Your value proposition is at the core of your business and is how you justify the price you charge for your product or your service. It will dictate your price point, determine your profit, and have a significant impact on the share of the market your brand occupies. Consumers may choose your offer over the competition because of your value proposition. Suppose you don’t have one? In that case, it means that your business is competing on price and features that competitors can easily replicate or improve upon, which is a dangerous place to be and leaves you vulnerable to the competition.
A business or brand will often have more than one value proposition in the marketplace. For example, you may choose to compete with other businesses in the same field while also competing with other products or brands. A powerful value proposition is a risk-mitigation strategy as well as an opportunity to elevate your brand’s position in the market.
There are 6 key steps to developing a clear and power full value proposition.
Define your target audience
First things first: Who are you trying to create value for? You might think that getting to know your buyer is a no-brainer, but you would be surprised to learn how many companies develop new products without a clear target market in mind. It’s the chicken and egg story of business; what comes first, supply or demand? Defining your target market is the starting point of your value proposition journey. The customer’s needs, desires and interests will help add features and benefits to your product offer to attract more buyers. The more you know your target market, the more customised and relevant your product offer will be.
Consider a mortgage broker who has a vague target market and is casting a wide net to include anyone interested in property investment. Such a general target audience makes it hard to define specific mortgage packages that will appeal to everyone and still have a strong value proposition. However, we could segment that target audience into smaller groups, such as newly-weds, growing families, real estate investors or seniors looking to downsize. Then it is much easier to define specific packages to cater to each segment’s needs. Fully understanding who your target audience is, specifically how they behave and think, will give your business more insight into how to develop unbeatable offers that best suit their needs.
Go beyond the generic demographic, gender, and age definition. Get into the psychographics of the target groups, which includes their values, desires, goals, interests, and lifestyle choices. Understanding consumer behaviour and transaction patterns are fundamental to understanding your target audience.
Below are 4 quadrants which will help you to define your market segments accordingly:
Finding the right problems
A product or service offered by a business is a solution to problems customers have – the problem and solution tactic is as old as business itself. What problem are you solving for your customers? By now, I am sure you have realised that people don’t want or care about what you sell. All that customers care about is that their problems are being addressed and solved by your products and services. Your offer is only a means to an end. Note that many of the most successful entrepreneurs didn’t initially offer products and services with fancy bells and whistles when they started their business. Rather, all they were trying to do was to solve a genuine problem to make life easier for some people. Being obsessed with solving a specific problem is chiefly the biggest motivator to come up with products that will disrupt and revolutionise the market. Once you solve the problem, then you can add other aesthetic elements and other value propositions to make the product offer even better.
Your customers have problems they don’t know how to solve, which is why they are searching for solutions like yours. Show them that you have the answer they are looking for along with the expertise to make their pain points go away.
Can you answer the following questions?
- Do you know the biggest unmet need in your marketplace?
- What is the biggest pain point experienced by your customers?
- How hard did you work to try to solve their problems in the past?
- Why is the problem so hard for them to solve?
- Who else is trying to solve the problem, and how are they approaching it?
- What does success look like to your customers?
- What might hold them back from buying a product or service?
- How do they reach a purchase decision?
To gain a thorough understanding of your customers’ needs, start by sitting down with your existing customers and asking them questions directly. Search online forums and sites customers visit and consider their topics of conversations. Also, look at your emails and online reviews, and chat with your sales team to pinpoint common complaints or issues your customers are having. You’d be amazed at the amount of information that can come from those sources. Once you have the list of problems, it’s time to get creative with the solution!
Problem-solving is the golden ticket
Great brands and multinationals such a P&G, Unilever, and Apple, focus on solving their customers’ problems which is why they have built so much customer loyalty. Think about it: P&G invented a better way to mop with the Swiffer; Steve jobs introduced the iPod and the iPad as ‘smarter mobile devices’ for people on the move, and Netflix solved the problem of unlimited access to entertainment from anywhere at any time. These brands have been able to capitalise on common issues to develop a unique value proposition.
|Product design is the best and easiest way to implement problem-solving. Tesla is solving the problem of dependency on fossil fuel and has designed a car that runs on electricity instead. Vanish has solved the problem of not separating whites from coloured clothing while washing. Can you redesign any part of your product or offer to make someone’s life easier? Great product design always comes from a genuine attempt to solve a problem permanently.|
Sometimes the problem-solving is not so much about the product itself but in the user experience. You can change the design of the packaging and transform the customer experience for the better. Nespresso has solved the problem of messy and complicated barista-style coffee machines at home with its coffee pods. Another great example of elevating the customer experience or empowering the customer is UBER EATS. UBER EATS did not invent the food delivery service; it just packaged food delivery into a more user-friendly and consumer-centric experience. From one App to many, it gave the customer access to multiple venues. If you are focusing on solving your customers’ problems, you can never go wrong with your value proposition.
Differentiate or fade away
Having a great solution to a customer problem is sometimes not enough, especially if the competition can easily replicate it. One way to protect your value proposition is to bring the offer to market faster than anyone else. Speed to market is a guaranteed first spot in the customer’s mind. Your differentiated value proposition may be as simple as providing the best customer service (think Zappos) or the fastest delivery (think Amazon). Or it could be that you provide a niche product or service or specialise in a niche market better than anyone else.
Often, a differentiated value proposition is a combination of many things your company does well, and when combined, they provide a value that your customers can’t get anywhere else. However, when you offer more than one value proposition to differentiate from the competition, it’s not enough to state that you’re the fastest or best. You need proof. You must demonstrate that you have the data to support your claims; otherwise, your value proposition may fall short. Do not fall into the trap of over-promising and under-delivering to your customers. Once you’ve broken their trust, you cannot get it back.
From proposition to promise
A powerful, differentiated value proposition is your customer promise and guarantee. Are you willing to put your money where your mouth is? If so, the customer is more likely to believe you and choose you. What is the promise you’re making to your customers that matters to them and makes you different from your competitors? Would it be apparent to a customer if they visited your website or looked at your marketing materials? At the heart of your strategy to differentiate your business from the competition should be your promise. And your devotion to delivering on the promise must be measurable, or the promise becomes an empty slogan.
A great example of using a promise as a powerful and emotional value proposition is FedEx whose brand promise is “Peace of mind”. How can you promise peace of mind if you are a logistics company? FedEx merely evolved its rational guarantee which was, ‘to be able to track your product at any time through online’, to a personal guarantee, which is ‘having peace of mind of knowing where your parcel is at any time”. Turning a rational promise to your customers into one using emotive language taps into their deep emotions such as a sense of insecurity; their natural response to this emotional trigger is to be more attracted to the promise. In the last decade, FedEx realised that making a personal connection using the right choice of words would be the best way to communicate its value proposition. Let’s face it; everyone can easily copy a tracking system, so it had to act fast to create an emotional imprint in the customer’s mind. The brand promise became not only its emotional value proposition but also its positioning statement via the slogan, “Relax, It’s FedEx”.
Sell the story, not the product
Now that you have the value proposition worked out, how will you communicate this message to your audience to strengthen your brand value? Promising a feature or benefit is not enough to position your brand in the mind of the consumer. To get the most out of your value proposition, you need to find an emotional trigger attached to the solution you are proposing, which is where the magic of creative advertising and storytelling comes into play.
Great advertising campaigns have been able to expose a simple value proposition in a captivating and enticing way. It’s not uncommon for businesses to focus on themselves, their products, and services in their messaging. Therefore, scanning your content and re-focusing your message on your customers and the problems to be solved is imperative. It’s a bit time consuming, but worth it.
Break down what you sell and what you do to solutions and benefits. Map these back to what we call “trigger phrases” like attention-grabbing statements or questions, that relate to the point of view of your customer, not your own. Take a second and write a bold statement, a headline that might be the first thing anyone who visits your website sees. Develop your pitch focusing on the value proposition then practise it with a few prospects and clients to ensure it resonates with them. Ask them to be honest in their feedback. Online reviews can also provide valuable insight into writing these headlines. They can often write your promise for you as you see first-hand what value the customer gained from your product or service.
What started as a shrug to IBM’s “Think”, Apple’s brand promise is arguably the most famous slogan of all time and the key to its wild success in the computer industry. Apple’s brand promise is two-sided – a guarantee to create products based on seeing the world a little differently, and a promise to inspire its customers to do the same. It’s not what you say, it’s always how you say it!
If you apply the tips above and work through the six steps, you will develop a powerful value proposition. Your brand’s message will benefit greatly, and it will also open doors to new opportunities for growing your business. Creating a powerful value proposition will lay the foundation for developing a strong brand image and add value to your product offer. Ultimately, this will add tangible brand equity and increase the overall value of your business.