Positioning is the place a business wants to hold in the minds of its target customers, compared with the competitors those customers are considering. The value proposition is the set of benefits the business promises those customers, which earns it that place. Positioning says what you want to be known for. The value proposition says what customers get that makes the position true.

The two terms are often used as if they mean the same thing, and many value propositions end up as a long list of features. In B2B, the order matters: choose the segment, decide the position, then build the value proposition around the benefits that segment cares about most, with proof attached.

What Positioning Is

Kotler and Armstrong define positioning as arranging for a product to occupy a clear, distinctive and desirable place, relative to competing products, in the minds of target consumers. The place sits in the buyer's mind, not in the company's documents, and it's judged against the alternatives the buyer is weighing up at the same time.

Positioning is decided for a chosen segment. A software company selling to hospitals and to logistics companies competes against different alternatives in each, so it needs a position for each. How to decide the position, and how to write it as a positioning statement, is covered in B2B Positioning: How to Decide What Your Company Is Known For.

What a Value Proposition Is

Kotler and Armstrong describe the value proposition as the full positioning of a brand: the full mix of benefits on which it is positioned. The position is the place you want to hold. The value proposition is what the customer gets that justifies it.

Suppliers write value propositions in very different ways. James Anderson, James Narus and Wouter van Rossum described the common approaches in Harvard Business Review in 2006:

• All benefits: listing every benefit the offering might deliver. This risks claiming benefits the customer doesn't care about.
• Favourable points of difference: listing every way the offering is better than the next best alternative. This assumes every difference matters to the customer, which it rarely does.
• Resonating focus: choosing the one or two differences that matter most to the customer, and backing them with evidence. The authors recommend this approach.

The same authors found that many suppliers claim savings and benefits they can't back up. A value proposition without proof gives the buyer a reason to doubt the position instead of a reason to believe it.

How Positioning and the Value Proposition Fit Together

Both come after segmentation and targeting, because both depend on who the customer is. Decide the position first. If you write the value proposition first, you tend to list everything the product does, and the position becomes whatever that list happens to suggest. With the position decided, you can choose which benefits to lead with and which to leave out.

The marketing mix then has to deliver the value proposition. If the value proposition promises fast setup, the product needs a short onboarding process and the price can't depend on a long procurement process. The marketing mix in B2B explains how product, price, place and promotion support the position.

What B2B Buyers Value

Cost reduction ranked first when IT infrastructure buyers were asked what mattered most, yet it ranked 27th for its effect on loyalty. Product quality, expertise and responsiveness were the strongest predictors of loyalty, and seven of the top 10 elements related to how easy the supplier was to do business with. Eric Almquist, Jamie Cleghorn and Lori Sherer of Bain & Company surveyed more than 2,300 decision makers in IT infrastructure and commercial insurance, and published "The B2B Elements of Value" in Harvard Business Review in 2018.

The same research found personal and emotional benefits among the drivers of loyalty. Hope, meaning the purchase gives the buyer hope for the future of their organisation, ranked fourth. Cultural fit ranked eighth. Suppliers rated excellent on six or more elements had an average Net Promoter Score about 60 per cent higher than suppliers rated excellent on one to five.

For a value proposition, this means two things. Price and cost savings are expected, so they rarely set a supplier apart on their own. And the benefits that keep customers, such as expertise, responsiveness and being easy to work with, are often left out of value propositions because they're harder to state as a feature.

From Position to Value Proposition: An Example

For example, a company sells staff scheduling software to hospitals. Hospitals compare it with the agency staff they already pay for to cover gaps in the roster. The company decides its position for this segment: the way to keep clinical staff on safe shifts without paying for agency cover.

An "all benefits" value proposition would list everything the software does: shift swaps, mobile access, reporting dashboards, payroll export and more. A resonating focus picks the benefits that matter most to this segment and supports each one with proof:

• Fewer agency shifts. Proof: results from hospitals already using the software, showing how agency spend changed after a year.
• Staff kept within safe working hours. Proof: the software blocks rosters that break the hospital's working-hour rules, shown in a demonstration.

Mobile access and dashboards still exist, and the sales team can mention them. They're left out of the value proposition because they don't set the company apart from the alternative this segment is weighing up. The two lead benefits then go into every campaign brief for this segment as the proposition.

How to Write a B2B Value Proposition

Start with the chosen segment and its position. Write one value proposition per segment. If two segments compare you with different alternatives, they need different value propositions.

Name the alternative the buyer is considering. Include doing nothing, a spreadsheet, an internal team or a competitor. Benefits only mean something compared with that alternative.

Choose the one or two benefits that matter most. Use win and loss interviews and customer research, not internal opinion, to find which benefits decide purchases and renewals in this segment.

Attach proof to every benefit. A customer result, a reference, a demonstration or a test. If you can't prove a benefit, leave it out until you can.

Test it with customers and with sales. Ask customers in the segment whether the lead benefits match why they bought. Ask the sales team whether they can use the value proposition in a conversation.

FAQ

Is a value proposition the same as a tagline? No. A tagline is a short line used in advertising. The value proposition is the set of benefits behind it. A tagline can express part of the value proposition, but it doesn't replace it.

Is a value proposition the same as a unique selling proposition? They overlap. A unique selling proposition is a single claim no competitor can make. A B2B value proposition can include benefits competitors also offer, if those benefits matter to the segment and you can prove them.

Does every segment need its own value proposition? Usually, yes. Different segments compare you with different alternatives and care about different benefits, so one value proposition for all segments tends to become a list of everything.

Where does the value proposition go in a campaign brief? The lead benefits and their proof become the proposition in the campaign brief, so the agency or creative team knows what the work has to communicate and what evidence it can use.

Decide the Position Before You Write the Value Proposition

Positioning is the place you want to hold in your target segment's mind. The value proposition is the benefits and proof that earn it. Decide the position first, then lead with the one or two benefits that matter most to that segment. B2B Marketing Fundamentals covers segmentation, targeting and positioning in order, and ends with a one-page growth strategy for your own business.

Sources

• Philip Kotler and Gary Armstrong, Principles of Marketing. Source of the definitions of positioning and value proposition.
• James Anderson, James Narus and Wouter van Rossum, "Customer Value Propositions in Business Markets", Harvard Business Review, March 2006. Source of the all benefits, favourable points of difference and resonating focus approaches, and the finding that many suppliers can't back up their claims.
• Eric Almquist, Jamie Cleghorn and Lori Sherer, "The B2B Elements of Value", Harvard Business Review, March to April 2018. Survey of more than 2,300 decision makers in IT infrastructure and commercial insurance. Source of the rankings of cost reduction, product quality, expertise, responsiveness, hope and cultural fit, and the Net Promoter Score comparison. bain.com