4 Steps for Determining a Value Prop

A powerful way to begin establishing trust and credibility is by being able to quantify the value proposition your solution offers. This 4-step process provides a way to think about the “formula” for calculating yours.

Let’s look at an example using an expense report management application.

1. The Quantifiable Community

In this example, let’s focus on the source of the majority of expense reports, and let’s assume that’s 100 employees — probably sales people — doing the bulk of the spending.

2. The Situation

Let’s assume that these 100 sales people are racking up an average of 200 reimbursable miles per week at $.56/mile.

3. Quantifying the Problem

Now it’s math. 100 sales people X 200 miles/week X $.56/mile X 50 weeks = $560,000.00 in reimbursements.

4. The Solution

The expense management software comes with GPS. Reimbursable mileage is no longer “self-reported.” Statistics show that can reduce the number of reported miles by 20%.

THE PAYOFF TO THE CUSTOMER

20% of $560,000.00 is $112,000.00 per year from just this one capability in the app.

THE ROI

In simplest terms, if the expense software costs $5,000.00 per year, the customer nets $107,000.00 in reduced expenses. What’s not to like?

What’s your payoff to your customers?

By starting the conversation with what you can credibly and legitimately project as the benefit in dollars and cents, along with the ability to explain how you’re projecting that benefit, you’ll have a quantifiable and defensible way to get the sales conversation started.

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