Creating a Value Proposition

Communicating the Benefits of Your Product, Service or Idea, Simply and Clearly

Messages must be consistent.

© iStockphoto/jacus

Imagine a world where everyone is in sales. 

Well, in actual fact, everyone is to some extent – not just the salesman at the car lot. Whether you're trying to sell your holiday ideas to your spouse, or you're pitching a new project to your boss, it's all selling, and, whatever your offer (product, idea, project or job), it's important to have a really strong value proposition.

A value proposition is a short statement that clearly communicates the benefits that your potential client gets by using your product, service or idea. It "boils down" all the complexity of your sales pitch into something that your client can easily grasp and remember.

It's not enough just to describe the features or capabilities of your offer, your statement needs to be very specific. Your value proposition must focus closely on what your customers really want and value. Do they want to solve problems, to improve on existing solutions, to have a better life, build a better business, do more, better, faster...?

A value proposition is a useful technique that has a much wider application than just marketing your products, too. Whatever you are 'selling' and to whom, a value proposition is useful, if not essential. Whether your 'customers' are external customers, employees, co-workers or even your family, the idea is to help them see the specific value your offer brings to them. And by doing so, you will grab their attention in such a way that they know: "Yes, that's right for me".

Creating a Great Value Proposition

When your customer asks: "Why should I buy this specific product or idea?" your value proposition must answer, in a compelling way. In creating a good value proposition, the trick is to know your product or idea well, know how it compares with those of your competitors and, very importantly, put yourself in your customer's shoes to find the answers.

Your value proposition can be created step-by-step, by answering a series of questions. Once you answer these, you have the ingredients to create a value proposition that answers your customer's question: "Why should I buy this specific product or idea?"

Step 1: Know your customer

Thinking from the perspective of your customer, ask the following:

  • Who is he or she? What does s/he do and need?
  • What problems does s/he need to solve?
  • What improvements does s/he look for?
  • What does s/he value?

Tip: If you don't know, ask!

It's easy to try to second guess what your customers want. And very easy to get it wrong. So do some market research. This could be a simple matter of asking customers directly, or of organizing a focus group or survey.

Market research is not just for external customers, it works for other 'markets' too. Depending on your product or idea, your 'market' could be employees, colleagues, or even your spouse.

Step 2: Know your product, service or idea

From your customer view point:

  • How does the product, service or idea solve the problem or offer improvement?
  • What value and hard results does it offer the customer?

Tip: Include numbers and percentages

To grab your customer's attention even faster in this financially-oriented world, your value proposition should also speak percentages and numbers. How much will your customer gain, save or improve? How much more efficient will he or she become? How much safer, smarter, faster, brighter will the solution be? And so on.

Step 3: Know your competitors

Keep on thinking from the perspective of your customer, and ask:

  • How does your product or idea create more value than competing ones?

Tip:

This can be quite difficult. See our articles on USP Analysis  , Core Competence Analysis   and SWOT Analysis   for useful tools for doing this.

Step 4: Distill the customer-oriented proposition

The final step is to pull it all together and answer, in 2 or 3 sentence: "Why should I buy this specific product or idea?"

Try writing from the customer viewpoint by completing the following, (and don't forget to include the numbers and percentages that matter!):

  • "I want to buy this product or idea because it will..."
  • "The things I value most about the offer are..."
  • "It is better than competing products or ideas because..."

Step 5: Pull it all together

Now, turn around your customers 'answer' from step 4 into a value proposition statement.

Example

Here's a simple example. Let's say that you sell lawn mowers, and your customer is someone with a large back yard.

Step 1: Know your customer

Your customer is a businessman with quite a large house, who likes the "meditative feeling" of cutting his own lawn, but gets bored by the job when it takes too long.

He's looking for a good quality of cut, for the job to be done quickly and enjoyably.

Step 2: Know your product or idea

The product is a ride-on mower with a 25 horsepower (powerful) engine and 45 inch (wide) cutting blades.

Step 3: Know your competitors

The mower goes faster and cuts wider than the competition.

Step 4: Distill the customer-oriented proposition

"Our mower cuts your grass in 50% of the time of 'big brand' mowers in its class. And it leaves the lawn looking beautiful too!"

If you haven't already looked at our USP Analysis   article, do so now – it will show you how, with a little research, you can identify how your product or service is unique. It's also worth understanding the various strategic positioning options that will underpin your value statement. Our article on Porter's Generic Strategies   explains these.

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Comments (11)
  • BlueHatbyJZ wrote Over a month ago
    Very good insight! Aligning the wants and needs of both parties (Owners and their students).
    Has anyone posted a real experience where this Skill was applied and the process s/he went through? I'd read up on the experience of others, perhaps that also can help me to further drill down on this lesson. Thanks again for the pointer.
  • Dianna wrote Over a month ago
    Hi Zsolt,
    To address your specific question regarding the process of creating a value proposition you're off to a good start. The issue here is that you need more research to better understand value in terms of this business. It's further complicated by the idea that you have two levels of customer. First you have the MA business owners who are in this instance your customer. You have to first sell them on the idea and that means better understanding their needs. Second, to develop your business proposal you also have to think about the end user- the clients of the martial arts school. What is the value of GO for them? By aligning the wants and needs of these two customers with what you can offer as a GO instructor you will hit on the value proposition that works.

    I too believe that a conversation with the owners around their needs is a good first step. The you can use the information you gain from them to enhance the value proposition letter you've started.

    Dianna
  • BlueHatbyJZ wrote Over a month ago
    [quote="Midgie":1h92ws2g]

    I would also caution you to be careful of anything that might be taken as criticism. ....

    How does all that sound to you?
    Midgie

    You got the point well Midgie, this has been my biggest challenge living in the US: perceived as "know it all" Arrogant etc. Since it is a common experience among Hungarians I started to dig in and my initial finding is suggesting the root of the problem is around the language use and perception of subject and objects in sentence structures but even the multiple meaning of some words. I cannot further explain it yet, but I think I am onto something. When I share a scenario like this with a forum like Think Tool the feedback I got thus far is very promising. Finally I found a forum where the word THINK is not a "dirty" word.
    I am dumbfounded to experience the people in general so prominently are settling for opinions in forums and never bothered to look up the meaning of the word: opinion.
    In any events, I truly appreciate your feedback and you are confirming the validity of the approach Brynn suggested.
    I will let you know how things turn out but I do have one question and that is to go back to the original lesson plan here about creating value proposition. Do you see opportunity for any point of improvements in the letter structure? That is why I created the review to visually demonstrate the line of thinking that went into creating the letter.
    Assuming that I'll be successful gathering more info and introduce the idea to them over a business lunch, what else can I integrate into the letter to maximize the Creating Value Proposition instructions?
  • BlueHatbyJZ wrote Over a month ago
    [quote="ladyb":uz6prfpc]GO looks like an interesting game indeed. Reminds me a bit of Blokus. My kids and I really enjoy that game. GO is definitely more complex though.

    A couple questions. How well do you know these people? Has your daughter been taking lessons there long?


    About a year now that my daughter is taking lessons there but personally I was not supportive of the school. Generally speaking I find contempt in my heart against most US Martial Arts schools that are very different from the traditional schools that I grew up with in Budapest. However a recent visit to take a free entry lesson reviled a much higher quality training than I expected that is offered in the mornings, a service I did not see before. So now I have a change of heart and happy to consider helping them.



    If you have a relationship with these owners, my thought is that this sort of conversation is often much better opened face-to-face versus via a letter. I think too you need more information from them before you can assume what 'value' GO would bring the organization. I would probably start with an invitation to coffee to discuss an idea you have. During that conversation you could talk about your desire to see them grow their business. Then you could introduce the game of GO and hit the highlights of your idea before putting it to paper and making it official. This initial conversation will give you a better idea of what they see as 'value' within their business. You can then go back and create a value proposition and potentially a proposal that addresses their specific needs rather than your assumptions of what they want.

    That's my perspective.

    Your perspective is a very good one! I shall consider it and will try to see if they accept an invitation for a lunch. If they do, gathering the intel as you pointed out is a wiser way to go. Thank you Brynn!

    Brynn
  • Midgie wrote Over a month ago
    Hi Zsolt,
    Interesting ideas yet I agree with Brynn about having a face-to-face conversation in the first instance rather than an email/letter.

    I have been involved in the fitness industry both as an employee and a member/ participant for many years. I know that some places have great passion for what they do, yet do not have as much business knowledge and experience to take things to another level.

    If you have an idea, an initial conversation with the owner/manager could be a good place to start. And by all means, offer your services to help out because they might not have the resources or the skills to get things going. Sending an email seems somewhat impersonal, when they are in a personal type of business.

    I would also caution you to be careful of anything that might be taken as criticism. I suspect they are doing the best they can with the resources and knowledge/skill they have. If they could do more, they would probably be doing it! So, if you are going to make some suggestions for improvements, I'd encourage you to also offer ideas as to how to make it a reality and take things forward. If you have the skills, resources and experience to help out, then offer it.

    How does all that sound to you?
    Midgie
  • ladyb wrote Over a month ago
    GO looks like an interesting game indeed. Reminds me a bit of Blokus. My kids and I really enjoy that game. GO is definitely more complex though.

    A couple questions. How well do you know these people? Has your daughter been taking lessons there long? If you have a relationship with these owners, my thought is that this sort of conversation is often much better opened face-to-face versus via a letter. I think too you need more information from them before you can assume what 'value' GO would bring the organization. I would probably start with an invitation to coffee to discuss an idea you have. During that conversation you could talk about your desire to see them grow their business. Then you could introduce the game of GO and hit the highlights of your idea before putting it to paper and making it official. This initial conversation will give you a better idea of what they see as 'value' within their business. You can then go back and create a value proposition and potentially a proposal that addresses their specific needs rather than your assumptions of what they want.

    That's my perspective.

    Brynn
  • BlueHatbyJZ wrote Over a month ago
    All right Don, you inspired me to do this, so here is my first draft, followed by my 8 min. review though I sound terrible as I am fighting a cold.
    ------------------------------------
    Dear _______________
    Regrettably I missed the class today but being in bed with a cold did yield some extra time to think about my experience at your martial arts school. The question I was asking myself is how to help your school and this letter is about an idea that you may find useful.
    Teaching the Game of GO for anyone but especially for children is a resource rarely found in the Western civilization (mostly among the privilege resources) yet it is very common in the Asian culture and most practiced in Japan where about 10% of the population learns to play it in school. The Japanese military school includes this game in their curricula but most importantly I want to point out its rich culture and connection with the Martial Arts. (Just Google: “Game of GO”)
    Your school is expanding and you are looking for more students as well as to expand your services. Am I seeing it correctly? How would you like to be the first martial arts school in the New Hampshire and possibly in the nation to offer the Game Of GO classes to your students? This page is a long standing high value article about why children should learn GO: http://users.eniinternet.com/bradleym/ChildGo.html Not to underestimate the old style web page, the content there is timeless and high value! Having the Professional Martial Arts Academy offering classes on GO and perhaps even chess since the two games goes well together; will strengthen you professorship in the community.
    Have I peeked your interest about expending your services and potentially make a news that will further serve you getting more attention expanding your school? If so, then you should know that I was teaching this game at the University of New Hampshire back in 1992 and the American Go Association still listing me as a local chapter GO Club coordinator in New Hampshire so perhaps I could help kick start a class for you?
    Key points:
    • Traditional Martial Arts and GO goes hand in hand to develop a sharp mind.
    • Nobody offers such services; hence you can be a leader to break grounds! (Newsworthy move)
    • I can help you get your classes setup and started.
    Till the next class
    Zsolt
    ----------------------------------
    Review:
    http://youtu.be/g3w5y9hkyxg
  • dp7622 wrote Over a month ago
    I've been a member here for a while now. Fun video presentation. I think that's a first here. I pop in and out of the forums as my time allows. Sometimes I'm very active and then other times I just read the new resources and search for tools that I'm in need of to deal with the challenges of my daily work. I just finished working on a rather large project so have been using the project management tools and with much success. I've just scheduled our after action review meeting for next week and I'm feeling very confident in the work we did and the feedback we received. I was looking at the value proposition article specifically to kick start a new project idea I have swirling around in my head.

    So if you want feedback on the value proposition you intend to present to the Martial Arts studio then by all means, post it here and I'm sure you'll get replies. The Mind Tools team always pops in and adds their thoughts so you'll almost definiely hear from a few of them. I don't know about kudos-points or getting a reward. My assumption is that folks come to these forums to talk through issues or get answers or ask for feedback and the dialogue is reward enough. I'm keen to give you feedback on the value proposition you come up with. None of my kids are in martial arts but I've been involved with many extracurricular sporting clubs so that should help.

    Don
  • BlueHatbyJZ wrote Over a month ago
    After reading this article, I have decided to integrate it into my communication skill development repertoire. Furthermore, I am putting it to the test by following it to the teeth with an idea I have concerning a local martial studio where my daughter is attending. The larger reason posting this comment is to initiate a MindTool community action! I worked up this scenario to peak your interest:
    http://youtu.be/NhIq1ublAPI
  • bigk wrote Over a month ago
    Hi

    It looks a good formula and very adaptable.

    I agree, you mention a very good point in how it can distill ideas into a quick effective summary of the main selling points to present to a customer.

    When the items in the list vary the list could be created to suit these changes or any focus needed.

    I want to buy... because... insert option 1 or 2 or 3 or 4 (if it has these options).

    It can help when you evaluate the competition this way to use it with your own evaluation of your product against the others.

    Bigk
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