There is a lot of confusion and conflation on what a value proposition is, especially versus brand positioning or a brand promise. Value propositions are specifically about the purchase or transactional value of a product, service, or experience. Anything that costs money, requires time spent, or requires additional effort can have a value proposition.
A value proposition is the articulation of all the tangible and intangible elements an audience must factor into a purchase decision. Because those elements can widely vary by audience, value propositions are most useful when they are done for a single audience; therefore, multiple value propositions can exist for a product if the product has multiple audiences that are varied enough that the benefits, differentiators, risks, or effort required are different, too.
Strong value propositions are those that demonstrate to an audience that the value of what they get outweighs what that audience has to give up to get it, which can include competitive offerings, alternative solutions, as well as the actual price, effort needed, and risk required.
Value propositions should be done to inform:
• Product/experience vision
• Product/services development
• Sales scripts
• Pricing
• Distribution or channel strategy
• Messaging
• Communications strategy
Value propositions can be expressed as single sentences, but they should be informed by and encapsulate four key areas:
1. Who is the target audience?
2. What are the costs of this product, service, or experience?
3. How does this product, service, or experience compare to competitors and alternatives?
4. What are the benefits of this product, service, or experience?
1. Who is the Audience?
The audience is who you want to purchase, experience, or engage with the product, service, or experience. While a value proposition can apply to multiple audiences, the primary and secondary audiences should be clearly identified.
A target audience can be an individual (e.g., homeowners, technology enthusiasts), or a segment (e.g., small businesses).
2. What are the costs of this product, service, or experience?
Costs include price, but aren’t limited to price. Cost also includes the effort required (like driving a long distance or dedicating a lot of time), and any risks involved (emotional, social, or physical) in purchasing, using or participating in your offering. It’s important to identify all of these, so you can judge if what makes you unique and how you benefit the audience is “worth” the costs of your offering. If it’s not, then you may have to add benefits or reduce costs.
If there are very few costs to your offering but still highly meaningful benefits and differentiation, then you may be able to increase the price of your offering or reduce “effort and risk lowering” investments (like convenient distribution and delivery).
3. How does this product, service, or experience compare to competitors and alternatives?
How is your product/service or experience the same as competitors, how it is better from competitors, and what does it offer that is completely unique or different from competitors? It’s important to explore all three.
Additionally, to arrive at a compelling value proposition, you should also explore what other alternatives there are outside of direct competitors. For example, if you’re a chat app, you will want to look at other chat apps, but also at what people might use instead of chat apps when they want to connect with friends and family, so you understand how you’re the same, better, and unique from those alternatives.
Lastly, it’s also important to consider if competitors or alternatives are priced differently, if getting or using them takes more or less effort than your offering, and if using them involves more or less risk than yours.
4. What are the benefits of this product, service, or experience?
Understand the complete spectrum of your benefits, identifying the whole ladder from functional to emotional to aspirational as well as prioritizing which benefits are most meaningful or game-changing for your audience, and which are just “nice to have.” You’ll want to anchor on benefits that ladder up to a higher emotional outcome (not just functional), and those that are the most meaningful to your audience. Lastly, you’ll want to identify which of your benefits are the same, better, or completely unique from the benefits of competitors or alternatives and prioritize those that are unique.
With these four considerations, you can then arrive at a conclusion on what the core elements are for a compelling, “worth it” value proposition for your audience.
The power of a strong value proposition
A value proposition helps you effectively understand your product’s overall value to each of your target audiences. This can then be used to inform product roadmaps, marketing communications, sales, and pricing and distribution strategies. Highlighting the benefits and differentiators while ensuring little to no risks or effort on the part of the customer are critical to marketing and sales strategies. A value proposition also allows you to understand where your products and services may require improvements or enhancements, particularly over time.
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