Value Proposition: The Customer Magnet

In a dog-eat-dog world like ours, you either put your best foot forward or crash and burn. That’s pretty much what it comes down to. Customers are being fed so much information these days that the first few seconds you have with them are your make or break. If you don’t stand out in that time, consider the opportunity missed.

What will help you stand out? The answer lies in your value proposition.

A value proposition highlights the uniqueness of your products or services to the target audience. It is essentially your promise to deliver a certain value to your customers, something that others in the market are not doing. It answers “why” someone should buy from you.

What Constitutes a Good Value Proposition?

In entrepreneurship, practically nothing can be viewed or created in isolation. You have to pick up elements from your primary market research, competitive analysis, persona, paying customers and everything else.

Similarly, while figuring out your value proposition, gather data about your customers, market and user persona. Your value proposition has to not only stand out but also deliver what customers want you to deliver.

Decipher what lacks in the market and what you can provide differently and then go on to check if it matches with your persona’s priorities. If their priority is reducing the time to build a product and your value proposition is reducing the cost of production, it’s unlikely that you will convince the customer. You have to sell them what they want, not what you want.

Penning Down the Value Proposition Statement

The value proposition statement explains your uniqueness to the customer in a concise statement. This statement is used by companies on their websites, advertisements and while onboarding customers. So it needs to be absolutely spot on.

Before we understand what a value proposition statement should look like, let’s look at what it definitely should not look like.

An elevator pitch: Your value proposition statement cannot be treated as a conversation starter. Don’t start it the way you start your elevator pitch- “Our company helps teenagers design…”
A tagline or slogan: Taglines and value propositions are poles apart. They are more for branding purposes and almost never explain the value. Avoid an Apple-like “Think Different” tagline as a statement.
A mission statement: Again, the purpose of your business does not explain it’s value. Steer away from “Our mission is to organise…” because you will get caught up in explaining your businesses goals rather than how the customer benefits.

Now, let’s throw light on the characteristics of a good value proposition statement.

Concise and easy: The most straightforward characteristic is that your statement needs to be both concise and easy to understand. Customers have a short attention span and if you don’t do your job well in the first few seconds, it’s the end of the road. Similarly, customers also come from very different backgrounds. Your statement should be simple enough to be understood by anyone and everyone- no fancy tech words/buzzwords.
Answers “why should I choose you”: It must convey the value of your product or service in a way that it makes it obvious that they should choose you over all others in the market. Be blunt while stating how your offerings are better.
Explicitly states what you do, but doesn’t end there: The value proposition statement should include what your company does but shouldn’t stop there. Since it is all about explaining the value, just explaining your idea does not guarantee it’s worth will come out. Make a conscious effort to explain the worth of your business.
Quantifies the value: Quantification of value is a great way to seal the deal. It puts into perspective exactly how much value can be derived by customers. We’ll talk more about quantification in the next section.

You won’t be able to get your value proposition statement right in the first go, it takes a lot of trials. It’s important to test with different keywords and see how customers react to each of them. You can then modify and proceed with the one that drives the best response.

Quantifying the Value Proposition

A quantified value proposition is about identifying the tangible metrics that will ensure your persona gets benefits that align with their top priorities. Someone will only buy your product if it is faster, cheaper, better than existing products.

So, while figuring out the quantified value proposition, focus on what customers gain instead of features and technology. While making the purchase decision, the customer is most interested to know “what amount of value can I extract from this product?” and “is it justified to spend that much money?”

In order to quantify the value, try looking for the following:

Any savings or reduction in costs (70% reduction in power bills by using our smart device)
Monetary gains (earn upto 50% more on our platform)
Emotional benefits or the feel-good factor (100% cruelty-free, vegan makeup brand)
Time-saving benefits (Set up your website is 2 days instead of 2 weeks)

There are other such factors that can help you enhance your value proposition and in turn, allow your customers to measure the benefits they get.

Another way is to visually illustrate the difference between two situations- one when your product isn’t used and the other when it is being used. It is a great way to give comfort to a customer who isn’t confident to take the risk with a new startup like yours. It’ll help them chart out the key areas where your product adds value.

Bottomline

The value proposition is an integral part of a startup’s business. Studies have shown that having a strong value proposition statement can boost conversions by over 10%.

However, understand that it is a promise that you are making. Don’t commit what you cannot deliver. Don’t be overly aggressive with your numbers such that you fall short of them later. You’ll lose more customers than expected.

The complete opposite – “Underpromise and overdeliver” – can be a wise strategy for startups if used correctly. The value should be enough to get their attention, but strive to always deliver more than that.