How to Create a Value Proposition
It defines how your brand is different and why customers should care.
As a business, we need to capture potential customers' attention as quickly as possible by illustrating how we provide a unique solution to their needs and why we are a better choice than competitors.
We call this statement the value proposition, and it is a crucial component of any marketing strategy.
This blog explores the value proposition and how to create one for your business and/or brand.
What is a Value Proposition?
A value proposition is a firm's summary statement of why customers should choose their product or service.
The value proposition is a promise to customers, communicating our primary benefit and how we uniquely deliver value.
It introduces our brand to consumers by sharing what our company stands for, what we do, and why we deserve the customer's business.
It must clearly explain how the benefits of our brand's products or services fit their need better than other comparable products on the market.
Our benefits then become crystal clear to customers from the outset to persuade prospects to become paying customers.
The number one reason a product or service is best suited to that customer must be communicated directly to consumers — through our website and other marketing materials.
The value proposition is an essential element of a firm's overall marketing strategy. It becomes the foundation for our brand identity, branding strategy, and market position unique to each firm.
It is the basis for our position in the market but is not the same as a positioning statement.
Positioning is just one component of our value proposition; communicating what distinguishes our products or service from the competition.
“A clear and effective value proposition should be the basis of a firm’s functional, psychological and economic value.” (Hassan, 2012)
The Importance of a Value Proposition
The value proposition communicates a business/brand's most important reason someone should do business with you and not the competition.
How do you provide the most value?
Your value proposition can provide a competitive advantage if done well.
It becomes a focus in our marketing and should always be prominent on the website and other customer touchpoints such as social media.
Your value proposition is the first thing they encounter for many consumers — so it should differentiate you from the competition.
However, many firms do not have one. According to HubSpot, around 60% of businesses do. But many companies do not do it well, which becomes a problem if customers do not immediately understand the value of what you offer.
Many customers will research several options before making the purchase.
You want your business to stand out amongst these alternatives to be noticed and remembered.
An excellent value proposition helps potential customers to understand how you uniquely provide value quickly. If it is not immediately clear what you offer, customers will likely disregard you.
The value proposition should target your ideal customers/market segment by identifying why your solution best fits their needs.
“These days, an elevated level of competition and rapid changes in the market and technology make it complex for a company to sustain momentum without focusing on deliver the value that customers require.” (Hassan, 2012)
Creating a Value Proposition
When creating our value proposition, we must define what we offer and explain how we provide a unique solution or benefit best suited to meet a particular customer group's specific needs.
First, we must identify all the benefits of our products or services and differentiate ourselves from competitors' alternative options. Be as specific as possible when describing how this provides value in an easily digestible way for the reader.
Strive to be too straightforward and the point — focus on clarity and the conciseness of your message.
You want the customer to understand your message, so avoid hype, marketing buzzwords and industry jargon.
“Identify the elements that make their offer superior in order to demonstrate, document and communicate them clearly to the targeted customers.” (Hassan, 2012)
Your Value Proposition is also not your slogan or catchphrase — it is more than that.
A value proposition should target customers' strongest decision-making drivers. To do this, we need to define how consuming our products or services will make their lives better and how their experience makes them feel.
Customers can have several motivations, including emotional drivers, rational needs, and fears of avoiding undesirable outcomes.
Focus on how customers define value. By connecting our value to the challenges of our target customer, the value proposition becomes clearer.
Using research to understand your audience
Before writing our value proposition, we need to clarify what customers we target our products or services.
Different customers perceive value differently. More than one component of a product or service adds value, such as price, quality or location. Therefore, we need a deep understanding of our marketplace to help identify our target customers' expectations, to best address their needs.
Market research helps us understand what customers are looking for in the product or service that we offer and how they phrase their needs. We write a value proposition in our ideal clients/customer persona's language, which can often be different to how we, as the business, would phrase it.
This research helps us determine the message that resonates best with our ideal customers and/or primary buyer persona, so we use the correct language.
Some of the things we are trying to learn through market research are:
- Who our target customers are.
- What their values are.
- What their needs are.
- What their motivations are.
- What your competitors are lacking.
- What your product or service does better.
- Why this difference should matter to customers.
Formatting a Value Proposition
The value proposition must answer what we offer, who is it for and how it is functional. It will usually follow a particular format, using a headline, sub-headline, and a short paragraph of text, with a visual.
A value proposition must have a strong and clear headline to grab customers' attention. It summarises your crucial benefit to the customer in one sentence, so it needs to be transparent and instantly credible.
The format for this could be "We help (X) do (Y) by doing (Z)."
The sub-headline is a 2–3 sentence paragraph. It is a specific explanation of what we do/offer, for whom it is for, and why it is useful. The final section explains this more in-depth by outlining what you offer and why it is superior.
Key benefits or features are listed, often as bullet points for ease of reading.
An image can communicate much faster than words, so a visual such as a photo or hero image is another critical component of our value proposition. A hero image is a large banner image, a web page that services users to glimpse the company.
“An entire set of experiences, including value for money that an organization brings to customers. Customers may perceive this set or combination of experiences to be superior, equal or inferior to alternatives.” (Lanning, 1998)
Testing your Value Proposition
After researching and writing our value proposition, we should test it. Research has shown that half of the businesses do not optimise their value proposition.
So how do you know if it is any good?
Testing the effectiveness of your value proposition helps objectify the process a little.
As well as surveying customers or using a focus group, you might consider running A/B tests.
You can test two alternative value propositions by driving traffic to two different landing pages. Targeted Facebook ads, Google ads, or email marketing effectively drive relevant, targeted traffic to these landing pages.
If one page performs better than the other by generating more engagement and conversions, this gives an objective answer for a better fit.
You can use this process several times to hone your value proposition further to improve results.
In summary, a value proposition is the summary statement of why a customer would choose a company's product or service. It frames how they uniquely provide value to customers.
This article has discussed the importance of creating a value proposition and the steps a business can take to create its own and differentiate itself from competitors.
Thank you for reading,
Dan
If you enjoyed the content, you might find this article on positioning useful.
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