You can have the very best business idea ever but, without a compelling value proposition, it might never get off the ground. Why? Because your value proposition is what lets your audience know why they should buy from you and you alone. It’s your power play, your ace card, or, to use marketing lingo, your USP.
A value proposition is officially described as “a positioning statement that explains what benefit you provide to whom and how you do it uniquely well.”
A winning value proposition will capture the essence of your business in one short paragraph. Think Uber: Tap the app, get a ride. Uber is the smartest way to get around. One tap and a car comes directly to you. Your driver knows exactly where to go. And the payment is completely cashless.
Not only is this value proposition simple and easy to understand, it actually names all the things that people don’t like about the competition – never being able to find a cab, drivers getting lost, not having cash on you when you need it most – and turns them into Uber’s USP. These are the pain points that Uber has set out to resolve. In this case, they are also the benefits customers can expect and the reason we should all flock to Uber and ignore any other taxi companies that might want our business.
How will your value proposition generate revenue?
At Streamlion Consulting, we work almost exclusively with start-up or scale-up businesses. We, therefore, spend a lot of time discussing the merits of, and the added value brought by a new or growing business idea. It’s this time and energy which many entrepreneurs cut out of the process. In their enthusiasm to start trading, they fail to get a clear enough understanding of the problem they are trying to solve or how their business is different from the next.
And, to answer the question about revenue, the very first thing a compelling value proposition will do is get you access to funding and investment.
Essentially, a strong value proposition will contain a little marketing messaging, some operational information and an idea of strategy. By bringing so many messages to the market, it will be highly effective at convincing buyers and decision-makers that they should be doing business with you. And, once this process is underway, revenue is an inevitability.
To work really well, your value proposition also needs to be succinct, specific and service-focused. In some ways, it represents the very start of your customer experience.
How does a value proposition work?
In a nutshell, a good value proposition will provide the differentiator between your business and your competition.
Renowned businessman and investor, Warren Buffett, refers to them as an ‘economic moat’. This is a great visualisation: the presence of a powerful value proposition will help fend off competition and protect your market dominance.
What are Streamlion’s top tips on creating a convincing value proposition?
Defining your business in a clear and succinct way is a skill. As business owners or entrepreneurs with a great idea, it can be easy to get bogged down in detail, to focus too much on the infinite moving parts that make our business so amazing. But we don’t need this level of detail in order to engage our audience. Quite the opposite, in fact.
Our first Top Tip is to start with a group brainstorming session. You need to get as much information as you can out of people’s heads and into a mind map or something visual. This needs to include what problem you are solving and why you believe you are different. You can either do this with a team from within the organisation or together with an impartial third party.
The key to driving value from these discussions is to continually revisit the purpose of your business and question what problem it solves. You can also go on to discuss whether that problem needs solving and why.
Once you’ve brainstormed everything, and discounted anything that is irrelevant, not convincing or too complex, you should be left with the building blocks of your value proposition.
Our second Top Tip is to keep it simple. Don’t try to complicate or obfuscate. There are no points for big words here. Simply try to write down your purpose. Forbes.com have a great breakdown of a typical value proposition template:
For (target customers)
- Who are dissatisfied with (the current alternative)
- Our product is (new product)
- That provides (key problem-solving capability)
- Unlike (the product alternative)
As with any marketing material, authenticity and building trust with our audience is key to success. This leads nicely to our third and final Top Tip, which is to always have proof. You should be able to back up your claims with customer reviews or testimonials, or independent research and polls. You may well believe that you are ‘the best’ or ‘market-leading’ but if you can’t back that up, you will pay the ultimate price for breaking the trust of your audience.