In a fantastic article on Forbes, entrepreneur and venture capitalist Michael Skok defines value proposition as a “positioning statement that explains what benefit you provide for who and how you do it uniquely well.” By describing your target customer, the problem you solve for them, and what makes you different than other solutions, a value proposition should make your product’s or service’s worth as clear as day to potential customers or investors.
As a business owner, you already know that your product or service is valuable — after all, you wouldn’t have started your business if you didn’t think so. That said, it can be tough capturing the inherent value of your business in a single statement. We’ve put together five questions that’ll help you arrive at a value proposition you can be proud of.
1. What product or service do you offer?
What product or service does your business offer, literally? If you’re a restaurant, the answer would be food and drink. If you’re a jewelry maker, it’s rings, bracelets, and necklaces. If you’re a clothing store, clothing.
Write your product or service offering down on a piece of paper. Now, tear that piece of paper up and throw it away! Ok, not really. But do try to put your literal product or service out of your mind while you answer the rest of these questions. Because selling a product is only so-so. Selling a solution, an outcome, a feeling, or a change is where the real value lies.
2. Who is your target customer?
Before you can determine your value prop, you’ll need to get inside the head of your target customer so that you know what will resonate with them or, in other words, what they’ll find value in. Here are some questions to consider to help you get to know your customer better:
- How old are they?
- What is their gender?
- Where do they live?
- What do they do for work?
- How much money do they make?
- Is family important to them?
- What do they do for fun?
- What do they read?
- What do they watch?
- What are their hopes, dreams, and aspirations?
- What is most important to them
- What makes them happy?
- What makes them frustrated?
3. What problem does your product solve for your customer?
Once you’ve gotten inside your customer’s head, ask yourself what problem they’ve got that your product will solve for them. If you’re a real estate agent, your client needs to sell or buy a house. You can help them do that. If you own a restaurant, your customer is hungry. For some business types, the answer to this question may be a little harder to figure out, but this answer is essential to creating an effective value proposition.
4. How does your product or service benefit your customer?
The answer to this question is, broadly, that the customer benefits by getting a solution to the problem you determined above. So, for you real estate agents, they benefit by finding that dream house or selling their property and, for your restaurant owners, they benefit by no longer being hungry. But take things a step further and make a list of the ways that they benefit in addition to having their problem solved:
- What emotions are involved (i.e. did they go from frustrated to happy)?
- How are the different areas of their life affected (family, work, friendships)?
- What is the customer experience like outside of the end result?
- For what reasons (aside from your product) would you like customers to recommend you to friends and family?
5. What differentiates you from competitors?
Odds are that you aren’t the only one offering a solution to the aforementioned problem facing your customers. What makes you different? Is your product superior? Are you less expensive? Do you offer the best customer experience? Think about what makes you special and why a customer would chose you over another solution.
Once you’ve put some thought into these questions, you’re ready to get to work on your value proposition, which should clearly state:
- What problem your product or service is solving
- What specific benefit customers can expect
- What differentiates you from the competition
Once you’ve determined your value proposition, keep it top of mind and make sure it shines through in all of your marketing efforts, from your website to company videos and everything in between. And feel free to share your business’s value proposition with us in the comments below. We’d love to hear it!