Why a Value Proposition is Essential for Business Success (And How to Create Yours)
“How do I know your solution is what my business needs?”
“I’ve already got a reliable supplier in your sector. Why should I switch to you?”
“How are you going to solve my business problem?”
Questions like these can make even practised business owners break a sweat. If you start hearing yourself waffling on about the ’synergistic benefits’ of your ‘integrated solution’ it’s not because you don’t know your stuff, it’s generally because you haven’t developed your value proposition.
A value proposition is a precise summary of the pain you solve for customers, the services or products you offer to alleviate their problems and why they should choose your business – not your competitors’. Unlike a strapline, which is customer-facing, a value proposition is an internal document designed to provide direction for your team in all areas of marketing and communications – including for developing external-facing copy and content.
Too few businesses have worked out their value proposition, which is why crafting one is often our proven part-time Marketing Directors’ first job when they join a new business. Crafting yours will force you to put yourself in customers’ shoes, offering up rich insight for you to use across your business more widely.
Here’s how to create yours.
What is a value proposition?
A value proposition is what it says on the tin: a simple statement of the value you offer customers, to communicate to them why they should buy your products or services.
An effective value proposition is clear and grounded in reality. It’s not an abstract summary of your business’ vision, mission or values. It’s also not a strapline – and shouldn’t be confused with one.
An example value proposition is as follows:
Example: Iron Mountain
We help our customers to lower storage costs, comply with regulations, manage risks, and use the value in their information to grow. Our solutions include information and asset storage, records management, and data management. Founded in 1951, we store and protect business documents, backup tapes, electronic files, medical data and other assets.
We treat the information and assets of our customers as if they were our own.
We invest in security technology.
We conduct background checks on all employees and provide ongoing security training.
We submit to third party security audits to enhance our security culture.
We follow and help set the strictest industry standards for safeguarding information and data privacy.
Our value proposition template
Crafting your own value proposition isn’t easy, but the fundamentals of the process are simple. Your value proposition should simply summarise the following facts about your business in a single phrase:
1. The pain your customers suffer, and their business goals
2. The products and services you offer to solve that pain and help meet those goals
3. Key reasons your target customers should buy these products and services from your business, and not from a competitor
This is the value proposition framework we ourselves use at The Marketing Centre.
Finding answers to the questions above and crafting a single response requires guidance. We’ve explored each step in more detail below.
1. What pain do you remove for customers?
The popular saying goes: ‘People don’t want a drill; they want a hole in the wall”. That’s true, but it’s not all they want.
What customers actually want in this context is to hang a bookshelf – their goal. Why? Because their books are being damaged on the floor – their pain.
Us humans are predominantly interested in our own problems. Focusing your value proposition around your customers’ goals and pain points ensures your messaging will be consistent, and consistently relevant, to customers.
Using the example of the drill and the bookshelf, trace the products and services you offer back to the problems each solves, and the business goals they help satisfy. In the Iron Mountain example above, these pains are high storage costs, compliance and inhibited growth.
Most businesses will identify obvious examples of the pain they solve and goals they meet for customers. But digging deeper and thinking laterally will throw up interesting alternative explanations that should also form part of your response to the question of customer pain.
For example, a quality stationer doesn’t only supply their customer with paper to write on. They enable those customers to supply their own customers with a premium branded service, by printing correspondence on high-quality paper stock.
The easiest and fastest route to finding these answers is to conduct customer research. Call both happy and unhappy customers to find out why they do business with you – you’ll be surprised at their response.
2. What products and services do you offer to alleviate this pain or meet the goal?
Where possible, combine the pain points above into three or four pain points, to make your value proposition as inclusive as possible.
Next, take these core pain points and work ‘upwards’, identifying:
Which groups of products and services solve each need;
How these products and services solve these needs, and;
The value this creates for the customer.
Where possible, quantify this value. For example; if your business’ software helps save customers time, calculate how much time. You might not include these figures in your final value proposition statement, but they will provide fertile inspiration for future marketing messages and will focus your thinking.
The Iron Mountain value proposition tells us that the business offers information and asset storage, and records and data management for customers.
The value proposition for software provider LessAccounting, meanwhile, is ‘Accounting software for business owners who dislike bookkeeping’. Here, business owners’ apathy towards bookkeeping covers a multitude of other pain points – including confusion, boredom and a concern that their time would be better spent doing something other than bookkeeping.
3. Why should customers choose your products or services?
How your business differentiates itself is the final element of your value proposition. Crucially, your value proposition should make it crystal clear why customers should do business with you, and not your competitors.
To identify your peculiar strengths, consider the following points. Then, wrap these together in a short list of ‘higher-level’ strengths as in the previous step:
Is your business a sector specialist?
Can you claim any proprietary processes?
What references can your customers provide about you, and what will those references include?
Is your brand particularly strong?
What do your customer reviews say about you?
Do you offer exceptional customer service?
Do you offer any money-back guarantees?
Do you offer free shipping or any other free value-add services?
What emotional triggers does your business answer?
The final point above requires special focus. Do customers buy your product because their friends and family also buy it? Do they believe their life will be better because of it?
Considering the emotional triggers your business appeals to will ensure your value proposition appeals to logical and emotional reasoning. This is something many businesses’ value propositions fail to achieve – notably in the tech industry, where businesses typically focus their value propositions on features and not benefits.
One more thing
Armed with your key pain points, products, services and points of differentiation, you should now be in a position to combine these details into your value proposition. Seek to keep the factors above as clear as possible, while aiming to keep your proposition to half a page of copy or less.
This process can be time-consuming. For best results, it’s important to find outside help to complete the exercise.
Introspection is tricky, especially for teams running day-to-day business operations. Enlisting the help of an independent observer won’t only lead to a value proposition that provides your marketing communications with direction and power, it might also lead you to learn something about your business, too.
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