With ever-increasing competition, you must understand the value proposition meaning, and why your brand needs one.
Introduction
With ever-increasing competition, having a strong value proposition is more important than ever. But what exactly is a value proposition, and why does your brand need one?
Read on as I demystify value propositions, explain why they matter, and teach you how to craft a compelling value prop that attracts and retains customers…
Table of Contents
- Introduction
- Value Proposition Meaning
- Unique vs Novel Value Propositions
- Not All Agree
- Internal vs External Messaging
- Why You Need a Value Proposition
- How to Craft a Killer Value Proposition – Part 1: Research
- B2B Considerations
- How to Craft a Killer Value Proposition – Part 2: Writing
- Value Proposition vs Brand Differentiation
- Value Proposition vs Tagline (aka Strapline, Slogan)
- Examples of Effective Value Propositions
- TLDR
Value Proposition Meaning
If you search online for “value proposition meaning” you get all sorts of answers. Most are in the right general vicinity, but surprisingly few clearly understand the true value proposition meaning.
Most definitions and articles jumble up a bunch of brand strategy elements into a kind of marketer’s Eton mess. To be fair, it generally takes junior marketers a while to understand the importance and sequence of the elements of brand strategy, and the nuances between them, so don’t feel bad if you don’t either.
Here’s my crack at defining a value proposition meaning…
Value Proposition Meaning/Definition:
Value Proposition Meaning: A value proposition defines the kind of value you promise to create for your customers. It is an internal document designed to guide your team on how to communicate the value customers can expect from your brand.
The value proposition is the element of business strategy that looks outward at customers, at the demand side of the business. It is the intersection between business strategy and brand strategy.
Conversations around brand strategy and taglines stem from a value proposition, but they are not the same thing. Neither are market positioning and brand essence, which are usually built out of the value proposition.
At its essence, a value proposition is a short, clear statement that summarises the key advantage or value that customers will gain. It explains the tangible and intangible benefits they can expect from using your brand.
An ideal value proposition distills this down to a simple declaration of value in just one or two sentences.
The customer-facing expression of a strong value proposition will resonate deeply with your ideal customers. It should speak directly to their aspirations, pain points, and goals.
Your value proposition will position your brand as the best choice to solve your customers’ problems and help them achieve the outcomes they want.
Unique vs Novel Value Propositions
Harvard Business School says that finding a unique value proposition usually involves a new way of segmenting the market.
But finding a novel value proposition expands the market. For example, until the iPad came along, customers didn’t realise they wanted tablets – but Apple effectively created a new demand.
Not All Agree
To be fair, not all marketers agree with my definition of a value proposition meaning. Some regard the value proposition as a consumer-facing statement, one to be published on the home page of a brand’s website and shouted from the rooftops…
“A value proposition should be front and centre when a visitor arrives on your site. Although it’s often found above the fold on the homepage, you should be aware of other common entrance points (e.g., a landing page, category pages, blog posts, and product pages).” [Shopify]
Others sit on the fence, with one foot in each camp…
“A value proposition in marketing is a concise statement of the benefits that a company is delivering to customers who buy its products or services. It serves as a declaration of intent, both inside the company and in the marketplace.” [Investopedia]
Internal vs External Messaging
I regard the value proposition as an internal strategic tool that looks outward at customers to define the value your product creates for them and, amongst other things, is used to guide your messaging.
When writing any copy directed at an external audience, you refer to the Value Proposition and make sure it is reflected in some way, shape or form in the copy you are writing.
However, that doesn’t preclude also having an external-facing value proposition statement for certain uses. Many brands do have a succinct statement that conveys their value for use in materials like websites, sales collateral, etc.
But the value proposition shouldn’t be decreed as immutable. The value prop should be expressed in different ways for different contexts while retaining its essence.
Both the internal strategic tool and external shorthand statement have merit. The two serve related but distinct purposes and can co-exist.
You’ll often find the value proposition expressed as an external shorthand statement in the form of a tagline, or headline, or intro paragraph, or highlighted portion of sales copy, etc.
The external statement should provide a consistent, recognisable anchor. But creativity and tailoring for each audience and medium is still essential.
In other words, your value proposition tells you what to communicate. How you articulate it in different contexts and across channels should vary.
The value proposition is a versatile framework that can function effectively as both an internal strategic tool and external market-facing statement if implemented with nuance rather than rigid decree. Flexibility in expression is key while protecting the core meaning.
Why You Need a Value Proposition
There are several important reasons every brand needs to define and promote a compelling value proposition…
- Attracts ideal customers. A strong value proposition acts like a magnet, drawing in qualified prospects to whom the value you offer resonates. It helps you connect with the specific customers who need what you provide.
- Builds trust and credibility. An effective value proposition demonstrates you understand your customers and can deliver on your brand promise. This establishes credibility and builds customer trust in your brand.
- Differentiates you from competitors. In a sea of competitive sameness, a solid value proposition explains why customers should buy from you instead of alternatives. It highlights your unique value. [Related article: “Brand Differentiation: The Ultimate Guide / aka How to Not Die!“]
- Gives customers a reason to choose you. Perhaps most importantly, a value proposition provides a convincing rationale for customers to engage and buy from you over others.
How to Craft a Killer Value Proposition – Part 1: Research
Now that you know what a value proposition is and why your brand needs one, let’s look at how to craft an irresistible value proposition.
The first step in strategy is always diagnosis. The following method is a text-based version of Peter Thomson’s Value Proposition Canvas, a process that will help you identify the relevant factors. Armed with those insights, you can then craft your value proposition.
Thomson says the Value Proposition Canvas helps teams get to “minimum viable clarity”. That’s a fancy way of saying it’ll get you 80% of the way to your perfect value proposition in 20% of the time and effort.
Answer the following questions as briefly as possible. Keep in mind that you are looking at how customer’s define your value. You must take their point of view, not an inside-out, operational point of view.
Product-Related Questions:
1. Features
Features are facts. They are your product’s functional attributes. They describe what your product is made up of and how it works. They also provide customers with the “reasons to believe” the benefits and value your product promises.
The proliferation of “me-too” brands has eroded features as a point of difference in most competitive categories, but they are still an important part of the value proposition for technology products and disruptive new products.
Questions to help you identify your product’s Features…
- How does your product work?
- Which features of your product make your customer’s life better?
- How do those features make your customer’s life better?
2. Benefits
Benefits are what your product does for customers. Benefits are the ways that your product’s features make your customer’s life easier by increasing pleasure or decreasing pain. The benefits of your product are central to your value proposition.
Questions to help you identify your product’s Benefits…
- What does your product do for customers?
- What are the functional and emotional benefits of your product?
- How do those benefits increase pleasure or decrease pain for the person using it?
- List all the ways your product makes your customer’s life better.
3. Experience
Product experience is how your customers feel as a result of owning or using your product. Product experience is different to features and benefits because it’s more about the emotional reasons people buy your product and what it means for them in their own lives.
A good description of the product experience will help you when you come to identify the market positioning and brand essence that is usually built out of the value proposition.
Questions to help you identify your Product Experience…
- How do the features and benefits make the customer’s life better?
- What does it feel like to use your product?
- How does the product experience make a customer feel?
Customer-Related Questions:
4. Substitutes
Substitutes are broader than just direct competitors. Look for the behaviours and coping mechanisms that people currently use in the absence of your product. After all, your customers have made it this far in life without your product.
No matter how much better your product is than the competition, if it isn’t better than the existing solutions, you don’t have a real-world value proposition.
Questions to help you identify your customer’s Substitutes…
- What do people currently do instead?
5. Needs
Needs are rational. They come from the head and rational thinking part of our being, not the heart and emotions. They’re the rational things that customers need to get done. Needs may be conscious or ones they’re not yet aware of (latent needs). For example, nobody knew they needed a portable music player until the iPod came along (at which point they suddenly wanted an iPod rather than any other perfectly good music player).
Questions to help you identify your customer’s Needs…
- What are the rational drivers of purchasing?
- What are the hidden needs?
6. Wants
Wants are emotional. They come from the heart, not the head. Wants are things we want to be, do or have. Your customer’s wants are usually conscious and aspirational thoughts about how they would like to improve their life, and can be powerful motivators of action. They might only need a small car to get from A to B, but they want a BMW SUV.
Questions to help you identify your customer’s Wants…
- What are the emotional drivers of purchasing?
7. Fears
The dark side of making a decision is that one usually has to give something else up. Choosing one thing means you’re not choosing another thing.
There’s also fear of making a mistake, fear of loss, fear of missing out (FOMO), fear of overpaying (FOOP), and dozens of other related fears, all of which can be strong drivers of purchasing behaviour.
Wants and needs that you observe in customers are sometimes driven by fears that lurk beneath the surface, so be sure to peel back the layers to find the true drivers of purchasing behaviour.
Fear is often the unknown reason that no one is buying your widget. For any product there is an unseen “pain of switching“. Even if your product is better than the competition, it might not be a big enough difference to overcome the status quo.
Questions to help you identify your customer’s Fears…
- What are the risks of switching to your product?
- What pain is associated with switching to your product?
- What undesirable outcomes are they worried about?
B2B Considerations
Even in B2B markets where customers are making purchase decisions on behalf of a company, they can still be guided by emotions. According to the consulting firm Bain, there are 40 discrete B2B elements of value, which fall into 5 categories…
- Table stakes
- Table stakes are prerequisites for being in business, not areas for differentiation…
- Meeting specifications
- Acceptable price
- Regulatory compliance
- Ethical standards
- Table stakes are prerequisites for being in business, not areas for differentiation…
- Functional value
- Functional value elements address a customer’s economic needs…
- Improved top line
- Cost reduction
- Or a customer’s product performance needs…
- Product quality
- Scalability
- Innovation
- Functional value elements address a customer’s economic needs…
- Ease-of-doing-business value
- Ease-of-doing-business value elements include both objective and subjective types of value.
- Increasing a customer’s productivity through…
- Increasing a customer’s productivity through…
- Time savings
- Reduced effort
- Decreased hassles
- Information
- Transparency
- Improving a customer’s operational performance through…
- Organisation
- Simplification
- Connection
- Integration
- Increasing a customer’s access through…
- Availability
- Variety
- Configurability
- Enhancing the relationship with a customer…
- Responsiveness
- Expertise
- Commitment (your commitment to their company)
- Stability
- Cultural fit
- Strategic elements…
- Risk reduction
- Reach
- Flexibility
- Component quality
- Individual value
- Elements at this level provide additional types of subjective value.
- Career elements…
- Network expansion
- Marketability (increased value in the job market)
- E.g. addressing individual buyer’s priorities, whether they are personal (reduced anxiety, appealing design and aesthetics) or career related (increased marketability or network expansion).
- Personal elements…
- Design and aesthetics
- Growth and development
- Reduced anxiety
- Fun and perks
- Considerations such as whether your product can reduce anxiety are very important. A fear of failure often nags at buyers who make big decisions, and “playing it safe” reduces both business risk and the risk of making a career-limiting mistake. Offering risk reduction and providing reputational assurance to people who are accountable for important purchases can add value to the value proposition.
- Inspirational value
- Supporting a customer’s purpose through…
- Vision (improving their vision of the future, e.g. helping them anticipate changes in the market)
- Hope (providing hope for the future of the company or the individual buyer, e.g. that they can move to the next generation of technology easily and affordably)
- Social responsibility (enhancing a customer’s social responsibility)
- Supporting a customer’s purpose through…
Understanding the full range of rational and emotional considerations, and tailoring the value proposition to the ones customers prize most, is critical to avoiding the commodity trap.
How to Craft a Killer Value Proposition – Part 2: Writing
Now that you’ve analysed your customers’ buying criteria and you’re armed with insights, here’s how to craft them into a value proposition…
1. Focus on Your Customer’s Point of View
Now that you have done your diagnosis and gained “minimum viable clarity” on the value your customers are looking for, it’s time to position your brand as the solution and highlight the key benefits you provide. Offer a compelling promise that you can fulfil.
2. Resonate Emotionally with Customers
Tap into the emotions, aspirations, frustrations, fears and goals of your customers. Craft a value proposition statement that directly reflects their desires. Make it personal.
3. Differentiate From Competitors
Clearly articulate what makes your value proposition better and different from competitive offers. Show why your solution is superior (from your customer’s perspective) without making claims you can’t fulfil.
4. Keep it Concise and Clear
The most effective value propositions are concise, often only 1-2 sentences long. They communicate the core value in a crystal-clear manner. Avoid generic claims and boil it down to your unique value. And remember that the value proposition is an internal document, so don’t try to wordsmith it into a customer-facing message yet.
5. Write It in a Way That Other People Understand
If you can’t easily explain to others why your company exists, how can you ever succeed? Steve Blank, who created the customer development method that launched the lean startup movement, has also developed a lean value proposition template…
We help X do Y by doing Z.
Once you have a statement in that format, Blank says, find a few other people (doesn’t matter if they’re your target market) and ask them if it makes sense.
If not, give them a longer explanation and ask them to summarise that back to you. Write down what they say. Other people are often better than you at crafting an understandable value proposition.
Value Proposition vs Brand Differentiation
Brand differentiation is about how you stand apart from competitors. The value proposition specifies the actual value you provide.
For a deep dive on brand differentiation, see Brand Differentiation: The Ultimate Guide / aka How to Not Die!
Value Proposition vs Tagline (aka Strapline, Slogan)
A value proposition is an internal document that defines the kind of value you promise to create for your customers, and provides guidance to your team for marketing communications. A tagline is a customer-facing statement.
A value proposition is a concise statement describing the underlying promise of the functional and emotional value customers get. A tagline is a short, catchy phrase representing your brand to the public.
A value proposition is function; a tagline is form. A value proposition is literal; a tagline is figurative.
A good tagline reflects the value proposition. Take for example these value propositions and taglines…
Examples of Effective Value Propositions
Airbnb
Value proposition: Airbnb provides an accessible global marketplace where anyone can list or book unique accommodations and experiences, enabling people to belong anywhere.
Tagline: Belong anywhere
The value proposition emphasises Airbnb’s role as a marketplace that makes travel accommodations easy to list and book. It focuses on the unique nature of the listings, as well as the sense of belonging that Airbnb aims to create among hosts and guests. The tagline “Belong anywhere” captures the feeling of being at home wherever you go, which is a key part of the Airbnb experience.
Apple
Value proposition: Apple combines the role of innovator, aggregator, and experience provider. Its computers, tablets, and smartphones form the hub of a single digital system enabling consumers to easily manage media production, consumption, and communication.
Tagline: Think different
The value proposition highlights Apple’s roles as an innovator that creates new technology, an aggregator that brings together hardware, software, services, and content into a unified ecosystem, and an experience provider that focuses on ease of use. The tagline “Think different” references Apple’s history of challenging the status quo and providing an alternative to the mainstream. It encourages customers to be innovative and creative.
FedEx
FedEx’s value proposition: When it absolutely, positively has to be there overnight.
Tagline: The World on Time.
The value proposition emphasises the reliability and speed of FedEx’s overnight delivery services. It speaks directly to customers who need critical items delivered urgently. The tagline “The World on Time” reinforces FedEx’s global reach and ability to deliver to destinations worldwide within strict timelines.
Nike
Nike’s value proposition: To bring inspiration and innovation to every athlete in the world.
Tagline: Just do it.
Nike’s value proposition is about inspiring athletes at all levels of ability through innovative products and experiences. Its tagline “Just do it” exhorts athletes to stop overthinking and take action. It’s about harnessing motivation and drive to achieve athletic potential.
These examples follow best practices for crafting value propositions: they are concise, clear, emotionally compelling, and communicate each brand’s unique value and benefit to customers. They serve as excellent models to learn from when developing your own value proposition.
TLDR
An effective value proposition is an incredibly powerful strategic tool for (i) focusing your team on the types of value customers expect from your brand, and (ii) guiding them on how to communicate your unique value and promise to customers in a way that enables you to connect with customers on an emotional level and position your company as the rational, logical choice over competitors.
Use the tips in this article to craft a value proposition that resonates with customers and helps your brand stand out.
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