Value Propositions and Willingness to Pay
This episode might reference ProfitWell and ProfitWell Recur, which following the acquisition by Paddle is now Paddle Studios. Some information may be out of date.
Originally published: May 9th, 2018
In the Mad Men days of yore, sentiment would indicate that coming up with the right value proposition required a few steak dinners and plenty of martinis. In reality the data tells us the truth, namely using the right value proposition can have a big impact on your product.
On this episode of the ProfitWell Report, Ed Leake, Founder at AdEvolver asks us to look at the influence on willingness to pay that value propositions can have. To answer Ed's question, we looked at the willingness to pay data of nearly ten thousand different subscription consumers.
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Value Propositions Influence Willingness to Pay
To get right to the point, the right value proposition absolutely influences willingness to pay, and a lot more than you’d intuitively think.
We tested a fake CRM product amongst different groups of sales leadership with decision making authority on sales teams with less than 10 sales people. When asking these same buyers about the same product, but leading with different messaging we saw varying willingness to pay. Note how focusing on sales efficiency and organizing the chaos won out handedly against propositions like accelerate your growth and see inside your whole team.
Remember this was the same product with the same description, the only piece we changed was the value proposition of the page, which resulted in increasing willingness to pay by 15-30%, which is no small amount at scale.
B2C Value Propositions Are Just as Important
Interestingly enough, these trends are similar in the B2C market, as well. When testing the willingness to pay for a fake fitness app, consumers resonated with the concept of keeping their fitness consistent and achieving their goals while sentiments around losing weight and getting healthy scored poorly. Again though, the swings are pretty dramatic.
Mindset matters when priming your buyers to make a purchasing decision, which is the very definition as to why product marketing exists as a function within your organization. You need to know what your buyers are thinking and ultimately need to make sure you get to a point of position, packaging, and pricing fit to ensure you align your entire funnel around that which will make conversion smooth and willingness to pay maximized.
All data indicates - value propositions have a big hand in that experience.
Want to learn more? Check out our recent episode: What is Customer Research? and subscribe to the show to get new episodes.
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You've got the questions,
and we have the data.
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This is the ProfitWell Report.
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Hi, guys.
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Ed Leake here from Midas Media
and founder of Adevolva dot com.
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Love the pricing tear
teardown videos, by the way.
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Got a question for you.
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Do you think that,
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value propositions affect a
customer's willingness to pay?
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Oh, Ed.
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This is a fascinating question
because in the mad men days of yours,
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sentiment would indicate that
coming up with the right value
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proposition required a few steak
dinners and plenty of martinis.
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In reality, the data
tells us the truth.
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So to answer your question,
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we looked at the willingness to
pay data of nearly ten thousand
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different subscription consumers,
and here's what we found.
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To get right to the point,
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the right value proposition
absolutely influences
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willingness to pay and a lot more
than you'd intuitively think.
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00:00:49,380 --> 00:00:52,340
We tested a fake CRM product
amongst different groups of
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sales leadership with decision
making authority on teams of
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less than ten people.
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00:00:56,535 --> 00:00:59,495
And when asking these same
buyers about the same product,
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but leading with a
different message,
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we saw varying
willingness to pay.
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00:01:03,335 --> 00:01:06,290
Note how focusing on sales
efficiency and organizing the
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chaos won out handedly against
propositions like accelerate
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your growth and see inside
your whole sales team.
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Remember, this was the same
product with the same features,
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but the only piece we changed was
the value proposition of the page,
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which resulted in increasing
willingness to pay by fifteen
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to thirty percent, which is
no small amount at scale.
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Interestingly enough,
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these trends are similar in
the b to c market as well.
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00:01:28,760 --> 00:01:31,480
When we tested willingness to
pay for a fake fitness app,
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00:01:31,480 --> 00:01:33,800
consumers resonated with
the concept of keeping their
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00:01:33,800 --> 00:01:35,945
fitness consistent in
achieving their goals,
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00:01:35,945 --> 00:01:38,745
while sentiments around losing
weight and getting healthy
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ironically scored poorly.
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Again, the swings were
nothing less but dramatic.
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Mindset matters when priming
your buyers to make a
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purchasing decision which
is the very reason as to why
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product marketing
exists as a function.
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00:01:52,025 --> 00:01:53,945
You need to know what your
buyers are thinking and
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00:01:53,945 --> 00:01:56,105
ultimately need to make
sure you get to a point of
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00:01:56,105 --> 00:01:57,545
positioning, packaging,
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00:01:57,545 --> 00:02:01,400
and pricing fit to ensure you
align your entire funnel around
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00:02:01,400 --> 00:02:03,880
that which will make your
conversion smooth and
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00:02:03,880 --> 00:02:05,720
willingness to pay maximized.
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All data indicates value propositions
have a big hand in that experience.
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Well, that's all for now.
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If you have a question,
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shoot me an email or video to
p c at profit well dot com.
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Let's also thank Ed for
sparking this research by
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clicking the link below to give
him a nice little shout out.
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We'll see you next week.
