What is a Value Proposition?

If you surf the web and plug in your favorite companies and look at their value propositions (if they can even articulate one), you will find all kinds of buzz words and equations that sometimes ring true and sometimes do not.

Many are aspirational.  Companies talk a lot about what they hope is their real-life value proposition, but they often have difficulty delivering on it.  Some try to be all things to all people.  Some try to be fast, good, and cheap, which is a combination that is usually not possible.  

Jeff Bezos regularly points out Amazon’s Value Proposition as: Fast delivery speed (often same day and with options of free 2-hour delivery) and a Vast selection (“Earth’s biggest selection”).

He makes no claims about quality as that is clearly not possible with the vast collection of products.  In fact, many of the leading quality brands across multiple sectors will not sell their wares on Amazon.  They know it will deflate their brand.

We all know if the value proposition we seek has to do with Quality, we will likely go somewhere other than Amazon for certain items.  If we want an engagement ring, we might go directly to a jewelry store.  If cubic zirconium works, Amazon can deliver. If we want an expensive handbag, we will likely go to Gucci or similar category.  

Sure, Amazon may offer a Gucci bag and a real diamond ring or two but if most of us are honest, when we spend several thousand dollars, we want the store experience.  We want to touch it, feel it, love it before we buy it.

Amazon clearly has a value proposition that has jetted them to massive success.  We do not have to be all things to all people and should not try.

How should you write a value proposition?

If you keep this definition in mind, it will help you get clearer on a value proposition that might work for your company:

A value proposition is that which you offer your customers that is relevant, measurable, and relative to their alternative choices.

Way too many value proposition messages say something to this effect: 

Our knowledgeable team delivers what you want when you want it. 

(Trust me, we have seen versions of this many times.)

Will such a value proposition make you buy that product or service?  Doesn’t it simply sound like a promise?  But what if it complied with the definition above and made it:

  • Relevant – How important is your knowledgeable team to me or do I have that expertise already?
  • Measurable – How do I know you have what I want and will deliver on time?
  • Relative to alternative choices – What can I get elsewhere, in terms of the product and delivery?

Some Value Proposition examples:

A better way of expressing that value proposition using the criteria above might look like this:

100% of our team has advanced degrees in this field with a minimum of 15 years’ experience.  We have delivered over 350 projects on time or ahead of schedule in the last two years.

Notice how the statement has measured statements of how successful the company has been in the past.

Articulating a value proposition that way “builds confidence and reduces risk” in the buying decision.  You never want the buyer to feel like they are making a crap shoot when deciding who to do business with.  

Since your value proposition has to be measurable, it must be based on what you have done in the past: “We saved our top 10 clients 20% in inventory last year.”  

Past performance is the best indicator of future performance.

If you have saved your customers time and/or money you must spell it out.  If you don’t value what you do for your customers, they won’t value it either.  Too many value propositions do not really convey value and thus miss the opportunity to convince a buyer. 

Don’t forget the existing customers

Remember it is far more expensive to gain a new customer than to retain a valued one.  Frequently re-state your value proposition to existing customers.

At least quarterly do the math and show them how you excelled for them:

Last quarter we delivered to you 98.9% on time with a 97% accurate fill rate.  This exceeds the industry standard by 7%. And 5%, respectively.

That is a value proposition every customer would appreciate.

Is your value proposition relevant?

This one is tricky because we have come to learn many organizations do not know what is truly relevant in the buying decision. 

For example, often companies think that their investment in giving back to their community is relevant.   It makes good P. R. and provide “branding” to get your name out in the community, but most of the time a buyer won’t choose you over the competition because of it. 

A value proposition based on what is relevant to the customer is more likely something in the realm of being on time, in full, and error free.   So if you are measuring, and touting, the things that are most relevant to your customers when they are ready to make a selection, you are closer to a meaningful value proposition.

Value Proposition Mistakes

If you conduct an online search for “good value propositions” you will immediately see a number of articles touting things like the “7 Best Value Propositions” or “32 of the best Value Propositions.”  If you read these articles, you might come away thinking that a good slogan is the same as a good value proposition. Let us be perfectly clear:  it is not. 

A good slogan or tag line is NOT A VALUE PROPOSITON.

Your best value proposition should speak directly to buyers of your products or services and articulate your operational performance history on those things buyers care about most.  While this sounds simple, we have seen organization after organization make two assumptions that undermine their ability to communicate an effective value proposition.

They think:

  1. they know what is most important to their buyers; and 
  2. buyers know all the value you provide them.

If you have read my blogs, you’ve heard me say many times that when we’ve asked our clients to guess what their buyers value most in a supplier, research demonstrates that 95% got it wrong. Too often organizations assume they know what buyers want, and as a result, build their operations, sales, and marketing around these perception gaps.

As stated earlier, if your buyer values on time, in full, and error free, then a value proposition that touts something else misses the mark, which may leave you wondering why it is you aren’t chosen more frequently.

Do not assume your customers know all the value you provide them.  Nothing gets you reduced to commodity status (where lowest price is frequently the tie breaker) like the assumption that “our customers know what we can do.”

It is worth taking the time within your organization to ask your team the following:

  • What are we doing for our customers that they take for granted?  
  • What would it cost them to do it themselves?
  • What might we be able to do that they would be willing to pay more for?

I found this link for some cited good value propositions.  I would not agree with some of them.

7 of the Best Value Proposition Examples We’ve Ever Seen | WordStream

For example, I think that Slack’s value proposition needs work:

“Essentially, Slack distills its value proposition in the example above – it makes users’ “working lives simpler, more pleasant, and more productive.”

The NASA JPL example is also very clever in that it subtly implies that if it’s good enough for large teams of scientists at NASA – the kind of people who put robots on other planets – then it’s good enough for anyone.

However, while this might seem like the value prop of virtually every productivity app on the market, Slack has several advantages that support its core value prop of making collaboration simpler.”

The author states that this value prop sounds like every other productivity app and he is right.  He makes my point.  They have not done a good job of conveying the value they bring even if they, if fact, do bring extraordinary value.

This list seems to identify good companies but not good value propositions

The Map to Value Proposition success

How can you improve your value proposition?  Start by using the definition we introduced as your standard:

A value proposition is that which you offer your customers that is relevant, measurable, and relative to their alternative choices.

Treat each of the three elements in that definition as an exercise or a project:

  • What do your customers want most from their supplier of (whatever you offer)?
  • What metrics do you have that prove you excel at those relevant wants?
  • How does your offering differ from that of your competitors?  Or at the very least, how does your message differ?  Is it more believable because it presents your performance (rather than just offering a promise)?
  •   Does it get your customer more margin, gain them market share, or make it easier for them to do those things? 
  •  Does it make your consumer healthier, wealthier, or sexier?  Not just “better” than they were, but better than your competition can do for them.

Remember everyone of us will pay for value when we understand the value we are receiving.  You must spell it out in a solid, measured value proposition.  Avoid becoming a commodity, just because of a poorly conveyed value proposition.

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