Value Proposition – A business promise that underscores why somebody should buy a particular product, technology, process or service by convincing a prospect it will add more value or better solve a problem than what he/she uses now.
Over the years I have been involved in innovative projects with new products, new technologies, new methodologies and new services. Today I enjoy working with innovators, helping them explore their value propositions and building their businesses. Creating a meaningful value proposition is critical if you want to start the journey from idea to building and managing a successful enterprise.
Value Proposition and Innovation are synonymous: “Offering something new or better, an improvement of what is available now, no matter in what form”. You cannot innovate without offering something of better value, be it in time, cost, design, energy, exertion or utilization.
Simply said, a value proposition is a positioning statement that explains what benefits you provide to whom. It describes your target customers, the problems you solve, the needs you address, and why what you offer is distinctly better than alternatives.
Your marketing efforts will lack persuasive substance, if you do not have a convincing value proposition, and do not know how to use it. Too many value proposition statements are vague and confusing. A value proposition is your prime tool that will explicate your competitive advantage in the form of benefits for your stakeholders, not only to your customers, but also to your employees, partners, shareholders, and to investors you want to entice. It describes in short what your strategic marketing plan describes in detail.
A solid value proposition forces you to focus on all business aspects that ensure you can deliver on your promises. It helps you to avoid wasting time going after customers that will not be buying from you anyway, from wasting money designing or producing something nobody will be interested in to use or can afford to buy, and from wasting energy, time and money on marketing campaigns that will not turn into sales and profits.
But first: what a value proposition is not.
Not #1. A value proposition is not a nifty slogan or tagline, or some kind of vision, mission or capabilities statement. Lionized companies with renown brands and products can brand their marks and convince buyers with marketing slogans like “Just do it”, “Things go better with Coke”, “Don’t leave home without it”, “Think different”, “Got milk”, “Intel inside”, “Diamonds are forever”. But these have nothing to do with a value proposition,
If you are an unknown startup, a new kid on the block, and you formulate a value proposition that does not mention what you sell and to whom, does not communicate any value, and does not show how and where you differ from what is available or done now, you will get nowhere. You will be ignored, vanish into thin air, and disappear in the annals of the irrelevant.
Not #2. A value proposition is not an exhaustive list of features, defining all the attributes you have built into whatever you are offering, aspects you have spent months or years in developing, remodeling and refining. “Our iBall is the lightest, smallest, roundest, fastest, safest, most advanced, least expensive ball in the world”. Great, but what are the benefits, and who are the users?
People buy benefits, not features. They want to know right away how what you are offering will benefit them. “What is in it for me?”. That is me as in ME!!! Or moi in French. Listing just a bunch of features means you leave it up to your would-be customer to come up with the benefits, if ever they want to spend their time on figuring them out.
Not #3. A value proposition is not a way to show how smart, great, intelligent and skillful you are. Vanity will get you nowhere. Moreover, technotalk, acronyms, jargon and disdainful gibberish can kill any interest in you right away. How would you feel if you read this: “Our innovative systems envisioneer enterprise-wide functionalities and extend mission-critical experiences using our proprietary Wacs system to syndicate killer paradigms and protract frictionless aspects in 3-D”. A value proposition of a HiTech startup that never made it.
The last thing you want to do is to make your prospects feel stupid. Using complex, tortuous terminology is the worst way to connect. A reader who does not understand at first glance what you mean will not pick up a dictionary to figure it out. Use simple, clear and straightforward language, so that a lay person can understand the message, and an expert will not ridicule you.
Not #4. A value proposition is not a way to state what you offer is the best of the best. Even if you manage to communicate a value proposition packed with vital benefits, briefly describing what you offer to your target market, but you omit what sets you really apart from your competition, destroys the essence of your value proposition.
An unambiguous comparison with what and whom you compete against is what will tip the scale to a sale. Why else would anybody bother to go for you and not stick to what he/she uses now, or simply ignore you?
Knowing now what not to do, let’s switch to what to do.
Building your value proposition.
Start by answering some simple “why” questions: Why do you think your idea or concept is so exceptional? Is it based on your own experience with something you do or use that is missing something or is not good enough? Or did you see or read about somebody else having problems? Assuming you plan to solve a problem or improve a nagging situation, why didn’t anybody else come up with (your) idea yet? Why would anybody be interested in your concept, and why will it be a success? Once you have spelled that out, formulate the “why” in clear, understandable language. It will be the basis of your value proposition.
You cannot create a value proposition without having done a detailed SWOT* analysis – and don’t forget to do a SW analysis of your main as well as upcoming competitors, not just of your own company. You cannot make a SWOT analysis without data from your Needs Research, Market & Competitive Intelligence, Proof of Concept, Proof of Market, Trials and Tests. If you don’t have your idea or concept evaluated, tried out or used, you cannot create a value proposition.
* not to be hit over the head with my no-acronyms advice: SWOT means Strengths & Weaknesses (of you and your competitors) and Opportunities & Threats (in your target market).
With a solid preparation and reinforced with the details and knowledge you have obtained from your target market and prospects, define the problems or pains you have observed that you think you can solve with your solution. Discuss, ask for advice, modify and reassess your solution with a selected number of prospects, and make them feel prominent being part in the development of your solution to their problems and pains. In fact, these advisors can potentially become your most loyal, long-term customers, your references and advocates, in fact your best and least expensive marketing tool, if you do it right by creating trust and building solid working relationships. Of course, this works only if you can live up to your promises.
“A problem well-defined, is a problem half-solved”. Many entrepreneurs make the mistake to dive headlong into the solution before defining and understanding the problem they are planning to solve.
If you identify the problems and pains to be obvious and/or critical, and you are convinced that your solution is THE solution, then the first thought that may come to mind is: “This is going to be an easy sell”. But beware: If a problem is so obvious, and yet critical, ask yourself (and find out from the user): “Why has this not been solved yet?” You may come to understand that a particular problem persisted because of ignorance, incompetence and/or negligence of the user. If you suddenly appear with your great solution, and you, naively maybe, point this out, heads may roll, or you can put careers and reputations at risk. Treat this situation tactfully.
Also, if you uncover a problem that the user has not been aware of, you may end up in the same situation as described above. Tact here is also of essence so not to be confronted with an obstinate or suspicious prospect.
Last but not least, if your solution demands more resources, changes in processes or protocols, and require in fact more work, convincing a prospect of the value of your solution will be tough. Therefore you must have a truly strong case, preferably with crystal clear financial benefits in terms of monetary savings, or savings in time and staff; yes, beware here again of objections if people fear to be dismissed if your solution is adopted.
This is a tricky issue that has to be well explained and justified in your value proposition.
Having defined and qualified the problem you are solving, you need to evaluate if your solution is compelling and unique. You need to evaluate your solution from two perspectives: from a skeptical user’s viewpoint, and from your & your company’s angle.
Often overlooked aspects are the Ease of Use and Ease of Learning of your novel solution, two factors that can make or break its acceptance. By measuring the gains for the user your solution provides in terms of simplicity (Ease of Use) and understandability (Ease of Learning) versus the time, pains and costs it will take to adopt it, you can quantify the added value of your innovation.
Disruptive innovation has become common parlance, but in reality people are interested in non-disruptive disruptions, where the technology with game-changing benefits is expected, even required, to be disruptive, however, its use must be non-disruptive with minimal modifications to existing processes or protocols. Ergo, disruptive innovation ought to be non-disruptive to adopt.
Having made all the preparations and precautions how to and how not to build your value proposition, get started.
It is impossible to suggest content, or even templates with “fill in the gaps”. A value proposition is unique, personalized and pinpointed. Here a simple value proposition of 3M, and one I wrote:
"For Professional Painters who need to paint interiors quickly without redos, the Scotch® Brand Masking Tape delivers fast work, consistency and perfect results, better than Manco and Tesa, at $xx/roll."
"For interventional cardiologists who find the use of large bore catheters like the ValveCath™ and Cath85™ problematic in TAVI procedures, the DimiCath™ of CardioLark is a dual purpose, self-expanding, Fr16 catheter that reduces vascular damage and minimizes post-op bleeding with 48%, according to a randomized, double blind study on 120 patients. Using our DimiCath™, substantial savings can be made as a result of shortened OR and recovery time, negligible need for transfusions, less complications, and faster discharge of the patient."
To summarize: What must a value proposition do?
It must resonate
You must address user and market needs and problems. These are not conceived from a dream, a fabricated story concocted behind your desk or whilst driving, a bunch of Googled articles, or suggested by some hired guru. No, they must come directly from your eventual user, your future customer. They are the only ones that know what they need and want, what their problems and pains are. You have to get their insights before you can start even to think about your value proposition. The promises in your value proposition have to resonate with your users, so that they can instantly recognize that your solution solves their problems and pains, that it is what they need and want.
It must differentiate
Your future clients must immediately understand why and how your solution is so much better than what they use now, but also compared to what is trending and other innovative options about to be introduced. You have to stand out. You have to differentiate. But beware, do not overdo it with too many random benefits. Pick two, max. four, that relate directly to the users’ needs or problems.
It must substantiate
Your claims mean nothing unless you can prove them. Provide evidence. Refer to an independent study or survey with hard data. Let your prospects find out themselves by testing it or having hands-on experience. Does it do what you claim it will do? Will it deliver those outstanding benefits you claim?
Even if your prospects want to buy (you resonate) and perceive you to be the only one on the universe that can deliver the benefits they need and want (you differentiate), if you cannot substantiate your claims, they will not believe you and will therefore not buy from you.
A value proposition is the clear articulation of what it is that you want your customers, employees, partners and shareholders to know about you. It is the encapsulation of your product or business, starting with why you are doing it. If your value proposition is not clear, your audience will not give you their attention. They simply will not care, and ultimately will not use or buy whatever you are offering.
More than 2,300 words to explain what a value proposition is may seem an overkill, but bear in mind that this seemingly short statement is in fact the core of both your innovative product and your business: you cannot do without it. If this hefty narrative dazzles or despairs you, contact me and let me assist you writing a robust value proposition.