The Necessity of a Value Proposition
How to craft a concise value proposition statement for potential clients that explains why they should do business with your company.Leave a Comment
After reading that headline, I bet you are assuming a theoretical treatise on some marketing methodology… and you would be mistaken. Before your eyes gloss over and you hit the delete key, let’s discuss a guaranteed way to increase your business.
There is nothing theoretical about value propositions. Without fear of contradiction, I can safely say they are a necessity. Whether you are a manufacturer, distributor, integrator, or even an individual salesperson, value propositions are the differentiation among what appears to be equals to end users and buyers.
The key word here is differentiation. I have written extensively on the reality of commoditization and parity. In short, most “things” look the same to buyers during a cursory review. A display is a display, a mount a mount, and signal distribution is just a way to get signals from one place to another.
As much as we would all like to think we are special (drinking our own Kool Aid, so to speak), in the eyes of the buyers we tend to be one (or more) among many. Also keep top of mind that Gartner research shows that 70% to 90% of a buying decision takes place before a salesperson is involved.
We can thank the internet for that. In their research, buyers can make outright erroneous decisions, or ones that lack the knowledge and details of compatibility. More often than not, they do not get the full story online.
A properly crafted value proposition distinguishes one company from another. This is not the overall marketing strategy that speaks to a company’s profile at a high level, rather a specific subset of tangible and sellable benefits a buyer will (not may) receive by doing business with you.
View Archive: 4 Operational Boosts to Build Big Value in Your Company
The most common error in the creation of a value proposition is what we call the “we are better” syndrome. The problem with this type of quasi value proposition is that everyone says the same thing, meaning the message falls on deaf ears. Also, finely crafted value propositions are not formulaic, and will articulate specific things to fill in the blanks. Each market niche will require some fine tuning of the message, depending upon their unique pain points. This is about them, not you!
Technically speaking a value proposition poses two questions: why you should buy from me and not the competition, and just as importantly, why do anything at all. It refers to the value a company promises to deliver to customers should they choose to buy their product. The key here is how that value resonates with the buyers.
A value proposition is part of a company’s overall marketing strategy that introduces a company’s brand by telling potential buyers what the company stands for and how it operates. The value proposition segment is a sales tool that tells the story of why it deserves their business. This statement, if worded compellingly, convinces a potential consumer that one particular product or service the company offers will add more value, or better solve a problem for them than other similar offerings.
In short, a company’s value proposition tells buyers a succinct list of reasons why a company, product, or service is best suited for that particular customer. A value proposition should be communicated to buyers directly, via the company’s website or other marketing materials or better yet in person.
As noted, earlier one size does not fit all and they are not fill in the blanks. They can follow different formats, as long as they are “on brand,” unique, and specific to the company in question. A successful value proposition should be persuasive and help turn a prospect into a customer.
Creating an “Economic Moat”
At its core, a value proposition is a promise from the company to the buyer. It needs to be simple yet persuasive in an easy-to-understand edited list of reasons why a customer should buy a product or service from that particular business. If the list is too long the buyers will not read it, and if it is too short then it lacks impact. Think Goldilocks and “just right.”
A value proposition should clearly explain how a product solves a problem and fills a need. It communicates the specifics of its added benefit and states the reason why it’s better than offerings from similar companies, products, and services on the market.
To be effective here, you need knowledge of the competition… you need to know who your competitors are and what they specifically do, and not just a general sense “of” them. As one expert opines, “The ‘perfect’ value proposition is to-the-point and appeals to a customer’s strongest decision-making drivers.”
Warren Buffett of Berkshire Hathaway fame tells us about what he calls an “economic moat.” An economic moat is a competitive advantage. He states that the wider the moat, the bigger and more resilient the firm is to competition.
Companies use this statement to target customers who will benefit most from using the company’s products, and this helps maintain a company’s “economic moat.” At its best a great value proposition demonstrates what a brand has to offer a buyer that no other competitor has and how a service or product fulfills a need that no other company is able to fill.
Structuring a Value Statement
A value proposition communicates a list of reasons why a product or service is best suited for a customer segment. The creation and careful editing of the “short list” is critical since it is the most effective tool we have to initially resonate with the buyers.
It should always be displayed prominently on a company’s website and in other buyer touch points. It also must be intuitive, so that a customer can easily read or hear the value proposition and understand the delivered value without needing further explanation.
Experts tell us that “Value propositions that stand out tend to make use of a particular structure. It begins with a strong, clear headline that communicates the delivered benefit to the company. The headline should be a single memorable sentence, phrase, or even a tagline. It frequently incorporates catchy slogans that become part of successful advertising campaigns. Often a sub-headline will be provided underneath the main headline, expanding on the explanation of delivered value and giving a specific example of why the product or service is superior to others the consumer has in mind. The subheading can be a short paragraph and is typically between two and three sentences long. The subheading is a way to highlight the key features or benefits of the products and often benefits from the inclusion of bullet points or another means of highlighting standout details.”
Keep your creative options open. Value propositions can follow different formats as long as they are unique to the company and to the consumers the company services. Effective value propositions are easy to understand and demonstrate specific results for a customer selecting your company products and/or services.
To differentiate your company, products, and/or services from any competition, avoid overused marketing buzzwords, and communicate value within a short amount of time. For a value proposition to effectively turn a prospect into a customer, it should clearly identify who the customers are, what their main problems are, and how the company’s product or service is the ideal solution to help them solve their problem.
A carefully crafted structure allows buyers to scan the value proposition quickly and pick up on your company strengths and differentiation. In order to craft a strong value proposition, companies should conduct market research to determine which messages resonate the best with their customers.
Words to the wise in writing a value proposition:
Gartner provides us guidance and tips on writing a value proposition. They answer the question as to what makes a good value proposition:
- Clarity – Make it easy to understand
- Communicates specific results a customer will get
- Explains how a product or service is different and better
- Can be read quickly in under 5 seconds.
In writing cover the following:
- Identify all the benefits your product offers.
- Describe what makes these benefits valuable
- Identify your customer’s main problem.
- Connect this value to your buyer’s problem.
- Differentiate yourself as the preferred provider of this value.
Hopefully I have made my case (along with support from recognized experts) on the necessity of creating and employing a strong value proposition. The “distance” between wanting to create a great value proposition and doing it can be a true journey. The variables are significant.
Today we have very few truly disruptive technologies, so it boils down to your company strengths, market research to see where you stand, marketing outreach, and the sales team. Be honest in your approach and think of tangible benefits that really solve customer’s problems.
We are not in the solutions business rather the problem-solving business. If your value proposition speaks to risk avoidance and problem solving for the customer in a convincing way you are ready to address and conquer the new reality of commoditization and parity and stand out from the competition.
If you enjoyed this article and want to receive more valuable industry content like this, click here to sign up for our digital newsletters!