We live in a world of overcapacity, where consumers are empowered to choose. With a market-driven approach you can stay focused on delivering outstanding value to your consumers to weather the downturn and be in great position for the upturn. It all begins with an on-target value proposition.
While a value proposition may sound complex and intimidating, the framework is quite straightforward. We focus on 3 questions: Who? What? Why? Put another way, the value propostion is a series of 3 statements: Convince (Who?), That (What?), Because (Why?).
The framework is simple (explained in more detail below), but getting it right, and making it stand out from the competition, is the hard part. Market-driven organizations should be constantly garnering feedback from customers and prospects through interviews, focus groups, quantitative research, competitor visits, shop-alongs, and web analytics. The more feedback you have, the more you understand your customers, and the stronger your value proposition can be.
For illustrative purposes, our team has imputed the value proposition of Apple and Under Armour in the following series of statements:
Convince (Who?): For talented creatives who aspire to share their story
That (What?): Apples offers creative expression through human technology that is easy-to-use
Because (Why?): Apple consistently innovates with breakthrough, well-designed products…iPod, iTunes, iPhone, iMac.
Convince (Who?): For athletes who seek great performance
That (What?): Under Armour’s mission is to make all athletes better through passion, science, and the relentless pursuit of innovation
Because (Why?): Under Armour’s technology is complex, but the value is simple: wear HeatGear when it’s hot, ColdGear when it’s cold, and AllSeasonGear between the extremes.
Below, we have outlined the questions you should be thinking about to help you develop a value proposition. This exercise should facilitate good discussion among your team, and can be repeated and refined over time to incorporate more market feedback.
Who? Your statement should read something like this: “For (target customer), Who (statement of need or opportunity).” Use the below questions and tips to guide you and read through our advice on customer segmentation.
- Develop a comprehensive list of your audiences and prioritize the top 2 to 4 audiences that you need to deliver against in order to succeed.
- What is your customer’s “statement of need” or opportunity (what do they want)?
Entrepreneur Steve Barsh has some great tips on his blog which I will repeat here:
- Think about dividing your customers into customer segments, and/or breaking them down by psychographic or demographic.
- Think about what they want (“Wants” are much stronger than “needs”)
- Look at it from the customer’s view, NOT yours. You need to stand in your customers’ shoes. Ultimately, interview and poll customers to verify what you think they want.
- Try to be as simple and direct as possible.
What and Why? The structure of your “What” statement: “The (product / service name) is a (product / service category) that (statement of key benefit – that is, extremely compelling reason to buy or use)” The structure of your “Why” statement: “Unlike (primary competitive alternatives, including “doing nothing”), our product / service (statement of primary differentiation).” Use the below questions and tips to guide you.
- What are current and future market trends (innovation, keys to success)?
- Who are competitors and why would they be selected?
- What are the key benefits — the extremely compelling reasons to buy or use your company’s product / service?
Again, I have incorporated some tips from Steve Barsh:
- Never say “I have no competition.” It’s just not true. Really think hard about all of the different types of competitors you have.
- One of the biggest competitors people forget about is the incredible inertia for your target customer to DO NOTHING! How are you going to overcome their inertia to do nothing?
- Put your product benefits in a priority order with your best at the top.
- Make sure that your benefits are aligned with what’s relevant to the target customer.
Once you have an on-target value proposition, align your team and organization to deliver on your promise. Beyond revising your marketing messages, you should think about the implications for product strategy and customer experience. If you have done it well, your value proposition will help clarify your organization’s objectives and enable your team to rally against a clear vision.