A value proposition is the promise that you give to a customer that assures them that you will deliver value to them. It is the sum of the benefits that your product or service will offer, who you are offering the benefit to, and why you are the best company to deliver that benefit. Summing this up in a clear statement helps sell you and your customers to easily decide why they should purchase your product.
Why is your value proposition important?
Your value proposition signals to your target market what you are going to do for them, why and how. It must be based in truth as there is nothing worse than setting unrealistic expectations that can never be met. A statement defining your value proposition should encapsulate your offer but should not go into specifics about the technology or packaging. You are simply stating the basic benefits and how you differ from the competition. There are some simple ways to evaluate your value proposition and I’m going to address these in a future blog. Usually the messaging is accompanied by at least one hero image. This may talk to one or all four components of your value proposition and should uniquely sum up your offer. Note, beware, using stock images when accompanying your value proposition as you don’t want to display the same images as your competitors.
Four components to your value proposition
Sometimes value propositions are described as consisting of only three parts, but I believe the fourth part below is essential. If you don’t, or can’t, simply describe how you differ from the competition, you are more likely to try and compete on price, and that is not good for most businesses operating today. You should offer more than the cheapest price, because someone will always be prepared to undercut your quote, regardless of how low you go. Stating your differentiation clearly and concisely is important, so your potential customers know the value of your offer and why it is better than your competitors.
1. Target customers (to whom)
Who are your target customers? You need to be specific when you are describing your target customers for a whole bunch of reasons. Segmenting the market helps to decrease your sales and marketing costs. Focussing on one specific market segment means you can have one set of marketing collateral aimed at that segment. Perhaps you are targeting owner-occupied households living less than 10 kilometres from a metropolitan centre, with children under five and a combined household income of more than $300,000. Suddenly your images will show families with young children in an up-market inner city setting. Another really good reason is crafting your offer specifically for your target base. You can package your product’s pricing, positioning, sales and marketing channels based on this specific audience.
2. Product description (what)
What does your product or service do? Don’t make this a long-winded explanation of the various locations where you source your product’s components. Short and punchy wins every time here.
In 2011, Travis Kalanick was pitching Uber with the short description, “You push a button and in five minutes a Mercedes picks you up and takes you where you want to go.” Now they have simplified it even further with just six words. “Tap a button, get a ride”.
Importantly, your product description needs to be memorable as often this descriptor will be used on its own to describe what your product does. The ‘why’ component of the value proposition comes next.
3. Defining your customers’ problem (why)
What are they currently dissatisfied with? The dissatisfaction could come from an existing product they are using or lack of product available. In either scenario their dissatisfaction is creating a problem for them – time, money, resources, missed opportunities, impeding growth, decreasing customer satisfaction, putting customer accounts at risk, pressure on staff etc. You can approach these two situations slightly differently.
Existing problems
Describe what your product does and specifically how does it solve your customer’s problem. If it’s an existing problem, there is probably a product already trying to solve their problem, but it is not yet solving their whole problem. It’s important in this instance to emphasise your product’s differentiation.
Solving problems that don’t yet exist
The problem may not currently exist, but you are anticipating it soon will. This could be due to knowledge of new entrants in other markets, or it could be because you are focussed on disruption. Before we had voice-activated GPS, did we know how convenient it would be to ask in real time for directions? There is so much appetite for disruption and we are now in the lucky stage of new entrants significantly improving our lives through convenience and better product and service offerings.
4. Product differentiation (how)
How does your product differ from the current alternatives? How is it solving anticipated needs through a new solution? You need to articulate either the difference to your competitors or the difference it will make to them. Uber did it so well with ‘Tap a button. Get a ride.’ Goodness knows it took many more steps to contact a cab, and it would take a lot more time. And, they didn’t even have to mention price!
Rhonda Locke is a highly experienced marketer, a customer, product and brand champion, and is the Founder and Director of Unlocke Creative.