Why Your Sales Strategy Needs a Value Hypothesis

by Adam Luckeroth, on Aug, 18, 2014

Our relationships -- both personal and professional -- come down to value. What value do we provide and what value do we receive? Being successful as a business means providing value to your customers, plain and simple. But we need to take that a step further to truly thrive. You first need to identify what it is that they need, understand how you can eliminate that need for them, and act accordingly. This idea is what’s known as a value hypothesis. Since we touched on this idea a few weeks back, I wanted to revisit it this week in greater detail.


The first thing we’ll need to do is define a value hypothesis. The concept is relatively simple - a value hypothesis is your answer to the question ‘what’s in it for me’. Before you do business with anyone, chances are you ask yourself that question. If the person you’re doing business with doesn’t satisfactorily answer that question for you, it’s not likely that you will proceed. A successful salesperson knows the answer to that question, and can convey that to their potential customer in a simple and comprehensive way.

As with any hypothesis, the second part is to test it. Once you’ve identified why your product would be valuable to your customer, it’s time to see if that hypothesis holds water. Does your product actually provide the value that you say it does? The last thing you’re going to want to do is trick yourself into believing that you provide something that you don’t. And, along with understanding whether or not you were correct in your assumptions, you have an opportunity to discover new and unexpected benefits of your product that you may not have considered. Testing your value hypothesis is the best way for you to understand your product or service from the eyes of your consumer, which makes your sales and marketing efforts more efficient.

Naturally, when diving deeper into the value hypothesis concept, one starts to wonder how to create one. I’ve been able to assemble a few simple steps to get you started off in the right direction.

1. Understand your customer. You can’t possibly know your value to a customer before your understand their unique situation. Every prospect is different, if only incrementally. Do your homework! They’ve already done their research on who you are, and what they think you can do for them, you need to do the same.

2. Define your value. What is it that your product or service can do for this customer? What need can you eliminate for them? It’s best to do this with each prospect, and should be integrated into your research process. Since each potential customer has their specific needs, you can’t just have one blanket value proposition for them all. The bonus? This is a time to get creative about how your product or service can help.

3. Start with an ‘if-then’ statement. I know this sounds a lot like a grade school science class, but why mess with the classics, right? Put your idea into a simple phrase: If company A uses my product or service B, then they will experience result X. X in this case could be a dollar amount of growth, heightened brand awareness, or whatever the value you’ve identified that fits their needs.

4. Determine how you’ll monitor and measure. You need to know how you’re going to measure and define success. A big part of the idea of a hypothesis is the collection and analysis of data. And regardless of how you feel about spreadsheets, sales and marketing are becoming increasingly driven by data. It’s time to get on board. So, make sure you know how success will be measured, and start tracking. This step is when it’s helpful to define what technology you’ll be using to help you monitor your hypothesis. Without the help of technology, your results may not be as accurate, and nobody really wants to manually do all of that analysis.

5. Optimize based on what you learn. Metrics and insights mean nothing if they’re not put to use. When testing your value hypothesis, make sure you continue to apply your learnings and make the necessary changes.

To be clear, a value hypothesis isn’t so much a ‘thing’ as a process. A semi-scientific method for improving your product or service, and your business. Following the above steps will give you a good start, but you need to make sure you’re building something that will fit into your organizational structure, and that your employees will continue to make use of.

If you have questions about the value hypothesis, or what kind of technology you can use to help you in monitoring, Tweet it to us @modusengagementor leave it in the comments!

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