Skip the fluff and get straight to the point. Put your marketing tactics in order by clarifying your offer and why you differ from your competition. Think of your value proposition as the foundation of your small business marketing efforts.
By clearly stating what you do and what value you provide, you can easily connect with your target market and position your small business for success. While your business may not have a defined value proposition from the start, at some point, you’ll need to create one to differentiate yourself from others in your industry.
In this piece, we will expand on what a value proposition is and provide tips that will help you develop your value proposition. Let’s get started!
What Is a Value Proposition?
A value proposition is a promise of value to be delivered. It’s a concise statement that articulates what you do and how it benefits your customer, and it is necessary to market your business’s attitude, intention, and position.
In simple language, a value proposition is a statement that outlines the specific benefits that your business can provide to its customers. A strong value proposition clearly states the unique benefits of your products or services, how it fulfills the needs of customers, and why it’s better than others in your industry.
What Is The Purpose Of a Value Proposition?
A solid value proposition is an essential part of any small business’s marketing strategy, as it helps you identify and communicate the value of your products or services to your target audience. Without a strong value proposition, your business will struggle to attract and retain customers.
Also, a strong value proposition helps you stand out from your competitors and gives potential customers a reason to choose you over them. That’s why your value proposition should be relevant to your target audience and address their specific needs.
Apart from defining your value proposition to speak to your target audience, it also serves as a watchword for your team, helping them stay focused on what is most important. When everyone on your team knows what your business does and why it matters, they can effectively share that message with others.
The Value Proposition Canvas
The Value Proposition Canvas (VPC) is a template designed by Peter J Thompson, a Digital Strategist based in Auckland, New Zealand, to help businesses get clarity with their value propositions.
The template helps businesses develop their value propositions by expressing clearly how their products fit their customers’ desires. Using the VPC, you’ll need to provide answers to the following key questions to get the clarity you seek about your value proposition.
First, think about your customers:
- What are the emotional drivers that push customers to purchase your products?
- What are the hidden needs of your customers and target audience?
- What are the logical drivers that push customers to choose you?
- What risks do customers face when they choose you?
- Are there any substitutes for your products or services? What is your target audience currently using to cope without you?
Now, turn your attention to your products:
- How does your product or service work? (Features)
- What does your product or service do? (Benefits)
- What does it feel like for your customers using your product or service? (Experience)
Where Does Value Chain Analysis Come In?
Value chain analysis is a process businesses use to identify the activities they perform that add the most value. This can be helpful when coming up with your value proposition, as it can help you focus on what unique capabilities you have that create the most value for your customers.
The value chain analysis identifies the competitive advantage, which you can tie to your business’s unique value proposition, with the goal of improving business profit, increasing efficiency, and cutting down on business expenses.
With this, businesses can identify the activities that bring the most value and how to make them better. While the value proposition focuses on the business in relation to its customers, the value chain analysis focuses on the business with regard to its internal operations as a profit driver.
How To Write a Value Proposition
Creating your value proposition can be challenging, but you can make it easier with the following methods.
1. Harvard Business School’s Three-Question Approach
This method breaks down your value proposition into the answers you give to the questions below.
- Which customer segment will your products serve?
- Which customer needs will your products fill?
- What product price will afford your business profitability while providing value to your customers?
2. The Steve Blank Formula
Steve Blank, founder of The Lean Startup Circle, came up with a simple formula for coming up with your business’s value proposition. The formula, “We help (X) do (Y) by doing (Z),” helps you cut quickly to the value you offer and the audience you offer it to. When using this formula, be instinctive with the answers you give.
If you have multiple ones, examine them with your team to choose which best defines what you do.
Tips for Defining Your Value Proposition
Analyze Your Product or Service
Consider what problems or challenges your customers have and how you are addressing those pain points. Think about both the practical and the psychological needs you are addressing.
For instance, if you’re a stock advisor, you aren’t just buying stocks and bonds for your clients. Hopefully, you also provide specific financial advice that makes them feel like their money is secure and well-invested. Zeroing in on exactly how you make customers’ lives easier and more enjoyable will help you define your value proposition clearly.
Go Straight to the Source
Not sure exactly what customers really value about your business? No one knows better than they do why they like to buy from you, so don’t be afraid to ask them! Ask them to fill out a quick survey to identify why they have chosen to do business with you in exchange for entering them into a contest where they can win a small prize. In your survey, ask what inspired them to make a purchase.
- Is it great quality?
- A unique selection?
- A convenient location?
- Friendly staff?
- Low prices?
Their answers may surprise you.
If you have a robust email marketing list, you can send out a simple survey to ask your customers what made them buy from you. The data can be a treasure trove of information.
Ask Your Employees
Whether you employ cashiers or accountants with graduate degrees, team members who do customer-facing work can lend valuable insight into what your customers value most—if you ask them.
Customers aren’t always fully aware of why they buy things—or aren’t always willing to admit it. Your employees who spend time with clients daily can help you understand what customers aren’t telling you.
Do Some Test Marketing
Once you have narrowed down your potential value proposition to two or three contenders, it is time to refine your value proposition even further. If you have an email newsletter, try testing email subject lines that emphasize the individual value propositions you are considering. Track their open rates (and CTRs) to see which ones resonate the most.
Don’t just use words to test your value proposition. Try posting images that emphasize your value proposition on social media, too, and see how your customers respond.
Let’s say your value proposition is that your small business employs the friendliest customer service, team. Try posting pictures of your team to put faces to the names. Are people liking those photos and posting positive comments—or just ignoring them? How does the engagement on these types of photos compare to that of articles you’re sharing or news you’re posting? The metrics from your social media pages may tell an interesting story.
Narrow the List
Once you’ve gathered the evidence, it’s time to choose a value proposition. Commit to it for at least three months by baking it into your marketing and highlighting it in your customer service. See how customers react.
Within three to six months, you’ll get a sense of whether you’re focusing on the right value proposition. If not, try one of the other strong contenders. It’s not always easy to pinpoint your value proposition, but it’ll be worth the effort once you get it right.
Keep it Simple
Your value proposition should be simple and easy to understand. Trying to cram too much information into a single sentence or phrase can often make things more confusing than they need to be. Instead, focus on communicating the essential aspects of what you have to offer clearly and concisely.
This will make it much easier for your target audience to understand what you’re all about and why they should care. It should be clear and concise, free of jargon and buzzwords.
Your value proposition should be all about your customer or client, not about you or your business. This means understanding what your target customers want and need, then tailoring your value proposition to reflect that. It should clearly state how your products or service will solve their problems or meet their needs.
When crafting your value proposition, focus on what makes you unique and how that can benefit your customers. What makes your business stand out? Why should customers choose you over your competitors? Make sure your value proposition reflects what sets you apart from the competition.
Don’t make claims you can’t deliver on. Be honest about what you can provide, and do not overpromise or make false claims. Take a close look at your offering and ensure that your value proposition accurately reflects its benefits. Customers will appreciate your honesty, and this will help build trust between you and them.
Examples of Great Value Propositions
Slack’s value proposition, “Great Teamwork starts with a Digital HQ,” is all about simplifying communication and collaboration for teams. Users love this messaging platform for its rich features and integrations, and it’s easy to use and helps teams stay organized and connected, whether working in the office or remotely.
Few tech companies have created such a strong and loyal following as Apple. Part of this is because they produce unique products that people love. Another big part of their success is their marketing, which is always on point. A huge part of their marketing strategy is their value proposition which focuses on the user experience.
CrazyEgg is a prime example of an effective value proposition. Their home page immediately grabs visitors’ attention with their claim that you can “Make your website better. Instantly.” This is followed by a brief explanation of how their heatmap and scroll map tools can help you understand what users want and need from your website.
Crafting a strong value proposition is an essential part of any small business marketing strategy. By clearly articulating what your business does and why it’s worth customers’ time and money, you can set yourself apart from the competition and attract more prospects.
So, take the time to put one together. You can use it as a guide for business operations and feature it on your website and all of your marketing communications.
Are you ready for a smarter way to engage with your customers?
Benchmark helps you do email marketing the practical way. Create an ongoing relationship with your subscribers that leads to increased sales and happier customers.