You may have never heard of value proposition but if you ever needed to sell a product or service you definitely know what it is.
The authors of Value Proposition Design, the sister book to Business Model Generation, have a very succinct definition that I like. It defines the value proposition as the benefits your customers can expect from your product or service.
It’s so simple. Why write a whole book about it then? I can assure you from experience that while the definition of a value proposition may be simple, writing one for your own product or service is not.
PURPOSE OF A VALUE PROPOSITION
Helps you organise your thoughts and communicate to your markets
Putting your value proposition into words will help you gather in one place all of your top selling arguments. You will be using all or parts of it in most of your communications to your customers. It will speed up your content creation and provide guidance for it.
Creating your corporate pitch will be a breeze
Once you have nailed your value proposition down you will only need to adapt it to your audience, add other messages if need be, and practice your timing and delivery of it to create your pitch.
It’s your lighthouse on a stormy sea
Your value proposition will remind you that answering your customers’ needs with a product or service they value is what your business is all about. If your business starts to skid and can’t deliver on its value proposition, you know corrective measures are necessary.
THE OLD VALUE PROPOSITION
Value propositions are not new. The way we use to define them gave equal weight to the product, the market segment and the industry. The value proposition was the answer to the following three questions.
- What is your product or service?
- Who is it for?
- Why is it better than your competitors’ offering?
A value proposition in the ‘90s would have looked like this.
Palm Pilot. The electronic pocket agenda, for busy professionals, that won’t weigh you down.
THE NEW VALUE PROPOSITION
Today, market segments are getting more and more granular. The competitive environment you operate in is changing much more rapidly. Focusing on market segments and competitors make writing your value proposition the old way a less precise exercise and a recurring task.
The approach suggested by the Value Proposition Design authors is better suited to today’s market realities.
It focuses on the value your product brings to answering a customers’ specific need. You only adjust your value proposition when the need changes. Which is a good thing given you will also need to change your product or service at this juncture if you want to stay in business. This way of creating your value proposition brings it all back to the customer’s need and positioning your offer against it.
Designing your value proposition now requires you to dig in order to understand your customers’ pains. What gains they expect as well as how they will interact with your product or service. This information will then allow you to analyse what pain relievers you offer them. The level of gain your product or service can bring them. It will also give you insight into how else your customers are answering the need you are addressing. This vantage point allows you a broader vision of your competitive environment by not restricting it to your industry competitors.
Source: Osterwalder A., Pigneur Y., et Al. – Value Proposition Design – Wiley – 2014 – xxv+290p
You can click on the above image to download a more detailed and free version of the Value Proposition canvas on the Strategyzer site.
An example of a good value proposition today would be:
Unbounce. Build, publish and A/B test your landing pages without I.T. Increase the ROI of your marketing campaigns
This value proposition talks to the jobs (building, publishing and A/B testing landing pages), the pains (having to ask and wait for the IT department to do the pages), and the gains (increasing campaigns ROI) their customers care about.
There are other methodologies out there to help you create your value proposition. Whichever one you use, make sure it is suited to your reality. The Value Proposition Design method is particularly suited for companies operating in environments where markets can effectively be micro-segmented and the environment evolves rapidly.
A value proposition is very much like a macro or template you create when you have a repetitive task. It may take some effort to build but it will bring you high returns on the time you save and act as a guide in your every day work.