Why you need to create a value proposition
Creating a value proposition for your business provides you with a powerful tool for differentiating your company from its competitors and attracting customers. A value proposition helps define what it is your company does and how it can help customers meet their needs.
Coming up with a value proposition (VP) that truly enables your company to stand out in a crowd of similar businesses is not an easy task. It requires an intensive analysis of your company’s competitive advantage and how that advantage benefits your customers. The next step is to communicate the VP in your market, using it to drive business.
Your VP serves as a foundational idea underlying your business. It is important to take the time to thoroughly analyse what your company’s purpose is and what it can do for customers, developing a powerful VP can significantly boost your business over the long haul. It is important to formulate a VP to represent your business as accurately as possible, here are six questions to help you succeed
- What is a value proposition and why do I need it?
- How do I determine my value proposition?
- How do I best put my value proposition into words?
- How does my value proposition set me apart from competitors?
- How do I communicate my value proposition to customers?
- How does knowing and communicating my value proposition help me grow my business?
What is a value proposition and why do I need it?
A value proposition can be defined as a statement, generally in the form of a short paragraph with any accompanying pictures, video or other media, setting out what your company does and why what it does is valuable to potential customers. The statement may also detail what it is that differentiates your company from its competitors.
A value proposition often uses an introductory declaratory sentence or headline designed to attract your audience’s attention, and then another few sentences or bullet points to complete the description plus any included image or visual media associated with your company and its products. Its purpose is to explain why a customer should buy your products by outlining exactly what they can do for a potential customer.
There are a variety of reasons for creating a value proposition:
- It can motivate potential customers to take steps to learn more about your company and its products.
- It helps differentiate your company from other companies offering similar products.
- It promotes brand loyalty by clearly defining the benefits your products provide.
How do I determine my value proposition?
Determining a value proposition requires an analysis of how a customer experiences/uses your company’s products. Exactly what does it do for them? Why would they want to buy your products over those of a competitor? The following questions are helpful for providing a framework you can use in drawing up your value proposition:
- What does the product do?
- Why is it helpful to potential customers?
- How does it help solve their problems or improve their situation?
- How is the product different from those offered by competitors?
Another way of approaching the creation of your VP involves an analysis of your company’s product from a strictly problem-solving point of view.
Asking the following questions can help in the VP creation process:
- What problem does the product solve? The reality is that people aren't just buying a product or service, they are buying a solution to a problem and your product or service is the solution. For example Amazon made purchasing online easier while Uber is improving the on-demand car service.
- How does your product solve the problem in a way other products aren’t able to? Asking this question helps you determine what to emphasise in your VP. For instance, if your product’s main differentiator is price, a different approach may be called for than would be the case if feature set or functionality are the main point of distinction.
- How urgent is solving the problem? Understanding the element of urgency in demand for your product is important to building your VP. If there is a high degree of urgency, referencing the time factor prominently in your VP is likely to be warranted.
- Is the market for solving the problem underserved currently? In a highly competitive market, your VP might look different from one in which there are few competitors. In crowded markets, emphasizing service and other such factors is one way to differentiate your company and its products if there are many similar products to yours already being offered. On the other hand, if there are no products like yours on the market placing significant emphasis on the unique or innovative factors of your product is likely to be warranted.
How can I best put my value proposition into words?
Your value proposition is meant to position your business as a valuable resource for potential customers. To do this, and to increase the potential that it will help drive more business your way, the language used in describing your value proposition should be powerful enough to attract and hold the attention of potential customers.
Some tips for creating a value proposition are as follows:
- Clarity – try to use declarative sentences and write in the active voice as much as possible.
- Don’t use promotional language that makes it seem you are desperate to sell your products, but rather demonstrate a firm belief in the value your products offer potential customers.
- Explain what sets your company and its products apart from the competition.
- Demonstrate the concrete results and benefits a customer will get from using your products.
Here are some samples created for this course to demonstrate potential approaches to drawing up a value proposition:
Acme Motors (auto repair shop):
At Acme, we are committed to delivering unsurpassed service. We guarantee every repair we make. If we don’t fix your problem it’s our problem. Every service job we do is guaranteed to fix the problem or you get your money back.
Analysis: The VP uses simple, declarative language to get its point across. It is easy to understand and highly focused on the services the company provides. The company is in a business where good service, rather than innovation or new products, is the primary differentiator and so chooses to focus on this aspect of its business in its VP.
Ace Dry Cleaning:
At Ace Dry Cleaning same day service is guaranteed. Every garment received before cutoff is guaranteed to be ready for pickup that day or the service is free. At Ace we don’t believe in exchanging quality for speed. We use only the highest quality equipment to ensure your garments are cleaned both quickly and thoroughly.
Analysis: As with the previous example, the company operates in a business focused on service. Therefore, it stresses the aspects of its approach in this area that can serve to differentiate it from its competitors and attract customers.
Ajax Software (security software):
Ajax Software, when Peace of Mind matters. Our software protects your vital data, night or day, year after year. At Ajax we design software that lets you sleep at night. Our software patrols your computer around the clock and alerts you instantly of any intrusion.
Analysis: This VP focuses on the emotional aspects of the product the company provides. Rather than using its VP to enumerate the exact features of its product, the company focuses on the benefits – the end result of its software’s functionality.
When durability and performance are the top priority, Consolidated Widgets gets the job done. Our widgets make your products work better and last longer. If quality is the question, Consolidated Widgets is the answer.
Analysis: This VP outlines in clear and simple language the emphasis the company places on quality products. Purchasers of widgets reading the proposition can take comfort in the company’s clear commitment to providing products that provide excellent performance.
When building your value proposition taking a trial and error approach is recommended. Try different VPs out and gauge the response before settling on the one that best represents your company.
How does my value proposition set me apart from competitors?
The Internet has empowered customers to perform their own research into almost any product they intend to buy. As a result, it is in your interest to consider what it is that sets your company and its products apart from your competitors and incorporate that into your value proposition.
A variety of factors can serve to set your firm apart from its competitors, including:
- A ground-breaking or innovative product
- Service that is above and beyond the usual
- Pricing that is hard to beat
- Industry awards or other plaudits
- Any other distinguishing factor
When consumers researching products on the web read your VP, if it adequately differentiates your products from competitors it provides a clear point of motivation when it comes to purchasing products from your company. Having a well-constructed VP helps to cement in a consumer’s mind what it is that makes your company’s product different. Doing so positions your company for repeat business by emphasizing the rationale behind purchasing a product or products from your firm.
How do I communicate my value proposition to customers?
Your value proposition should be prominently featured on all media communications your company makes. This includes your website, advertising media and sales literature such as brochures and other marketing material. In addition, company personnel such as sales and customer services staff should be familiar with the proposition and be prepared to communicate it to customers and prospects when appropriate.
Where appropriate, your VP should appear prominently in the following media:
- Sales brochures
- Informational brochures
- PowerPoint presentations
How does knowing and communicating my value proposition help me grow my business?
A value proposition is not simply a sales pitch communicated to prospective customers. It also serves as a focal point for identifying your company’s primary competitive advantage. Knowing this provides you a powerful organising principle when it comes to devising marketing campaigns and outreach efforts to get the word out about your products.
In addition to helping to focus your company’s marketing efforts, your value proposition also gives potential customers the chance to evaluate whether your products are right for them. If it is well designed it can increase awareness of and sales of your products.