Essentially, the value proposition is the #1 thing that determines whether people will bother to invest more time and energy to know more about your product or hit the back button. In the early stage of a start-up when you are not yet known popularly, it becomes even more critical that you have a better value proposition.
If you are familiar with lean business model canvas by Ash Maurya, the value proposition is one of the 9 blocks of a business model that you sketch when you get started to put your idea onto a paper. It is one of the most important elements of the business model and therefore critical for start-ups to get it right. One of the reasons as to why most start-ups fail to define their value proposition well before they launch their products is that founders tend to give too much credence to the ‘idea’ they have and run with it as opposed to exploring how this idea would actually perform in the market.
“Unique Value Proposition: A single, clear compelling message that states why you are different and worth buying.”
– Steve Blank, The Four Steps to the Epiphany
In other words, a value proposition is a clear statement of the tangible results a customer gets from using your products or services. It is outcome focused and stresses the value of your offering.
How people do it wrong?
On the surface, value propositions seem incredibly straightforward. A lot of founders tend to mistake it for what it is not. There are 7 commonly wrong ways of understanding and using value proposition and they are:
Definition – A brief attention-getting phrase used in advertising or promotion.
Use – Slogans are used with the brand name and logo of a product or service. Though name and logo are often recognizable, they usually don’t have an embedded germ of a communicable idea. Since slogans do carry ideas, they are received, remembered and then played back, complete with all the associated emotions and claims a given slogan evokes. This repeatability makes well-written slogans powerful and far-reaching.
Examples – Save Money, Live Better (Wal-Mart); I’m lovin’ it (McDonald’s); Just Do It (Nike)
Structure – Because slogans are meant to be remembered and repeated, effective taglines employ elements known to increase retention like rhymes, puns, hyperbole, and simile.
Definition – A catchphrase is a phrase or expression recognized by its repeated utterance. Such phrases often originate in popular culture and in the arts and typically spread through word of mouth and a variety of mass media
Use – Catch attention for your brand
Examples – “Beer, now cheaper than gas. Drink, don’t drive”; “It’s lonely at the top, but you eat better”; “We repair what your husband fixed” (From a plumber’s truck); “7 days without pizza makes one weak” (From a pizza shop)
Structure –Principles of a good catchphrase are – it must be short and simple (usually around 10 words or less), must be memorable and pleasant to the ear and must evoke some kind of emotion or agreement. A catchphrase is meant to stick in the head of the audience so that when they see it, they can mentally repeat it to themselves.
Definition – A positioning statement is a one- or two-sentence statement that articulates your product or service’s unique value to your customers in relation to your chief competition.
Use – Positioning is the process of identifying an appropriate market niche for a product (or service or brand) and getting it established in that area. It clearly defines your company’s place in the market and helps you get your marketing in order for higher profits.
Examples – Volvo: For upscale American families, Volvo is the family automobile that offers maximum safety.
Structure – Combine the responses to these 3 questions in a sentence – who is your target market? what unique value do you provide them? why Should They Believe You?
Definition – It is a formal summary of the aims and values of a company. A written declaration of an organization’s core purpose and focus that normally remains unchanged over time.
Use – The mission statement can serve as a guidebook for the organization, representing lofty goals and aspirations while serving as a barometer against which leaders can measure actions. It is a useful piece of public relations, an attempt to paint a rosy picture of an organization. The process of brainstorming and writing reinforces the purpose of the organization.
Examples – “We strive to be the global leader in the sporting goods industry with brands built on a passion for sports and a sporting lifestyle!” -Adidas; “We seek to be Earth’s most customer-centric company for four primary customer sets: consumers, sellers, enterprises, and content creators.” –Amazon; “To connect people with their world, everywhere they live and work, and do it better than anyone else.” -AT&T
Structure – A mission statement describes the company’s goals in three ways – it defines what the company does for its customers, it defines what the company does for its employees, it defines what the company does for its owners.
Definition – A high concept pitch distills a startup’s vision into a single sentence.
Use – First, the pitch is the perfect tool for fans who are spreading the word about your company. Investors use the pitch when they tell their partners about your startup. Customers use the pitch when they rave about your product. The press uses the pitch when they cover the company.
Examples – “Friendster for dogs.” (Dogster); “Flickr for video.” (YouTube); “We network networks.” (Cisco)
Structure – First, the pitch should be brief: one short sentence is perfect. The pitch combines the building blocks by using analogy, synthesis, juxtaposition, combination.
Definition – An elevator pitch is a brief, persuasive speech that you see in use to spark interest in what your organization does.
Use – Some people think that this kind of thing is only useful for salespeople who need to pitch their products and services or startup founders who are looking for an attention from investors. But you can also use them in other situations. For example, you can use one to introduce your organization to potential clients or customers.
Structure – Your elevator speech should be brief. Restrict the speech to 30 to 60 seconds — that’s the time it takes to ride an elevator. Even though it’s a short pitch, your elevator speech should be persuasive enough to spark the listener’s interest in your idea or organization. Your elevator pitch should explain who you are and what qualifications and skills you have.
Definition – It is a short text which serves to clarify a thought for, or is designed with a form of, dramatic effect. Many tagline slogans are reiterated phrases associated with an individual, social group, or product. As a variant of a branding slogan, taglines can be used in marketing materials and advertising.
Uses – The idea behind the concept is to create a memorable dramatic phrase that will sum up the tone and premise of an audio/visual product, or to reinforce and strengthen the audience’s memory of a literary product.
Example – “Tools to Grow Your Website’s Traffic.” SumoMe
Structure – The #1 best way to create a tagline for your business is to describe what you do in the shortest space possible. This process is like trying to cram a large thought into a single Tweet.
Value propositions play an integral role in defining your startup’s purpose and validating ideas among your target audience. Directly correlating with the business plan, they quantify the intended market position of your startup and demonstrate the fundamental value of your product offerings in the mind of your target audience.
The inability to communicate your purpose and value to your target audience, in a clear and concise manner, is a death sentence for even the best ideas. Often times, it is one of the root causes in the failure startups.
Ensure you are not one of them.