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What do you mean by Value Proposition?
Value Proposition is (and should be) the most important element of your overall marketing messaging. It communicates why should buyers choose your products/services over others (competitors), and highlights the key benefits of your products/services in a crisp way.
Unfortunately, many startups (and founders) are prone to bury their value proposition under buzzwords or meaningless slogans, which in fact makes it difficult for them to sell.
Worst of all, they don’t even bother using their value proposition on their site, in their marketing campaigns, and in their sales pitch.
A mistake that often proves deadly!
What are some examples of Value Propositions?
Let's look at some of the compelling value proposition examples that should give you some ideas for developing or refining your own value proposition.
1. Uber: The Smartest Way to Get Around
Its website explicitly conveys its tempting, and superior service in a simplistic way:
One tap and a car comes directly to you (no more pleading calls to traditional taxi operators.)
Your driver knows exactly where to go (no painful explanations to the cabbie about where you want to reach?)
Payment is completely cashless (not worrying about change/enough cash.)
2. Slack
With all your people, tools, and communication in one place, you can work faster and more flexibly than ever before.
Slack’s value proposition focuses on making users' (professional) lives simpler, more pleasant, and more productive. It saves time by tearing down communication and systems silos. Owing to its powerful value proposition, Slack is a much preferred alternative to the dreaded email inbox and other tools.
3. Airbnb
Airbnb realized that the hospitality market can be disrupted for the 2 key stakeholders:
Guests, who wanted a place to stay, and
Hosts who wanted to rent out their spaces.
Thus its 2-in-1 value proposition:
Travelers benefit from a truly local experience and hosts benefit from extra income.
What are the 6 Elements of a Value Proposition?
[Source] To articulate a value proposition for your product, you need 6 elements, which are:
Be very specific at this, and try including titles if you can.
2. Alternative
This is an alternative to your product i.e. what they are using today?
What is missing or what frustrates users/customers of alternatives?
3. Problem
Weaknesses of their current alternative, and/or problems/frustrations caused by them.
4.🟧 Capability
The unique ability that is unlocked by your product, something the users/customers couldn't do before, and now they can with your product/service.
🟩5. Feature
The part of your product/service that powers the above capability, answers "how"
🟦6. Benefit/s
New change driven by this new capability.
For e.g. increase in cost efficiency, decrease in time taken for resolution, etc.
How to Write a Great Value Proposition for Your Startup?
We'll cover here 3 different methods from a single sentence formula, and 2 different frameworks for you to choose from.
a. Steve Blank (ex. Google employee) formula to distill your insights.
We help (X) do (Y) by doing (Z)!
This may look more like: “We help our [target customers] do [their needs] by doing [our features that bring them _____ benefits].
Here’s my value proposition for my investment banking business.
We help Startups and SMEs (our target customers) Successfully Raise Funds (by fulfilling their needs). By Empowering them to be Investable/Fundable First (this is how we do it)!"
Defining the Value Proposition: 3 Essential Questions
To create a cohesive value proposition, start by brainstorming around these 3 questions:
Which type of customers (distinct group of customers/customer segments) will you serve?
Which needs (fair price, great product, or being well-treated) are you going to meet?
What relative price point will provide acceptable value for customers and acceptable profitability for the customer?
Some of the value propositions can be improved by cutting down features that aren't actually needed by the customers, thereby reducing the prices, and knocking out the competition.
Depending on your product/service, it may make sense to start with the customers or the needs first. Together, all 3 create a triangle that can lead you closer to a succinct value proposition.
Finding a unique value proposition usually involves a new way of segmenting the market. For example, Apple create a new market with iPad, until the time customers didn’t realize they wanted tablets.
c. Value Proposition Canvas
The Value Proposition Canvas is a framework developed by Dr. Alexander Osterwalder, which can help ensure that a product or service is well positioned around the customer's values and needs. It is best used in 2 situations:
When a new offering is being developed from scratch, or
When there is a need to refine an existing product or service offering
This can be mapped across 2 categories:
a. Customer Profile
Which type of customers (distinct group of customers/customer segments) will you serve?
Jobs: the tasks (functional, social, and emotional) that customers are trying to perform, problems they are trying to solve, or needs they wish to satisfy.
Gains: the benefits that the customer expects from the product/service.
Pains: the negative experiences, emotions and risks that the customer currently experiences in the process of getting the job done (from existing alternatives).
b. Value Proposition of the Product
Evaluate your product against each section from the perspective of the customer.
Benefits of your product: Does it increases pleasure or decreases pain for the user/customer?
How do the features make the customer’s life better?
How does the product experience make a customer feel?
Next, you’ll dive into the customer’s wants (emotional drivers), needs (rational motivators), and fears (undesired outcomes).
Remember that even when consumers are making purchases on behalf of a company, they can still be guided by emotions such as the perceived likelihood of failure, their anxiety, or their reputation at work.
A fit is achieved when the products/services offered as part of the value proposition address the most significant pains and gains from the customer profile.
Identifying the value proposition is just the start.
It is important to validate it with your customers and get their feedback/confirmation on the value proposition.
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