A value proposition is a promise of value a company makes to its customers, a positioning statement that describes the unique benefits of using your products and services. It clearly illustrates who your intended buyer is, the problems you solve and why your solutions are better than the alternatives.

Value propositions are important for all businesses, but especially for lesser known startups who are trying establish a foothold in the market. They give people a reason to buy from you.

What are the components of a good value proposition?

A value proposition (VP) is a statement of value that meets several criteria. It communicates to customers how your product or service solves a particular problem or improves their lives in a relevant way and explains why customers should buy from your business instead of the competition.

  • Headline - You should keep the headline to one concise sentence that describes the benefit you offer and ties it to the customer.
  • Sub-headline (short paragraph) - Expand upon your headline with a short, yet specific explanation of how your business solves the problem in a unique and special way. Make sure you include the key benefits and features your customer will want to know.
  • Images - An image or graphic that reinforces the message can be a powerful strategy. People often respond strongly to a well-crafted image that communicates a message.

Evaluate the usefulness of your VP by asking whether it clearly demonstrates the products or services you sell, what the benefit of using it is, who this solution is meant for and what makes it unique and special.

Don't mistake slogans and mission statements for value propositions

  • Mission statement - Clarity is very important when it comes to creating a VP, and the language should be easily understood and appreciated by your target customer. A VP is not a mission statement that talks about revenue goals or clich├ęs about customer service. Try explaining your VP to a friend who represents your target market and ask if he or she understands the benefits you are trying to communicate.
  • Slogan - A slogan, or positioning statement, should come from your VP, not vice versa. Slogans are short messages designed for branding and advertising, and even though they may communicate unique value, a VP is an explicit message to customers (2).

Define the problem

Many businesses make the mistake of creating a value proposition before adequately understanding, and defining, the problems they are trying to solve. This is important because you cannot communicate value without first understanding the consequences of not using your products. Explore the type of problem you are solving to determine the consequences:

  • Consequence of inaction - What will happen if people do not use your solutions? Is there a quantifiable negative consequence if they don't use it, like the loss of someone's job? If so, you can build internal advocacy among companies you are trying to reach.
  • Solution is mandated - Is your target buyer facing an unavoidable consequence if the problem is not solved, like in the case of a government or regulatory mandate? In these cases where the consequence of non-compliance includes a fine or penalty, you will find it easier to explain value.
  • Markets are underserved - Are there customer problems that lack valid solutions? Focus on gaps that other solution providers have left open, and demonstrate how your business fulfills that need. In these cases, your target market will likely embrace this solution.
  • Problems are critical - Is the problem you are trying to solve a critical issue for your target market. These issues are most important, as they can often put careers and reputations in jeopardy. These are problems that companies are highly motivated to solve, often requiring less selling effort from you. Latent problems that are less pressing usually require more selling effort, and aspirational problems are often completely transparent until a solution provider exploits it. Facebook is an example of a B2C company that found an aspirational social need people have and provided a great solution for it.

Evaluate whether your solution is unique and compelling

After establishing the problem you are solving, it's important to objectively evaluate how unique and interesting your solution is. Having a solution that is faster or cheaper does not necessarily make it compelling. Your solution might look at a problem differently, creating new benefits by solving the challenge in a unique way that brings tangible benefits to the user.

Predict how easily users can try your product and adopt it

Many businesses often forget to evaluate how difficult it will be for customers to integrate the product into their lives. Regardless of how interesting and useful the benefits may be, if your product has a high learning curve, you will have a harder time spreading advocacy. Some experts advocate creating "non-disruptive" solutions, or developing products that make it easy for customers to integrate into their lives, while also improving it significantly (1).

A value proposition can not only help you communicate better with potential customers, it can also bring clarity and focus to your products and services before they even get to market. Many businesses invest a huge amount of resources into developing a product without truly examining the problem it solves, whether the solution is unique and compelling, and how easily customers can use it. Creating a strong value proposition will help you understand your customers better, which is always the first step toward success.


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