In today’s highly competitive market, the success of a product or service depends on whether customers choose to buy it. But, with so many options in the market, how can you convince them to choose yours? This is where the value proposition comes in. A value proposition is a clear and concise statement that outlines the benefits and advantages of your product or service, and what makes it superior to other options available in the market.
What is a Value Proposition?
The concept of the value proposition has been around for over thirty years. It was first introduced by Lanning and Michaels in 1988 as a statement that outlines both the tangible and intangible benefits that a company provides to its customers, along with the approximate price it charges for them. Today, a value proposition is more than just an internal statement. It describes the reasons why customers should choose your product or service over others. It clarifies what makes the product exceptional and differentiates it from other alternatives in the market. At its core, a value proposition is a written promise to customers about what your product or service will provide and how your company intends to deliver on that promise.
What Makes a Good Value Proposition?
Crafting a strong value proposition is essential to effectively communicate the benefits of your product to your customers. A good value proposition should address the pain points of your target customers and explain how your product can enhance their lives. It should also summarize what sets your product apart from the competition.
To be effective, a value proposition should be easy to understand, easy to remember, and tangible rather than abstract. It should provide a solution to your user’s specific pain points and differentiate your product from other alternatives.
The fundamental elements of a value proposition are value, relevance, and uniqueness. The offer or the benefit should be clearly defined and targeted to specific customers or users. Value is the most crucial element because if the offer is not easily understood, the target audience and uniqueness will not be enough to define the value.
How to write a value proposition?
To write a strong value proposition, it is important to understand both the product and the target audience. Here is a step-by-step guide to writing a compelling value proposition.
- Identify and understand the target audience: Before crafting a value proposition, it is essential to have a deep understanding of the users, their needs, preferences, and pain points. Here are some questions that can help you identify your target audience:
- Who are your target users?
- What are their key demographics such as age, gender, income, education level, etc.?
- What are their objectives, motivations, interests, and pain points?
- What is the problem that they are trying to solve within the specific context?
- What are their current solutions for their pain points or challenges? How are they inadequate?
- Define the primary offer and its benefits: Start by defining the primary offer and the benefits it provides to customers. Consider questions like:
- What specific problem does this offer solve?
- What are the key unique features of the offer?
- What are the tangible and intangible benefits of the offer?
- Link the offer to the target users: Explain how the offer meets their needs. Consider questions like:
- How does the offer solve the user’s problem or pain point?
- How does the offer meet their need to achieve their goal?
- How does my offer stand out from similar solutions in the market?
- What could be the potential concerns of my target audience about my offer, and how can I address them effectively?
- How does my offer align with the values of my target audience? How can I use it to communicate the benefits of my offer?
- Iterate: Once you have identified your target audience, defined your offer and its benefits, and linked them together, you will need to test and refine your value proposition based on user feedbacks.
Using the Value Proposition Canvas
The Value Proposition Canvas by Strategyzer is a powerful visual tool that structures these steps and helps you define and position the value proposition. Whether you are developing a new product or looking to strengthen an existing offer, this tool can guide you in identifying how your offer creates value within the market. It has two main components: the customer segment on the right and the value proposition on the left.
The Value Proposition Canvas
To get started, you will need to create a user profile that reflects your target audience. This involves identifying the needs, interests, motivations, and desires of your users, as these factors can significantly impact the overall picture.
The customer segment is made up of three parts:
- Customer Jobs (jobs to be done): This refers to the outcomes that your customers are trying to achieve or the problems they are trying to solve with your product. This information represents the primary purpose of your product.
- Customer Pains: At this stage, you will list your users’ negative experiences, undesirable situations, negative emotions, and pain points. These can occur before, during, or after the events that are mentioned in the “jobs-to-done”.
- Customer Gains: Here, you will list the benefits and the desires that your customer is trying to achieve. In other words, you will identify the expectations that the customers have of your product in order to purchase it.
Once you have listed all the pains and gains, prioritize them based on their relevance to your users. This will help you create a more targeted and effective value proposition.
To further illustrate and solidify this concept, let’s go through an example:
We are all familiar with the common scenario of working professionals facing unforeseen health challenges over time. Most of this group may then turn to physical activity to improve their fitness. With this in mind, let’s develop a value proposition that targets this specific segment. So, let’s think about what their jobs-to-be-done might be. The first thing that comes to mind is improving overall health and boosting energy levels. Maybe reducing stress and enhancing recovery are others.
Let’s reflect this on the Value Proposition Canvas:
Target Group: People who do regular exercise, fitness enthusiasts age between (18-40)
Our potential users are seeking a quick solution for their muscle soreness and fatigue after intense exercise, given their very busy schedules They struggle with the fatigue and injuries that prevent them from progressing. Additionally, they require instructions that are easy to understand and apply.
What will make them satisfied? It is not very complicated: they are looking for faster recovery, remarkable progress in their performance with reduced muscle soreness and fatigue, decreased risk of injuries during training, and finally expert guidance for safe and effective pain relief.
Now that we have covered the right-hand side of the canvas, let us move to the left side. The value proposition section includes three key components to describe the product’s offer to the target customers:
- Products and Services: Here, we list the products and services that will form the basis of our value proposition. The question we need to answer is: “What products and services can we use to address the needs, pains, and gains we identified in the previous steps?” We then prioritize these products/services based on their importance to the customer.
- Pain Relievers: In this step, we identify how our product/service(s) create value by alleviating customer problems. We determine what problems our product/service(s) can solve, what performance improvements it can provide, what cost/time savings it can offer, what fears it can allay, and what concerns it can address. We then rank them in order of importance to the customer.
- Gain Creators: In this final step, we define the features and benefits of our product that will improve customer satisfaction and help them achieve their goals. These are the benefits that will boost customer satisfaction and engagement.
Continuing with our example, the platform will offer several features as gain creators. The primary objective of the platform is to improve exercise performance by addressing common challenges such as muscle soreness and fatigue, promoting faster recovery, and increasing confidence in exercise safety. It does this by providing professional guidance and tips during workouts.
To simplify the complexity of exercise services, the platform provides clear and easy-to-follow instructions to help prevent injury during workouts. Users can expect timely pop-up messages offering professional guidance and tips as needed. Additionally, the platform will provide additional tips and suggestions for better pain management.
The platform will also include pain relievers and incorporate exercises and training tips specifically designed to reduce muscle soreness and fatigue. It also offers guidance on effective pain management and recovery techniques to speed up the recovery process.
The image below shows the reflection of this on the Value Proposition Canvas.
Once the canvas has been created, we can use Value Proposition Formula to craft alternative statements that describe our product’s value to our target customers. The formula goes as follows:
Our product/service helps <customer segments> who want to <jobs to be done> by reducing/eliminating <pain point>, and enabling <customer gain> unlike <competing value proposition>.
In our example, the value proposition can then be formulated as:
Our training platform helps individuals who engage in regular exercise and seek valuable guidance to alleviate muscle soreness and fatigue by optimizing recovery time and enhancing exercise performance through self-care practices, unlike others that only offer basic training tips.
This exercise may seem simple, but it is essential for confirming our product’s value. By articulating the formula, we can gauge a potential user’s level of understanding and determine if they want to learn more. After completing the exercise, we should expand and test our value proposition with potential users.
It is important to note that the final version of the value proposition may require additional brainstorming activities before being tested with the target users. Once we have finalized alternative ideas, messages, and wordings, we can begin testing with a few testers.
During testing, we can ask simple questions to gain insight into the user’s understanding of our value proposition such as:
– What was the first impression of the value proposition? Was it easy and clear to understand?
– Do you have any questions after hearing the value proposition?
– What are the most compelling features or benefits from your perspective?
– What problems do you think the offer can solve? What can be the potential concerns?
– How likely are you to take action (e.g., make a purchase, sign up for a trial)?
Testing the product with target users allows us to gain an objective understanding of their perceptions and expectations of our product’s value proposition, without any assumptions or biases. Through this process, we can identify pain points that may have been overlooked and refine our value proposition to better meet their needs and expectations. Moreover, user testing serves as an invaluable tool for uncovering potential usability issues, giving us the opportunity to make necessary improvements before launching to the market. By observing how users interact with our product and gathering feedback on their experience, we can identify any areas of confusion or difficulty and address them proactively.
In our example, after running the first user tests, we observed that pain management through the application’s tips was not a primary focus for users. Instead, they showed a preference for using traditional methods to address their pain points. On the other hand, we discovered a significant interest among users in comparing their performance with their close circle, including friends and family. They expressed a strong desire to track and monitor the progress of their loved ones. These insights indicate the need for the product manager to review and potentially reprioritize the feature set accordingly.
In today’s highly competitive market, where customers have many options, it’s crucial to have a strong value proposition to stand out from the crowd. This value proposition should be clear, concise, and easy to remember, and should effectively communicate the unique benefits and advantages of a product or service, setting it apart from other options available in the market. A weak value proposition can hold your business back, preventing it from reaching its full potential. If you are struggling to develop a compelling value proposition, please do not hesitate to take the first step by reaching out to us today.