An Introduction to Proof of Values
In the tech sales world, Proof of Concepts (POC), which show whether a project, idea, or strategy is feasible, are pretty well known. What is still quite unknown is what Proof of Values (POV) are and how they can help build business cases that lead to an increase in the deal conversion rate.
What is a Proof of Value (POV) in Tech Sales?
A Proof of Value is an extension of a Proof of Concept. While the POC demonstrates the technical feasibility of a solution, the POV also demonstrates the business value. The great advantage of a POV is that it not only satisfies technical requirements, but also builds a strong business case for the investment from the customer’s perspective.
How POVs can increase deal conversion in Tech Sales
In a marketplace crowded with competing solutions, customers are looking for more than just promises; they want proof that what they’re investing in will deliver real, measurable value. This added value is calculated together with the customer during the POV. The joint calculation will then help the business unit to justify the solution to the CFO, because it will be clear that the investment will be worthwhile.
Proof of Value example: Work Management Solution
To illustrate a POV, imagine a work management solution like Asana, Monday.com, or Smartsheet. A POC would show that all of the required technical features are working. A POV would go further and calculate the impact of this solution, for example, by looking at how much time the solution saves.
Let’s say that in a first step the POV shows that the average employee saves 5% working time thanks to intelligent project management, automation and templates. Then, in a second step, the hourly wage and number of employees can be used to calculate what this time saving means financially.
Example calculation:
250 employees * 2,080 working hours per year * $35/hour * 5% time saving = $910,000 Savings
If the solution costs $30 dollars a month per user, that means an investment of $90,000 a year. This would result in a net benefit of $820,000 – a clear investment case.
Key Components for a successful POV
A successful POV also means carrying out a successful POC. These four elements are also relevant for a POV:
1. Tailored Value Proposition
Each POV should be tailored to the specific needs and business context of the customer. This customization ensures that the value demonstrated is relevant and compelling. Only when the value proposition is right will the expected value be high enough to make a relevant business case.
2. Choose relevant Metrics
It’s important to identify and agree on the key performance indicators (KPIs) that matter most to the customer. These metrics will be used to measure the success of the POV.
3. Data-Driven Evidence
Showing how the product or service can improve those KPIs with real, quantifiable data is a key part of an effective POV. Therefore, a goal of the POV is to collect the data and draw a comparison between the current situation and the situation with your solution.
4. Limited time investment
It is important for both sides to set a time limit on the POV. This allows both parties to plan their use of resources and commit to finding a solution within the POV. The result of the POV can then be used as the basis for a purchase decision and long-term cooperation.
POVs can help to increase the deal size
When POVs are implemented correctly, the end result is a clear calculation of value. As with Value Selling, this helps to focus on the added value of the solution, not just the price. When it is clear what the economic impact is, it is much easier to justify the investment.
Conclusion of POVs in Tech Sales
In conclusion, the importance of a well-executed Proof of Value (POV) cannot be overstated. It not only demonstrates the tangible benefits of a product or service but also builds a compelling case for investment by presenting data-driven evidence and a clear calculation of value. By ensuring customization to the customer’s specific business context and selecting relevant metrics, the POV aligns the solution’s advantages with the customer’s key priorities. Moreover, by managing the time investment effectively, both parties can commit to finding a solution that leads to a successful partnership. Therefore, when implemented correctly, POVs are a powerful tool to elevate the deal size and secure long-term collaboration.