If you’re developing a product or service you’ve probably come across the term Quantifiable Value Proposition (QVP). What is QVP and why is it important?
Your QVP is a measure of the value that you provide to your customers and clients through your products and services. As the name implies, the key concept of QVP is that the value you provide is quantifiable (ad hoc) – and it’s best if your QVP is also measurable (post hoc).
Your QVP should be aligned with your customer’s priorities and aspirations. If your customer’s #1 priority is increasing their sales conversions and your QVP is increasing sales conversions then your offering benefits are aligned with your customer priorities. If, on the other hand, your QVP was focused on increasing the number of leads, the conversation with the customer will be an uphill struggle. In this case, there’s misalignment between the customer’s priorities (sales conversion) and the QVP that you are promoting (lead gen).
Quantifying your value proposition helps you paint a vision of the future for your client. You are saying “through the use of our offering, you can expect XYZ benefits.” Measuring is important because it allows the customer to reflect on the purchase to determine if it met expectations.
Sometimes quantifying and measuring your value proposition is easy. As an example, let’s say your customer is a product development department in a medical device company. Your offering has the ability to help them save 3 weeks of time in the product development process through increased efficiencies. The QVP is that through the use of your product the customer will be saving 3 weeks in product development time. The QVP is also easily measurable by the client. At the end of their product development they compare to a previous estimate or similar project and see if they indeed saved time using your offering.
Sometimes your value proposition is not so easy to quantify – particularly when dealing with subjective experiences like taste, feeling, or satisfaction. In these cases, it is helpful to consider how your offering improves the customer’s condition. Are there simple ways to show they are better off with your product or service than without it? Does your product or service help your customer deal or cope with a problem and reduce its negative impacts?
Your QVP begins with understanding your clients top priorities and aspirations. Once you have a clear understanding of what matters most to your client you can then craft a QVP that helps them paint a vision of the future with your product or service. Your QVP will help you in determining your pricing and once you have settled on your business model you can Calculate your Customer Lifetime Value.