What is a Value Proposition?
A key enabler of your business strategy is your value proposition. But although the term may be commonly bandied around organisations – especially in marketing departments – not everyone understands what it is. In fact, Intrafocus, through its Strategy Readiness Quiz, has seen that 37.5% of responders do not know how to write a value proposition.
So what is a value proposition?
Simply put, a Value Proposition is what defines whether or not a prospect will bother learning more about your business and offer. Get it right, and your audience will be intrigued enough to find out more. Get it wrong, and their attention will immediately go elsewhere.
The key rule:
If your business isn’t well known in your market, you need an excellent value proposition to make yourself known. Even if your brand is well-known, you can’t rest on your laurels as new and fierce competitors come in all the time. Unless you are in a monopoly situation where customers are ‘forced’ to buy from you – with no threat of market entrants – get on and invest in that value proposition now!
Signs of a missing or poorly-defined value proposition
A lot of business owners think that they have a value proposition and then struggle to share it. Can your employees tell you why a prospect should choose your business for their product or service? Do your marketing materials clearly explain the implicit promise of value that you are offering to your target market?
What the value proposition needs to communicate
There are 4 key things to know here:
1. It must explain how your product or service improves things for customers or solves a problem that they have
2. It must quantify its value by delivering specific, identifiable benefits
3. It must uniquely differentiate your brand from competitors, by explaining why customers should choose you
4. It must be highly visible and the first thing that any prospect sees when reading your messaging.
How to create yours:
Step 1: Define
Use the four key points above and try to define what makes your business offer special. Make sure you don’t confuse this with a marketing strap-line or positioning statement. You are looking at the fundamental, underpinning reason for your business’s existence, from your customer’s perspective. This is a long-lasting, strategic expression of value, which differentiates you in the marketplace as the provider of choice.
Step 2: Phrase
Once you think you’ve captured some ideas, write them in a simple way that makes sense to a human reader (not a searchbot!) Strip out jargon and banalities. Use words that your customers use and keep your language simple and appropriate. Remember, this is about your customers. It isn’t about making your business sound as fancy as possible or about impressing your peers. Start with a benefits-led headline, follow with a sub-header and move into a supporting paragraph about the offer and its benefits, using bullet points where possible. An accompanying image is also good.
Step 3: Test
Evaluate your draft by asking some volunteers to read it and ask what you are selling, what is benefits are, who the target market is and what makes the offer unique or different. If your readers are bemused, you need to do further work. The value proposition must be compelling and simple. You may want to create a few different versions and A/B test them with your audience. Expect to go back to the drawing board. Creating a genuine value proposition is hard and takes time. One typical error, for example, is focusing on a benefit or feature that is actually of little interest to your customer. You must make sure they are truly at the heart of this activity.
Step 4: Refine
Once you’ve chosen your value proposition, communicate it effectively in written and spoken form. This is where some refinement may creep in. Avoid any kind of superlatives or hype, unless you can quantify your claims. Check too that the message can be read and absorbed in around 5 seconds.
Step 5: Boost
Remember that your value proposition must seal the deal in your customer’s mind. If you and a competitor have a largely similar offer, then put yours in the frontrunning by offering small ‘booster’ value adds. This might be something like free next day shipping or a rolling contract which can be cancelled at any time. These are all things which won’t be too expensive for the business, but which may be enough to win a customer over.
Campaign Monitor has a very clear value proposition with an excellent and highly specific leading paragraph, clear benefits, excellent positioning and clarity of the target audience. Note the ‘free sign up & no credit card required’ booster too.
Evernote is another great example with a different layout but an excellent concept that story-tells the how, what and why in a simple way. Again, it lists key benefits with meaningful imagery and uses a catchy slogan to bring the message home. It sounds friendly, inclusive and – again – uses a booster for the sign up.
Errors to avoid
Whilst thinking about your good practices, here are also some common mistakes to avoid:
1. Don’t suck all of the personality out of your VP by over-writing it and making it too corporate. It must have an emotional connection to your audience to really click.
2. Make sure you write your value proposition in words. Don’t think that you can just create a video in the digital age!
3. Think about aesthetics. The final piece must be readable, especially on your marketing materials.
4. Strip out pointless headlines and make sure the focus is on the customer – not your own internal audience.
How to test your value proposition
Once you think you have your value proposition right, test it across your next marketing campaign and carry out A/B testing. Measure clickthroughs and conversions as a minimum with your split test or lead/sales conversions as the ideal. Invest too in PPC advertising, split testing ad variations and targeting the same customer. The version with the highest CTR will be the one that best grabs attention from your audience (although whether this will convert into the highest sales is another matter!) You can then send online traffic to a landing page to test conversions. For offline testing, consider a focus group of customers and prospects – rather than spending too much time testing your value proposition on internal stakeholders, no matter what their level of seniority is. Remember, this is all about the customer – not your own people.
Finally, once you are happy that you have nailed the perfect value proposition, then make sure you add it clearly across your marketing materials (particularly across every main entry point on your digital assets) and ensure that your employees know it too. By beginning to embed it strategically across every customer touchpoint, you can begin to increase those conversions and lifetime customer value.
The value proposition is one element of a strategy, to learn more about creating a good strategy, take a look at our Strategy 101 series