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