award data and contracts that were released on (so the type of contracts most new vendors pursue) received an average of 11 bids per solicitation, so that’s about a 9% chance of winning.
  3. Your value proposition: Your value proposition is the reason why you are better than the competition and why partners and customers should choose you over everyone else.

Value prop 1: I’m cheaper

  1. I’m cheaper: The government is highly price sensitive so if you are less expensive then this is really compelling
    1. As a rule small businesses have better (cheaper) cost structures compared to large businesses
    2. But there are a lot of small businesses out there, all of whom have “good” cost structures
    3. So if this is your value prop then you have to do something to get below everyone else
    4. There are so many companies trying to win on price that it is difficult to differentiate on price

Value prop 2: I have customer insight

  1. Customer insight: The key to this value prop is that you have an unusual insight about the customer releasing the RFP which will allow you to:
    1. Address unwritten elements of the RFP
    2. Present especially compelling past performance
    3. Cut costs out of your proposal thanks to your unusual knowledge of what it will take to implement the solution

Value prop 3: I am innovative

  1. Innovation: The premise of this value prop is that you do something different that allows you to provide a better, faster, or cheaper solution. Frequently, this means:
    1. You use different products in your solution that are cheaper
    2. You have a different operational approach to the problem
    3. You have unique tech
    4. You have unique staff
  2. This is a double edged sword: A lot of government officers do not want innovative, they want reliable, so be sure you know what the customer is interested in

Things that are not a value proposition

  1. If you can’t prove it, it isn’t a value prop: Anything that is purely subjective is not a value proposition. It might be true, but it won’t fly
  2. A simple test: Imagine you were in a room with nine competitors, you state your value prop, and then each of the other nine says the exact same thing, if you can’t prove why you’re right and they’re wrong it isn’t a good value prop
  3. Examples of bad value props:
    1. We care more
    2. We have the best people
    3. Our customers love us
    4. We put the customer (or quality) at the center of what we do

What to do

  1. Open your workbook to the value prop pages (There are three)
  2. Create copies for each of the offerings you are considering
  3. Fill in the evidence you have for each of the value props
  4. Down select: Take a look at the strength of your value props for each offering you are considering. You only need one, but if any options don’t have a good value prop discard them.


Video Transcript(s):

As we said in the last class the government’s risk averse, and even if you have a ton of excellent past performance and all the right degrees and certifications you're still more of a risk than the vendor they’ve been working with for the last three years. So you need to make the case that there’s something so compelling about your offering that they should choose you over the current provider.

And generally this is known as your value proposition.

Now there’re LOTs of value propositions but the main ones we see are:

  • First, that you’re cheaper
  • Second, that you can deliver a better solution because you have special access to or understanding of the customer. 
  • Third, that you can deliver a better solution because you have an innovative solution
  • And fourth that you have a set-aside. And number four is a bad value proposition. We have classes on set-asides and how to use them effectively but a set-aside is not a value prop, even though a lot of people think it is.

In this exercise you’re going to look at whether you can credibly make the cheaper, customer knowledge, and innovation value propositions for each of the options you’re considering.

So, like before, create copies of the three value prop pages, one for each option you’re considering and let’s start with the cheaper value prop, and in the government market there are two key elements of price.  

  • The first is the amount you charge for the people who are doing the work and the products you’re selling
  • And the second is the amount of overhead you charge

So for the cheaper value prop, list any ways you can do things cheaper. And don’t be surprised if you don’t have anything here, the cheaper value prop’s a tough one.

Then on the second page list government organizations that you know well, and by know well we mean that you know key decision makers, contracting officers, program and budget officers, the organization’s mission, operations, key data systems, acquisitions processes, We mean really know the organization..

Next go to page three, and the “innovation” value proposition is tricky because innovation is subjective. But for now list all the innovative ideas you have, and all the problems you see, with how this product or service is delivered today. 

So for each option you should have three pages of notes on potential value props. And now it’s time to do another down select. So if some options don’t have a clear value prop we recommend discarding them. 

And that’s it, that was the last of these self reflection analyses. And I hope you’re feeling good.  In about an hour you’ve gone from perhaps a dozen options to a full fledged business hypothesis including

  • What you'll sell
  • A data driven validation of the market
  • And a few theories for why customers and partners will choose you over the competition

And those are the core elements of your business plan, there’s a lot more to do, but this is the nucleus. 

So hopefully this didn’t take too much time, but this kind of planning and thinking is hard and incredibly important, so go treat yourself to a fancy coffee or something.

And after you’ve taken a break it’s time to get feedback, and identify the one product or service that’s going to become your initial primary offering.