What is a value proposition?
Updated: Aug 21, 2022
Without a good value proposition, marketing efforts can only ever go so far.
At Haynes MarComs we’re obsessed with value propositions. We want to know the purpose of your product and business, the role it plays in making the lives of your customers better and more productive, and the innate value it offers them.
The clearer a value proposition, the easier it is to develop content strategies that reinforce your position in the market and highlights the opportunities you offer customers and the industry. Being anchored to a defined value proposition that incorporates your business’ mission, vision and values will enable your marketing, sales, customer service and product development to be focused and have purpose - really helping to differentiate your delivery.
It’s also important to commit to your value proposition, and not continually pivot or adapt. That’s not saying it needs to be broad; in fact if you’re too broad you’ll struggle to communicate your offering, while if you’re too niche you can lose opportunities.
Three starter questions for creating your value proposition
There are three key questions that are built around the value proposition, which any marketing communications professional should be asking from the offset. It’s not what does your product do, but:
Which customers are you going to serve?
This is really important, knowing your buyer personas and those involved in the decision-making. The more you understand your target audience, the easier it is to relate, while not being distracted by irrelevant audiences and markets.
Which needs are you going to meet?
First we need to have a good grasp on your buyers’ pain points - those aspects of their business, their role, or their targets that they’re struggling to achieve. You should be offering the solution that resonates with their pain points. And don’t go making it up; your target audience will see straight through you.
What relative price will provide acceptable value for customers and acceptable profitability for your business?
Really understand where you sit in the market, and how justifiable your prices are. Where can you add additional value to make the price/investment attractive? Many companies will focus on the features and functionality that define them from competition, just a list of product specifications - not really that attractive to anyone - especially when you’re trying to hook and reel in new prospects (lead product features until later in the sale process). Instead it’s about looking at the benefits, how your solution is an enabler to other things.
Making a commitment to your business and the market
A value proposition stands as a promise you are making to your customers and target market segment, explaining why a buyer should choose you. It’s important you use words that are compelling and exciting without alienating the audience. Your audience still requires contextual and relatable signifiers - being too innovative in your approach or trying to be overly distinctive can distance you and make you unrelatable. You still need to consider market fit.
Your business offers a solution - be clear what problem it solves. This is a message you need to use consistently across all communications and buyer touch points. You need to get to the point quickly - think of it as an elevator pitch:
Have a clear headline
Explanatory short, two to three sentence paragraph (with or without a short bullet point list)
Be selective of words, terminology and tone of voice to best resonate
The concept of the value proposition actually hasn’t been around long; it is credited to Michael Lanning and Edward Michaels, who first used the term in a 1988 staff paper for the consulting firm McKinsey and co. In the paper, which was titled ‘A business is a value delivery system’, the authors define value proposition as "a clear, simple statement of the benefits, both tangible and intangible, that the company will provide, along with the approximate price it will charge each customer segment for those benefits".
How to create value proposition?
Market research will help you better understand your target market and get deeper insights to their challenges so you can improve your value proposition and define a strategic future for your product. Listening is essential before defining any value proposition: What do your customers say? What are your prospects saying? What feedback do you have from lost leads? What is the wider market - those who don’t know you - saying? What is the perspective of the wider industry and your partners?
Often innovative companies can struggle to grasp the real issues. While it’s great having early adopters as your customers, this segment is far from vast and will move on when innovation is not continually delivered. To offer further value, ongoing market research and listening will enable you to drive investment and make the right product decisions.
At Haynes MarComs, we look at your value proposition in five stages:
Discovery – market research and listening, understand the company throughout, identify real customer success
Analysis – define the SWOT and identify the opportunity through TOWS analysis to help define the ‘blue ocean’
Positioning – understand your true competitors and reflect on the market, where you sit in relation to other businesses and where you aim to sit
Decide – set the benefits and the value, define your product packages, marketing and pricing
Differentiation – build a value framework to differentiate product in market for sales and marketing teams
Deploy and optimise – backup proposition with evidence, create feedback loops to review performance and how it is resonating with the market
Without a good value proposition, marketing efforts can only ever go so far
A value proposition is arguably the most important aspect of your overarching company message, and potentially the most critical element of your marketing strategy.
Value propositions are most notable for b2b companies and especially within technology, software, systems and applications. Too often companies will talk about being ‘feature-rich’ and lead with the product functionality without telling the buyer how the product helps them do their job, outperform in their role, or achieve key strategic milestones.
[B2C tends to focus on fulfilling desires - though in recent years and in competitive markets a value proposition will enable you to be clear with where you stand and how you differentiate to build better brand relationships with customers.]
In a world where every company is ‘award-winning’, ‘a trusted partner’, ‘innovative’, ‘disruptive’, ‘revolutionary’, a ‘market leader’, ‘world-class’, ‘experts’ or ‘specialists’ - you need to work harder to stand out.
What is NOT a value proposition? We particularly find these from Invespcro important considerations:
An incentive: The word ‘incentive’ is defined as a ‘positive motivational influence’ designed to incentivise a visitor to act right away. Incentives are not value propositions, but often companies confuse them.
A catchphrase: A slogan or tagline is “a catchphrase or small group of words that are combined in a special way to identify a product or company.” Slogans are not value propositions, but many companies tend to merge the two.
It’s not a positioning statement: A positioning statement is an expression of how a given product, service or brand fills a particular consumer need in a way that its competitors don’t. A positioning statement is a subset of a value proposition, but it’s not the same thing.
We create full multi-channel content strategies to reinforce and promote your value proposition amongst your target buyer personas to drive the leads and sales, that can be scaled across the business as you grow.
Find out how Haynes MarComs can provide you with a content library and build engagement across your marketing channels to shape your sales funnel while building greater awareness and understanding in your industry.