I attended many networking events since I started my business. When talking to event attendees, I’m often asked the following questions: “How do I know your product/service is what I need?” “I’m happy with my current provider, why should I choose your product/service instead?” “How can your product/service solve my problems?” In the early years of my business, these are the questions I dreaded the most, and I know for a fact that I’m not alone. Many business owners when I popped the same questions also jabber for hours about various quality of their business that the audience doesn’t really care about. You may also do this very thing, not because you don’t know your stuff, it’s generally because you haven’t really thought and developed your value proposition properly.
Your business is a value delivery systemMichael J. Lanning and Edward G. Michaels from McKinsey stated that “Customers base their buying decisions on two criteria: the benefits of a particular product or service and its price”. In short, customers would like to buy things from you with great value at a fraction of the cost. If you hire a consultant for $5,000 yet it will cost you $20,000 of your own time doing it yourself, then the consultant just provides you with a $15,000 value with his/her service. Generally speaking, customers will acquire products/services, among competing alternatives, that creates the most value for them. If you wait until the start of your marketing campaign to think about your value propositions, then it’s already too late. Yes, a value proposition is at the centre of marketing messages to promote and capture your target audience’s attention, but its development and creation should have happened way before the product/service being marketed. It is NOT a marketing message. Many companies regard their mission statement or elevator pitch as their value propositions. Instead, these statements are the outcome of the very value created from the beginning. A Value Proposition is bigger and wider than a simple statement.
What is it?A value proposition is a description or a series of descriptions which target a specific audience and deals with the benefits your business offers with your products/services to alleviate the pain points that your customer segment has and create gains for them. These statements are ultimately set out why your customer segment should do business with you as opposed to a competitor or other alternative products/services. An effective value proposition is clear and grounded in authenticity. It’s not a conceptual summary of your business’ vision, mission, values or tagline. Therefore, the key to developing a great value proposition is to first understand your customer segments. This includes what jobs they’re trying to accomplished, and all the related pains and gains in doing those jobs.
Elements of a Robust Value PropositionCreating a robust value proposition requires you to ask the right questions. There are essentially 3 questions that you need to ask yourself to write your business value propositions.
Who are your customers?All good value propositions start with the customers. It involves identifying the company’s main audience, or target market, the consumer group likely to give your company the largest revenue stream. You need to have a clear idea of who your ideal customer is and shape your value proposition to appeal to that customer segment. But more than just simply identifying the typical demographics (e.g. age, marital status, income, etc), you need to understand the jobs that your customers trying to accomplish, then design the value proposition to speak to that segment’s job’s pain points and gains. A quote from the late Clayton Christensen,
“If you understand the job that the customer is trying to do, it becomes clear how to improve the product.”The “job to be done” approach focuses on what people are trying to get done, not just who they are and what they want.