With a well-crafted and tested value proposition, everything can become much more manageable
In this blog post, I’ll guide you through the process of creating a winning value proposition and explain how it can impact your product, business model, team, and future strategy.
A value proposition is a clear and concise statement that communicates the benefits of your product, how it solves your customers’ problems, and what makes it unique in the market. Its purpose is to summarize the benefits that your customers will receive from using your product or service in a way that is simple, clear, and easy to understand.
“Your value proposition is an answer to the question: Why should I buy from you and not your competitor?” Neil Patel
To create a compelling value proposition, you must focus on two key things: the customer needs you are solving and how you are doing it better than your competition. The goal is to identify the unique value that your product or service provides and communicate it in a way that resonates with your target audience.
Some good examples of simple value propositions include Buffer’s “Simpler social media tools for authentic engagement” and Grammarly’s “Great writing, simplified.” These statements convey the key benefits of the products and are easy to remember.
At Growth Unltd., we focus on helping startups achieve product-market fit by implementing best-practice frameworks and enabling founders to scale. While this might seem like a mouthful, we use a simplified version or tagline to communicate our value proposition: “WE NAVIGATE STARTUPS TO PRODUCT-MARKET FIT.” This statement conveys our unique value in a way that is clear and easy to understand.
The value proposition is one of the most critical elements in building a successful startup and product. It’s often the first thing potential customers see or hear about your offering, even before you have a product. If your value proposition doesn’t resonate with your target audience, they’re unlikely to become customers.
Crafting a compelling value proposition is crucial because it can help differentiate your product or service. In a crowded marketplace, a well-crafted value proposition can help potential customers understand why they should choose your offering over others.
Your value proposition has a significant impact on all pillars of your startup:
- Product: It provides a clear direction for your development by defining the benefits you deliver and how you differentiate from your competition. This helps you prioritize new features and gives you a clear path.
- Marketing: Your value proposition is the foundation for your marketing communication, and it shapes what you communicate and how you communicate it to your target audience.
- Team: Understanding the value you deliver to your customers helps you understand what skills your team needs to possess. By clearly understanding your value proposition, you can build a team aligned with your startup’s mission and goals.
- Strategy: Finally, your value proposition is critical to your overall strategy. It defines the unique value you deliver to your customers and helps you differentiate from the competition.
A well-crafted value proposition can significantly impact your startup’s success. It provides a clear direction for your product, shapes your marketing communication, informs your team-building strategy, and differentiates you from the competition.
Knowing your customer is crucial when creating a winning value proposition. You must understand their pain points, needs, and desires to create something people want.
Before jumping into the solution space, focus on the most significant problems using the problem hypothesis framework. This involves identifying a specific problem and interviewing potential customers to validate whether they have these problems. These interviews help you validate your problem hypothesis and learn more about your customers’ needs.
When crafting your value proposition, please don’t focus on the features of your product or service but on its benefits. Benefits are the positive outcomes that your customers will experience from using your product or service, while features are the specific characteristics of it. For instance, the features of a car include horsepower and fuel efficiency, but the benefits include freedom and independence, the ability to travel long distances, and safety.
Use the value proposition grid and the Kano Model to identify your unique benefits and how you compare to your competitors. It highlights the three categories of benefits: Performance, Must-Haves, and Delights.
Let’s take the example of a new electric vehicle. In terms of Performance, the vehicle’s more extended range stands out. A Must-Have feature would be four wheels. And a delightful benefit would be massage seats. Although the color pink may help you differentiate yourself from competitors, it alone cannot guarantee customer satisfaction or address their specific needs.
Analyze these categories and determine which customer needs you want to address. Remember that delighters are the strongest, followed by performance benefits.
While there’s no one-size-fits-all formula for creating a winning value proposition, having a framework to guide you is helpful. A standard formula used by many successful startups is:
[Product or Service] is a [Category] that [Key Benefit]. Unlike [Competitors], our [Product or Service] [Unique Selling Proposition].
Let’s take a closer look at each element:
- Product or Service: This briefly describes what you’re offering. It could be anything from a physical product to a digital service, but it should be easy to understand.
- Category: This is the category your product or service falls into. This helps your customers understand where your offering fits in the market and what to compare it to. For example, if you’re selling software, you might categorize it as project management or customer relationship management software.
- Key Benefit: This is the most important benefit your customer will receive from using your product or service. It should address a specific pain point or need your customer has. This benefit should be clear and compelling enough to make your customer want to learn more.
- Competitors: This is where you acknowledge your competitors and their offerings. You can either name them specifically or refer to them more generally. Understanding your competitors’ strengths and weaknesses is essential to position your offering accordingly.
- USPs: This is what sets your product or service apart from your competitors. It’s the reason why your customer should choose your offering over your competitors. Your unique selling proposition could be anything from a feature your competitors don’t have, to a different pricing model, to a focus on a particular niche or customer segment.
In addition to the formula, it’s also essential to focus on the critical elements of a value proposition. These are:
- Clearly defining the specific problem faced by a targeted audience.
- Outlining how the product or service addresses this problem.
- Highlighting both tangible and intangible benefits to the audience.
Your value proposition should focus on benefits unique to your product or service rather than those already offered by competitors.
A tagline serves as a concise statement that captures the essence of your business. While a value proposition is more tangible, a tagline represents a broader concept or philosophy that your business stands for.
Typically, companies have a single tagline that is both memorable and closely tied to their brand. Take Apple, for instance, whose value proposition was “The best experiences. Only on Apple” and whose legendary tagline was “Think Different” from 1997 to 2002.
Here are two other examples:
A Messaging app for Teams who put Robots on Mars
Slack’s goal is to simplify, improve, and increase productivity in the workplace. Their website tagline cleverly highlights their focus on serving teams who achieve incredible feats, such as sending robots to Mars, like their customer NASA, while the value proposition is something like “Be More Productive at Work with Less Effort.”
On our platform, employers apply to you
I love Medzie’s approach — a one-stop-shop platform for healthcare professionals to find perfect work matches and one of the startups we’re working with. It highlights the pain of the customers — complex recruitment processes — and offers a simple solution.
Finally, it’s essential to have a copywriter craft a tagline from your value proposition to make it both catchy and comprehensive. A well-written tagline can distinguish between success and failure in a crowded market.
Testing your value proposition with your target audience is crucial to ensure its effectiveness. The key lies in your product or service’s benefits, where you either stand out as “superior” to your competitors or offer a solution to a problem that no one else does. However, it’s essential not to focus on the benefits that your competitors already offer.
“So come on and chickity-check yo’ self before you wreck yo’ self” — Ice Cube
To conduct an effective experiment, it’s vital to minimize variables. For instance, you can test your value proposition by creating a landing page that allows people to sign up for a closed beta, which you promote through a small campaign. Through this, you can generate a funnel and optimize your positioning.
You can automate surveys to obtain data on which benefits work best and what potential customers expect from your product. Additionally, you can perform A/B testing on different sets of communicated benefits during your campaign or on your landing page.
By performing these simple tests, you’ll know if there is a demand for your product in the market and how strong it is. Conversion rate and cost per click of your campaign are crucial indicators.
To validate your value proposition, you can launch a small campaign on the preferred network of your persona that leads to a landing page with a call-to-action. Keep the ad simple, using a value proposition and image. Many tools offer cost-effective ways to build landing pages, such as Wix, Tilda, WordPress, or Instapage. Once you’ve chosen one, link it to your Google Analytics account or create one if you don’t have one.
Choose where to run your campaign depending on your persona’s preferred networks, such as TikTok, Facebook, Twitter, LinkedIn, or Google. Target your persona and start with a small budget of around $500. Increase it slightly as the campaign performs. After running it for a few days, compare the results.
I consider a conversion rate above 10% good and above 20% excellent. In B2B, aim for 200 new qualified leads that match your ideal customer profile criteria, while in B2C, aim for 1000 subscribers.
Once you have a solid value proposition and have validated it with your target audience, the next step is to turn it into a Minimum Viable Product. This version of your product has just enough features to solve the problem you’re addressing and nothing more.
It’s essential to focus on the core features that align with your value proposition and provide the most value to your users. Once you have your MVP, you can test it with users, get feedback, and iterate to improve it.
From there, it’s all about execution and building the product with additional features and functionality based on user needs and feedback.
The key is to focus on your value proposition first and then keep iterating until you have a product that solves your users’ needs.