Fix your value proposition or die!
Your company’s value proposition tells your customers what you’re selling and why they should care. If you can’t explain this in less than eight seconds, your company will lose sales – guaranteed. Fix your value proposition now, or you’re going out of business.
I spend a lot of time helping entrepreneurs figure out how to explain what their business does. You’d be surprised how many of them can’t describe in a few sentences what problem their company solves and who benefits from their solution.
It’s crazy, but it’s true!
This lack of clarity leads to unproductive sales conversations and confusing communication on the company website. It has a negative impact on internal stuff too. Their product development is unfocused, and employees don’t have a clear idea of what they’re working on and why.
The end result: a lack of progress and lots of frustration.
The Launch Code’s #1 building block: value proposition
Creating a simple, easy-to-understand value proposition is so critical, I’ve made it the number one principle of The Launch Code™. The Launch Code™ is my business development framework that combines corporate planning methods with entrepreneurial execution to give entrepreneurs a well-structured guide to building and expanding a profitable business.
I’ll show you how to create a single sentence that explains what your company does, who benefits and why your customers should do business with you instead of with your competition.
You get this right and you will have a powerful value proposition that helps you attract new business and close deals quickly.
So, what exactly is a value proposition?
It’s a clear and concise explanation of…
- what problem your product or service solves,
- for whom you solve this problem, and
- how you solve the problem in a unique way.
In short, your value proposition tells your target customer why they should use or buy your product.
Here are two examples:
- Facebook is a social utility that helps people communicate more efficiently with their friends, family and coworkers by connecting them through an easy-to-use online platform.
- Salesforce is a software that helps businesses improve their sales results by collecting and analyzing customer information and creating quality sales management processes.
Your value proposition reflects the focus of your business
Crafting your value proposition forces you to decide exactly what product or service you offer, who should buy your product or service, and what unique method you’re using to solve this customer’s problem. The more focused your value proposition, the more likely you are to grow quickly in your sales and marketing efforts.
The stakes are high. If you get any of your value proposition building blocks wrong, you will find it much more challenging to build your business.
The most common mistakes in value propositions
- It highlights the features of your product or service and not the benefits it provides to your target customer.
- XYZ Corp is a leading developer of nanotechnology. [Ok, but why is this good for me?]
- The target customer is either unclear or too broadly defined.
- XYZ Corp is a leading developer of nanotechnology to the medical profession world-wide. [Just because everyone CAN use your service, doesn’t mean everyone SHOULD use it. How about narrowing your focus to say, cardiologists working in private hospitals in the Northern Europe?]
- The value proposition includes industry buzzwords that cloud your message.
- XYZ Corp is a leading developer of micro-cellular nanotechnology built on polymeric and lipid-based nanoparticles and used in the medical profession world-wide. [Huh?]
Your value proposition may differ for various customer segments.
You can have multiple value propositions if you have different types of customers who engage with your service.
For example, Uber’s value proposition to riders is, “we help city residents travel conveniently, 24 hours a day, seven days a week, by calling a ride with one click, and tracking the driver.” The company’s value proposition to drivers is, “we help you earn income using your vehicle to transport passengers by making your availability visible to potential customers.”
Both statements are equally relevant, but a word of warning: make sure you only have one value proposition for each customer segment, otherwise you risk losing focus and clarity in your communication.
How do you create a powerful value proposition?
Step 1: Determine the customer problem your business solves.
You should be able to articulate a clear problem or need that exists for a group of target customers.
If you operate a business-to-business service, typical needs include increasing revenues, saving costs, boosting efficiency or raising awareness. The closer you are to impacting your customers bottom line, the more ‘must have’ your product or service will become.
Step 2: Identify your target customer, their key characteristics and mindset.
Don’t fall into the trap of marketing your product or service to ‘everyone.’ This is like trying to boil the ocean. It takes too long and it’s just impractical.
Instead, start by defining a typical customer segment according to certain demographic and psychographic characteristics. These may include ‘facts and figures’ like age, income or revenue level, industry, or geographic location, and ‘touchy-feely’ characteristics like ‘believes in customer care’ or ‘places a high value on quick response time.’
Targeting a clearly defined niche will help focus your marketing message and select your sales channels because you’ll know exactly what your audience wants to hear and how they access this type of information. Once you successfully target a niche, you can always expand to a broader market later.
Remember: before Amazon became the world’s biggest retailer selling virtual everything to everybody, founder Jeff Bezos focused on marketing one product to one customer: he sold books to technology savvy book lovers.
Step 3: Name the product or service you are offering.
Describe what exactly your product or service is, and how your target customer will use it to solve their problem. Make sure you include a few specific and relevant characteristics, but don’t get into minute details.
Give your product or service a simple name that your target customer will understand. Is it a marketing platform, a software tool, an e-commerce service, a design agency, a technology firm, or a business-to-business technology?
Step 4: Describe the key benefit your customer will experience.
List all the ways in which your target customer’s life, business or other circumstances will improve by using your product or service.
Make sure you define both practical and emotional benefits as you are marketing to people often makes decisions based more on feelings than on rational parameters.
Identify the single most important benefit based on your current understanding. This is your key benefit.
Step 5: Define why your solution is especially unique or valuable.
Identify one or two reasons why your target customer should buy your product or service instead of your competition. This is known as your competitive advantage.
Is your technology safer or more reliable? Do you offer greater convenience? Are you a better value for the price? Whatever your ‘special sauce’ is, make sure it meets three basic criteria.
As my friend Paul Garrison writes in his book ‘Exponential Marketing’, the special benefit you offer should be meaningful (something your target customer values), deliverable (something you can actually implement) and defendable (something you can protect versus your competition).
Explain your value proposition in a single sentence.
If you’ve followed each step carefully, you should be able to complete the following sentence.
[Company name] is a [product/service definition] that helps [target customer] to [key benefit] by [competitive advantage].
To test this sentence for clarity, read your value proposition to an intelligent 12-year-old. S/he should be able understand exactly what your company does and why your customer should use your product or service. If s/he doesn’t get it, it’s time to rethink your value proposition.
Creating a value proposition is a process.
Don’t get discouraged if you don’t get your value proposition right the first time. It’s likely that you’ll need to test several versions before you start seeing its impact.
You need to follow a process of ‘trial and error’ to define exactly what benefit your product or service offers and who will be most likely to pay for this benefit.
More importantly, finding your focus requires you to ‘let go’ of some initial assumptions, and make tough decisions on what you will not include in your value proposition. Oftentimes, letting go is the toughest part of the process.
Eventually, you will be able create a clear message that resonates with your target customer. Get it right, and you’ll not only boost your bottom line, you’ll also ensure that your business lives a long, healthy and prosperous life!
Register for my FREE value proposition webinar today
Do you want to learn how to create a high-impact value proposition from me?
Register for my FREE one-hour webinar, and I’ll take you through the five-step process you can follow to explain why your target customer should buy your product or service. This one statement will be so clear, your customers, your team, and even an intelligent 12-year-old will understand why your startup is in business!
Act fast! I’m making only 20 places available for this FREE webinar! Register here: Fix your value proposition or die!
Remember to include your current value proposition in your registration form, and you just might get my live feedback and immediate help during the event!