The Value Prop Hierarchy.

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1. Press enter or click to view image in full size “When selling to other businesses, you want to climb as far up the value proposition hierarchy as you can.” 2 min readDec 9, 2021

   In Value proposition hierarchy

2. -- “Over time I realized that there is a sort of value proposition hierarchy, and your ability to sell and price your product is almost entirely determined by your ability to position your product as far up that ladder as you possibly can.” Here’s what I mean:

   In Value proposition hierarchy

3. Here’s what I mean: “If your product is perceived as something that will improve an existing process, well that’s nice, everyone wants their sock drawer to be more organized, but it’s not something a company would pay a lot of money for. So many you’ll get 2 points in the customer’s mind.” However if your product is going to save the company real money, well, the customer should easily be able to get their boss to sign-off on that purchase. So now you get 5 points in the customer’s mind.

   In Value proposition hierarchy

4. If your product is perceived as something that will improve an existing process, well that’s nice, everyone wants their sock drawer to be more organized, but it’s not something a company would pay a lot of money for. So many you’ll get 2 points in the customer’s mind. “However if your product is going to save the company real money, well, the customer should easily be able to get their boss to sign-off on that purchase. So now you get 5 points in the customer’s mind.” But wait — if your product will help them drive revenue, well, everybody wants that and the boss’s boss will be happy with that purchase! So now you are worthy of 8 points in the customer’s mind.

   In Value proposition hierarchy

5. However if your product is going to save the company real money, well, the customer should easily be able to get their boss to sign-off on that purchase. So now you get 5 points in the customer’s mind. “But wait — if your product will help them drive revenue, well, everybody wants that and the boss’s boss will be happy with that purchase! So now you are worthy of 8 points in the customer’s mind.” What if your product will drive their share price and the valuation/market capitalization of the company? The CEO herself will jump at the opportunity to approve that purchase. So you have 10 points and two tacos in the customer’s mind!

   In Value proposition hierarchy

6. But wait — if your product will help them drive revenue, well, everybody wants that and the boss’s boss will be happy with that purchase! So now you are worthy of 8 points in the customer’s mind. “What if your product will drive their share price and the valuation/market capitalization of the company? The CEO herself will jump at the opportunity to approve that purchase. So you have 10 points and two tacos in the customer’s mind!” This hierarchy explains how Customer Relationship Management (CRM) became the most successful enterprise software category ever. A CRM vendor is selling a value proposition that says their product will help you to improve a process, reduce costs, drive sales, and (by extension) drive shareholder value. That’s right there is the home run. And Salesforce (whose stock ticker symbol is “CRM”, by the way) has built this into a $260B business.

   In Value proposition hierarchy

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