As I enter my second year of business school there are many things we have learned that I should be applying in a more functional level. One of the first items we discussed in the University of Utah MBA program was how to develop our personal elevator pitch/value proposition. The words for this 30 second script have changed over the last year, but the underlying value has stayed consistent. What was critical to understand is this concept of value and how does one convey value in such a brief period of time.
Value has a plethora of meanings. The definition we will be discussing is simple. What can I provide that the other person needs or wants and is willing to pay me to do it? In the business world if no one is willing to pay you for some service or product then it is just an idea and let’s be honest we want to get paid.
As the president of the entrepreneur club we talk about value proposition as if it is the newest buzz word, but interestingly enough it is probably one of the most overlooked questions / concepts in all of the companies I deal with. Each company nails the product they are developing, but forgets to ask why anyone would pay for this possible solution.
There are two concepts that I have learned that I thought were extremely helpful in understanding ones value, either as a company or as an individual.
The 5 Cs of value:
Cost – Are you, the product or service saving the other person or company money? If so, prove it!
Convenience – Are you making processes faster or easier? This one ties back to money, although showing the savings can be a bit tricky if the time you are saving isn’t significant.
Confidence – How are you proving your worth? Time in the field, degrees, experience etc… During a Start-up Weekend someone once said, “Do, don’t tell.” Show me/ them that I can trust you.
Compensation – What else are you giving me? Sometimes services can’t be measured, for example thinking. How would you put a value on someone’s ability to think or be creative? In this case you have to bring more to the table.
Connection/Character – What is your or your company’s Brand? What do you stand for, who are your people, what would you like to be known for? These are all critical questions. To some people these are the most important questions, like myself.
B – C = V
B = Benefit: Benefits are all real or perceived benefits that one gets from a person, product or service. This idea includes all features a product offers, time savings, location, previous experience etc.. This is a critical component to think about as it really encapsulates any reason why someone would want to hire you or to pay for your product or service. If you are looking at it from a personal value proposition think about all of what you can and will do for the company outside of just filling a job description.
C = Cost: Cost is simple. How much are they paying you to receive the above?
V = Value: Value is the difference between benefits and cost. One thing to keep in mind is that we often inflate our personal value or our business’ value. Remember that it is the other person who is determining what the Benefits are in this equation. No matter how much we think ourselves or services are amazing it is their discretion to agree or disagree.
In closing, start to think about the WHY first. This will really help in creating the value in yourself, product or service. Once you truly understand the value you bring it is much easier to build a solution that reflects that value. Below is an amazing video that I watch on a regular basis to help me refocus and remind myself why.
“People don’t buy what you do, they buy why you do it. ~ Simon Sinek