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What is a Value Proposition?

April 21, 2017, by Seb Hardman

What is a Value Proposition?

So what exactly is a value proposition?  In my opinion, this is a question that should be asked much more often. In this short post I'm going to help you understand what a value proposition is and give you some top tips for developing your own.

I’ve been involved in many business meetings where everybody has a different understanding on what exactly a value propositions is, how it should be structured, and how it should be used.

Is it a marketing slogan?

A brand value?

Or perhaps a unique selling point?

Let’s explore.

Value proposition definition

A definition is always a good place to start.

Alex Osterwalder’s book Value Proposition Design says that a value proposition:

“Describes the benefits customers can expect from your products and services.”

That sounds pretty straightforward, but the devil really is in the detail, so let’s deconstruct it.

Describes the benefits” - a good value proposition speaks about the positive outcomes of engaging with your product or service (not your company - a company should have its own separate value proposition).

...customers can expect…” - stating the obvious, but a value proposition is written in the language of your customer, and framed in a way that will resonate with them. And naturally the benefits described must be authentic!

...your products and services…” - a well-formed value proposition describes in customer-centric language which of your products and services is going to deliver the desired benefits.

Moving on to what a value proposition does, a good value proposition fulfils a number of key tasks:

  • It explains how your product or service meets customer needs (relevancy)
  • It describes the benefits your customers will receive (quantified value)
  • It positively positions your product or service in relation to the competition (unique differentiation)

I often think that a helpful way to think about a value proposition is as a promise.  

More specifically, a promise to your customers of the value they are going to receive when they engage with your product or service.

Why it's important to have a great value proposition

There are a multitude of reasons why having a great value proposition is fundamental to having a great business. But I think it's best demonstrated by the team over at WiderFunnel who have developed what they call the 'Lift Model' to optimise conversion rates.

Value Proposition Lift Model Plane

As you can see there are a few key tactics to increase conversion, but at the heart of the model is the value proposition. Having a strong value proposition that resonates and engages customers is the backbone of your offer to your customer. It won't just explain, differentiate, and engage - it will also increase sales!

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Value proposition development tips

Here are six of my top tips for developing a great value proposition:

  1. It’s not just about clarity - value propositions must also be compelling.
  2. It shouldn’t be a functional description, it needs to engage emotionally.
  3. It almost goes without saying, but it has to be 100% customer-centred.
  4. You need to be able to explain it to a friend in simple terms and they understand it.
  5. It needs to be jargon-free (there are some exceptions, but beware!).
  6. It should be in a tone of voice your customer feels comfortable with.
  7. Implicit in the value proposition should be your product/service differentiation.

So I hope this brief introduction to value propositions has armed you with a bit more knowledge so you can be more successful when developing your own.

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