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What is your value proposition?
A value proposition isn’t just useless information about your company, products or services. It’s a statement about what outcomes a person or group can expect when working with your company.
A company’s value proposition is at the core of its business model. It’s a promise the organization makes to its customers regarding the value of its products and/or services. A value proposition should be simple, but powerful and clear. A compelling value proposition strategically examines the factors that influence customer focus, and overall business ambition and sets expectations. It serves both your customers and employees by setting up their expectations. Guiding employees by setting these expectations help ensure they understand your company’s standards and gives them something substantial to aspire to in regard to product quality, service, etc.
Your value proposition guides your strategy
A value proposition is a critical component of your strategy rather than just a feature of your marketing plan. It should provide three critical benefits:
- Functional benefits: This is how your product performs. These benefits tie your offer to the outcome the customer wants.
- Product attribute benefits: This is what makes your product stand out. These benefits provide a credible point for comparing your offer to competitors’ offers.
- Personal benefits: These benefits account for emotional connections tied to the purchase decision.
The most successful value propositions will offer the customer all three types of benefits at once. It is a promise that you plan to offer the buyer a positive experience with a great product or service. It convinces the buyer your product is the best choice for them and appropriately capitalizes on how the buyer feels. For employees, an effective value proposition gives them a better sense of what marketing strategies will be most effective.
A strategy with real benefits
Value propositions examine factors that influence a range of areas, such as customer focus or overall business ambition. So rather than seeing them as a feature of your marketing plan, develop the value proposition as a strategic core for all your operational models (e.g., decision-making, finances and resource prioritization).
Once you have a clear operational strategy based on your value proposition, it will provide direction for all the interactions your employees have with your customers. It tells your sales representatives exactly who the target market is, what that audience wants to get or achieve and what’s most important for the audience to know about your product or service.
With this clarity, the sales team can become more efficient and productive. They can reduce operating costs, all while improving customer engagement, segment reach, customer retention, market share, revenue, net profit and market share.
Take my company, for example. I’m the chief marketing officer (CMO) of an investment management company that has made our value proposition a part of our deeper strategy. Our team recognized most organizations handling exchange-traded funds (ETFs) focus on beating a single financial index. However, we acknowledge that investors have specific, long-term goals and want investment solutions based on those unique objectives. We allow those goals to drive the development of all our products. The approach simultaneously meets investor needs and serves as a differentiator.
Determining the need to pivot
Even when employees have a clear value proposition to offer customers, they’ll only be successful if that value proposition is still in line with current markets. Put your value proposition into context by looking at what’s happening outside your business. Is your industry — or an adjacent one — experiencing big changes? If so, you’ll likely have little choice but to pivot and transform.
But what does transformation look like? You will either expand your value proposition or create a new one. Most companies will rationally expand their proposition until they have evidence that maintaining their core strategy is no longer safe. If you’re in an industry where digital disruption isn’t immediately emerging, you could probably get away with maintaining your tech infrastructure. If your industry is already adopting new digital options, simply optimizing your work might not be enough.
Whether expanding your value proposition or starting from scratch, your employees need to understand your changes’ intent and practical application. The more they understand these elements, the easier it will be for them to commit to the shifts in an authentic way that improves customer trust.
A must-have formula
Whether you’re drawing up a new strategy or tweaking your current one, the key is to define your position based on the target segment you want to dominate and the value proposition you intend to dominate it with. The following formula can help you establish clarity:
- Our product is for [target customers; functional] who want to [alternative to the norm or current options; functional].
- Our product provides [key problem-solving capability; functional] that offers [product attributes; product], allowing you to [key product features; personal].
A completed version of the formula might read: “Our product is for new parents who want to better understand their baby’s emotional wellbeing. Our product provides AI-based emotional tracking for infants that offers biofeedback analytics, calendar graphing and predictive alerts, allowing you to use a customized dashboard to respond and bond more deeply with your little one.”
Then, you’ll need to differentiate their value proposition from others to stand out. Find ways to demonstrate that your brand offers something competitors do not. Or, explain how the service or product fulfills a need no other company can.
Strong value propositions build strong business
In today’s competitive environment, you have to give your employees the tools that can drive customers to take action. And a well-written value proposition can do that. It does more than just serve as a marketing hook. It directs the business and provides strategic guidance for your entire team. It gives workers insight into your values and goals, offering them direction. The resulting unity and efficiency set your brand apart and enable you not just to respond to customer preferences but to drive them. Keep the value proposition formula offered above in your back pocket so that you’ll adapt well and enjoy smooth sailing no matter where the market winds might blow.