Value Propositions: Why They Matter For Your Product And How Build Them
Picture this scenario: You are an entrepreneur who just started their own company, and you have what you think is a great product to sell. You put a lot of time and effort into it, done your homework, made sure the product checks every box and are ready to put it out on the market. You’re excited, energized and ready for the sales to start rolling in on this new product.
Not so fast.
Before you bring your product to market, you need to nail down your value proposition. Essentially, this answers the following question: Why should customers buy this product from you? With the amount of products, advertisements and companies all competing for the very limited attention span of customers and consumers, it is critical for businesses to do this right - particularly if they are a new entrant and have not yet built up any brand equity with customers. If they don’t put in the necessary time to build out a strong value proposition, the product they worked so hard on will get no traction in the market.
Doing this, at a minimum, puts you on par with your competition. Consider, according to QuickSprout, that 69% of B2B businesses have established value propositions. Glossing over this is disastrous for businesses. Remember, this is about what your customers think is valuable, not what you think they are missing in their lives or what you think holds value.
So now that we have covered why they are important, how does one go about building a value proposition? Quicksprout has an interesting infographic on the steps business can take:
My take: while I agree with the steps outlined above and think they make sense, I think their process is too general. If you are just getting started, following these steps may get you a value proposition, but one not as optimized as it could otherwise be.
That is why, before I even help clients develop a value proposition, I walk them through a four step process I adopted from Ian Brodie’s book EMail Persuasion (which is a very good read if you are looking for basics on email marketing). It is a four step process that, if you do it right, helps clearly reveal your value proposition as well as some great insights on who might buy your product.
Before I start going through, a really important point needs to be made:
The Customer Needs To Be At The Center Of Everything
As a company, Amazon does a lot of things very well, while also having things to work on. One of the things they nailed though is a customer obsession. At Amazon, any initiative they undertake starts with the customer and works out from there. It is so important that they have it as one of their 14 leadership principles, and with good reason. Every value proposition needs to be designed with customers in mind - otherwise, how will it resonate, and if it does not resonate, how can you expect people to buy it? This extends to products as well, but that is a whole different story that would need a separate blog post to do it justice.
To give you an example of how this can go wrong, consider the case of a fitness company in the technology space (note: I’m cloaking the actual industry, product and story in an effort to maintain privacy). They wanted to partner with insurance companies such that the insurance company would buy the product, push out the app to its customers and offer them reimbursement for gym memberships, race fees, etc.
When I asked what the value proposition was, I was told it would keep people healthy, therefore keeping costs down, among a few other things. The problem: this was a great reason for the insurance companies to offer to reimburse their customers if they did things to stay healthy. What I did not hear was why the insurance companies would pay this company to use this app. That critical element was missing from the value proposition, making it much harder to sell the product.
With that customer focused mindset, here is the process I like to follow to get to a value proposition:
Step 1: Determine Who Your Customers Are
To get started, write down everything you know about who your customers are. Things such as:
How old they are
What sex they identify with
Whether they are married or single
Whether or not they have children
How educated they are
Where they live
Their current role
Whom they admire or aspire to be
You won’t know all of this - and that’s ok. Depending on your product, some of the items above may be relevant or irrelevant. The important thing is to start building the profile of who your customer is.
Step 2: Determine The External Pressures On Your Customer
In this step, you want to note all of the pressures that are put upon your customer. As a loose example, perhaps they work in a large organization and are pressured by their boss to meet a monthly sales quota. Or perhaps they run a small business, and need to do a certain amount of sales to meet payroll. They also could be a young professional, fresh out of college, juggling multiple bills that they need to pay.
This is where you can start to see what might be important to your customers, and begin to line up these wants and needs with your product (we will do this in a little more detail later).
Step 3: Determine The Internal Pressures On Your Customer
This is exactly the same as in Step 2, except here we take a look at the pressures the customer puts upon themselves. To go with our young professional example above, say this person sees their friends graduate with great jobs, and put pressure on themselves to find one, quickly. They may also live at home for a bit, and want to save up money for an apartment or a down payment on a house. For a different perspective, consider a mid level manager who wants to get a promotion - they feel they are ready for it, but want to keep delivering quality work to make sure they stay in the conversation.
Up to this point, we have a pretty good profile of our customer. We know who they are and the pressures they face. Finally, we need to….
Step 4: Determine The Know And Feel Factors For Your Customers
Here, you need to determine what your customers need to see, hear and believe about your product that will convince them to purchase or interact with your brand. Essentially, why should they buy from you, and what about your product will make their lives easier? What really moves the needle for them and pushes them further down the funnel? To do this, look at the list of pressures you gathered from steps 2 and 3. This should give you a pretty good idea of some of the problems your customers face.
Then, knowing what those problems are, determine what about your product can help solve them, and what they need to know in order to believe that. If you are selling a service for example, does your customer need to hear success stories from others you have worked with? If you are selling a dashboard, do your customers need to know that it will increase business efficiency by 20% in the first year?
Once you determine what your customers need to hear or see, you can take the impactful pieces and start to communicate a true, customer centric value proposition out to them. This is likely to resonate with your customers, because you did your homework and made the entire process with them in mind. If this is done correctly, this should create that sensation within the customer that helps push them into, and further down, your funnel. We know this because in Steps 2 and 3 we took stock of pressures your customer faces, and are using that to determine what moves the needle for them in Step 4.
Two quick points in closing. In terms of how long a value proposition should be, I think it really depends on the customer base and market. For some products, a quick, short slogan is appropriate, whereas for others they may need more detail. It really depends on the audience. I would advise against making a very long value proposition however - customer attention can drop off after a certain point (you don’t read a long book in one sitting very often, right?).
Lastly, bear in mind that customers may find different uses for your product than you had originally intended, and that your value proposition may need to adjust accordingly. Pedialyte is a great example of this - originally designed to help babies fight off dehydration, many adults used it as a cure for the hangover. Abbott, the parent company, adjusted accordingly in their advertising. The value proposition does not have to be set in stone if your customers tell you they find other benefits in your product.
Oak Moon is a consulting agency based out of Columbus, OH that helps companies market their brands, define value propositions and uncover customer insights, among other services. If you are interested in hearing more or have questions or comments about this blog, feel free to reach out at firstname.lastname@example.org.