What is Your Value Proposition?
The Value Proposition is a key to validating your business idea. It sounds deceptively simple.
It is vital to determine the answers to the following 3 questions that will produce the Value Proposition:
- What customer problem will your business address?
- How will the customer get value from your solution?
- Does your business model support the value proposition?
Write down your conclusions, refine them and be prepared to develop them once you have started the business and begin to get feedback from your customers.
Get it Right
It will demand considerable work to get the value proposition right. You have dealt with businesses that did not deliver value to you. You knew it immediately. You have also had dealings with companies that did get it right.
Spend a moment or two thinking about examples of each and the kind of experience you had using their products or services or interacting with them. Draw three columns on a sheet of paper and put your words under ‘Right’ and ‘Wrong’. You will then have a Value Proposition template for your own business. Of course the model below is over simplistic, but you get the gist. Use your personal experience as a user or customer and it will make the process more valid.
|Bigco, Inc||outsources to cheapest countries|
|Carmaker, Inc||offers lifetime guarantees|
|Bank, NA||CRA rating ‘outstanding’|
|Phonebiz, Inc||never admits failures|
Why Define a Value Proposition Now?
It is a first priority task for the entrepreneur because the market is too crowded for just another widget.
Even if your are offering professional services, you will need to stand out from the crowd. If you are a lawyer for example, your value proposition will show how you provide personal or business results, not legal results. To do so involves really understanding who the clients are and what they need.
You are likely to be excited about what you do or make. If you are not clear about your value proposition at the outset, you risk making the wrong product or offering a service that satisfies your needs and not those of your clients.
A carefully expressed value proposition will define the integrity of the business.
Your value proposition will guide your:
How Do You Define a Value Proposition?
You will be called upon to demonstrate that you are able to confront and solve the problem through superior:
Why should a consumer buy your product or service? You will have to convince your potential customer that your particular product or service will add more value or better solve his problem than other offerings, or it is inherently an outstanding solution in absolute terms, never mind thinking about the offer in a competitive frame of mind..
It is not only about your product or service itself, but also the way that you will make it available and provide the service that goes with it. If the value proposition is purely product focused, it will ring hollow. The value we are talking about here is tough to define—it goes beyond price and quality. It concerns relationship.
An alternative right-brained approach is to use storytelling: create a business worth talking about and tell stories about the business you create.
Be Sure to Live Your Value Proposition
The value proposition is not about fine words and platitudes about offering something that is a ‘breakthrough’, or ‘best-in-class’. This kind of management-speak jargon is delusional. Be very specific and direct. Use everyday language and touch feelings as well as thoughts.
Naturally, you will want to show how your business will increase revenue, decrease cost, yield efficiencies, or improve speed to market–or enhance delight, save time, be more effective or share relationship. In so doing you must be clear about how your solution is special. So not only has your offer to be the best it can be, you need to be able to show how you are going to deliver your offer effectively and with real care.
You will only define a great value proposition if you love your customer deeply and honestly. The customer’s perception and experience is what matters, not your boastful claims. And remember, you cannot control what is outside, but only that which is inside yourself. Be the change!
Value Proposition Matrix
Defining your value proposition is like catching a monkey by the tail. To help you with this elusive task, I have created the Value Proposition Matrix. Se if you can focus on the criteria that have importance and evaluate them by who determines the value.