A successful person is not always one who earns millions of dollars every month. Of course, no one would refuse to become a millionaire, but being successful means more than just rolling in the money. First of all, it means understanding your purpose in life and recognizing the meaning of your profession.
The same can be said about business. No one doubts that one of the main reasons for starting a new business is to make money. But what value does this company bring to customers? This is the first question you should ask yourself as a beginning entrepreneur.
Nowadays, we deal with different types of businesses every day. You buy products in grocery stores, buy clothes in brand new showrooms, order a personalized writing services and going to the gym. What value does each of these companies bring? Leading a healthy life, standing out from the crowd, and getting good grades in school or college – all of these are the values that people pursue.
So why would customers choose your offering? Before diving into the vast and complicated world of entrepreneurship, answer this question. But try to do it in a simple and laconic way.
The value proposition is one of the key concepts of strategic marketing. It is often formulated as a promise that answers the question of how the company’s product will satisfy the customer’s needs, relieve pain, and provide benefits. But that’s not all. Another crucial reason for formulating a value proposition is to outperform competitors.
It is important to remember that the value proposition is not just a description of your product or service. It should explain how your product preferably solves customer problems and why it does it better than others.
Unique and Exclusive
One of the most common mistakes made by people just beginning their career journey is putting an equals sign between a value proposition and a company’s motto. A unique value proposition is not a slogan, slogan or position statement. Rather, it is an explanation that you provide to your customers.
For example, Nike’s “Just do it” is a motivating slogan that doesn’t show people the value of the brand. The value proposition of this company is based on four main pillars:
- accessibility (available worldwide);
- personalization (online and offline sales);
- innovation (new materials, avant-garde designs);
- status (in collaboration with famous athletes).
Value Proposition Formulation Diagram
Peter Thomson, a digital strategist, developed his Value Proposition Canvas model, which is now used by many companies and is especially useful for those new to the field.
The program consists of two basic segments – the first helps to better understand the product or service, and the second focuses on the emotional component, namely understanding the feelings of customers.
Analyze the product
This step is simply a description of the product, its main features, purposes and benefits. You can skip this step if the product is in a consumer domain. But if it’s something brand new, you should describe all of its features.
Be clear about how the product will improve the customer’s life to better articulate the benefits.
This step deals with the emotional side of buying a product, not its practical value. Still, impressions are a central element that will help define the essence of a brand and its positioning in the market.
Analyze the target audience
As considerate as we may think we are, emotions are often the main drivers of our decisions. For example, when buying shoes, we tend to choose famous brands like Adidas or Nike, not anonymous companies. When it comes to cars, people dream of Ferraris or Lamborghinis, not just vehicles to get from one place to another.
People always have needs. And your strategy is to find them as quickly as possible. Sometimes you can do it even faster than the customers themselves. How? The problem is that some people don’t know what their needs are. This is called latent needs. Thus, the sooner you recognize the latent needs of customers, the sooner your product will be purchased by them.
When purchasing a particular product or service, people often doubt whether it is worth paying their money for. Where is the guarantee that the purchase will meet all requirements? Replacing any product you are used to with a new one is associated with the so-called “change pain”. So, show your clients that this process won’t be painful.
Components of the Effective Value Proposition
Of course, there are no universal formulas, since all companies are different and offer unique values to their customers. Still, an approximate scheme for beginner businessmen might look like this.
- A catchy title to catch the buyer’s attention. It is best if the phrase is easy to remember.
- A subtitle which provides a brief explanation of what you offer, how you do it and why your product is important.
- Visual elements: videos, images, graphics. Note that people tend to remember pictures faster than words.
- Lists which include the main characteristics of your offer.
When everything is ready and you can’t wait to share your ideas with people, the next question could be: “what channels should I use to communicate my offer to the public?” And here is the answer. Since we live in a digitized world, almost all platforms are online:
- social media pages (your value proposition should be the most visible element for people to understand where they stand);
- website home page (place it above any other detailed information);
- product packaging (it’s a good idea to always remind buyers why they chose you);
- leaflets (it may seem a bit outdated, but sometimes paper brochures work, especially if they are handed out at conferences, meetings or other events).
When starting a business, focus on both the practical and the emotional. Remember that you are selling your product or service to real people who have problems, needs and wants. So, formulating a unique value proposition is the first step to reaching your audience.