Having worked extensively in strategic marketing and sales, one of the common errors I've encountered is that where businesses do not have a clear value proposition, either for their business as a whole or for their products.
There are three areas this article will address
- What is a value proposition? Is is the same as a unique selling proposition (USP)?
- What makes a good one?
- How do I create one?
What is a value proposition?
Firstly let’s differentiate between a value proposition (VP) and a unique selling proposition (USP).
A unique selling proposition (USP) is a statement about what meaningfully sets your business/product/service apart from the competition. It states that aspect that differentiates your product/service from other products/services of similar businesses.
A value proposition is a clear statement of the tangible results a customer gets from using your products or services. It clearly describes how you create value for others.
Investopida’s definition of 'Value Proposition' is a little more detailed:
“A business or marketing statement that summarizes why a consumer should buy a product or use a service. This statement should convince a potential consumer that one particular product or service will add more value or better solve a problem than other similar offerings.”
Value is what the product does for customers that they’re prepared to pay you for — not its features.
What is it not? Its not just a statement, it’s the whole experience a customer has engaging with your business and all of these elements should be truthful. Value propositions are experienced as well as stated. Being able to support your value proposition with evidence is very powerful too.
What makes a good value proposition?
Here’s the bit that most people miss – you must always think about your value proposition (VP), relative to that of your competitor and your customer
You have a value proposition (VP)
Customer has a value equation (VE) ie: how much they will exchange for the product/service you are offering.
Your VP must be > competitors VP
Your VP must be > customer’s VE
Building a Value Proposition
To clearly define your VP, here are some of the questions you need to answer, as outlined by startup and business expert Michael Skok:
- For (detail who your target customers are)Who are dissatisfied with (the current alternative/s)
- Our product/service is a (what type? What is different?)
- That provides (key problem-solving capability)
- Compared with (alternatives)
Now do a sense check - Is it uniquely different? Is it valuable and relevant to your customers? Can you quantify it?
Now what?
Then the branding geniuses can whip it into a smart phrase or two, create an advertising tag-line or slogan and you’re ready for world domination. Well, not quite.
To ensure the VP is experienced and delivers on it’s promise, engaging your team and to build it and ensure you can continue to deliver it is critical. It is of no benefit to state a VP and then be unable to deliver or sustain what you state. Customers will quickly become dissatisfied and lose trust in your brand. Take the time, engage your business leaders and colleagues, and get it right, it really will pay dividends.
