What’s a Value Proposition?
Hi, friends. Happy last week of August! In honor of back to school time, we’re going back to [business] school, by picking up our Building Your Business Plan series with the ever-popular (but often confusing) value proposition.
The value proposition is a tricky one. It’s difficult to put in definite terms because a great value proposition isn’t about anything concrete. Many people believe that it’s a list of product features, yet it’s anything but. The value proposition states a company’s (or product’s) benefits, differentiation, and captures the client’s perception.
Here are a few things to think about when crafting a value proposition…
Features & benefits are two different things.
A product feature is an objective fact. We can observe a product or service and state an undeniable truth about what the product does or its characteristics.
A benefit, on the other hand, is deeper; it’s transcending in a way. The benefit is the lasting takeaway from the product or experience. We can think of it as, “This product allows me to __________.” You could say that it’s the product aftertaste, in a way.
For example, in working with Ila Bridal, a wedding dress boutique in Nashville, we articulated this feature and benefit of ready-to-wear dresses:
Feature: a ready-to-wear dress costs (way) less than buying a wedding gown the traditional way.
And while saving money is great(!), that’s not actually the benefit…
Benefit: the bride feels smart for putting her money toward longer-lasting investments, that she values more, like…
- down-payment for her house
- honeymoon
- food at the wedding
- helping loved ones get to the wedding or creating an unforgettable experience for guests
Ila Bridal offers her brides the feeling that they’re stylish and smart.
Differentiation
As the great Dr. Suess said,
Why fit in when you were born to stand out?
Remember how we pulled ourselves away from the competition a few weeks ago? Bring those differentiators to the foreground and make sure that your stated benefit helps you stand out from the pack.
Good differentiation is:
- simple,
- relevant to its target market,
- (actually) different,
- credible,
- consistent, and
- can be extended to future products.
Perception is Reality
Lastly, when we craft a value proposition, we should proactively project “How do I want customers, colleagues, and the competition to perceive us?” (not too dissimilar from a resume). Value is 100% in the eye of the beholder, so if we’re not articulating a benefit that increases the client’s quality of life, then there’s no actual value at all. Here are 3 questions to ask:
- What will the offer allow the client to do?
- Based on our branding, pricing, and other competitors, how do we want clients to perceive us?
- What does the client perceive they’re spending in exchange for this this benefit? What’s the price relative to their view of the world, and what’s the cost of doing business together, unrelated to price?
As ConversonXL says, the “value proposition is a promise of value to be delivered.” And of course, stating a promise isn’t the hard part. I would even go so far as to say that keeping the promise isn’t the hard part. The challenge is to capture what a client values and convert that intangible, indelible mark into words.
