Most companies, I am afraid to report, do not know how to craft a Value Proposition statement. This is biting them.
Specifically, having worked in the last few months with a large number of high-tech start-ups at various stages, it became glaringly apparent that early- and late-stage start-ups are primarily leveraging founders’ tech skills and do not and/or cannot devote sufficient resources to the development of their Value Proposition early enough in the game.
Never mind that the core technology is brilliant or that the market is ripe for the picking. If the Value Proposition isn’t well articulated, the company’s users, prospects, clients (even investors!) won’t bother listening to the underlying genius.
Not just start-ups
The lack of a clearly articulate Value Proposition is a problem not just for start-ups and not just for tech companies.
The Value Proposition is the starting point for the Demand-Creation plan. Even a cursory visit to most companies’ websites, or a review of their marketing communications materials, reveals an over-emphasis on features and functionality –not to mention ego — and a fundamental absence of segmentation based on the Value Proposition, as articulated to its various target audiences.
Long sales cycles and complex offerings suffer the most
Not having clearly articulated Value Proposition is a particularly bad problem with complex offerings in long sales cycles where there are many Value Propositions within the same product or solution, and where there is a need to engage multiple people/roles at different stages – who in turn have multiple information needs.
The Basics: What is a Value Proposition Statement?
A Value Proposition Statement is defined as:
1. A promise of value to be delivered
2. A belief from the customer of value that will be experienced
In other words, your Value Proposition must be a provable statement that summarizes why your customers will get more value or better solve a problem by engaging with you rather than with similar offerings and options available.
Plus, for customers or clients to consider engaging you, the Value Proposition statement must be superior to competitors’ as well as to “doing nothing.”
Here is a Value Proposition “Formula”
There has been a great deal of research on determining value, but it essentially comes down to what customers get for what they pay (Value = Perceived benefit/Cost).
In yesterday’s blog post I emphasized that the right answer to the “What Do You Do” question is, “What do YOU do?” That is, only by understanding the audiences (plural) to your Elevator Pitch can the right Value Proposition be brought forth.
One formula that works for me and my clients is:
To [your target audience], is the [vendor category description]
of [product or solution description] that delivers [your benefit statement]
because [proof & reasons to believe you]
- Your target audience = the corporate roles and industries or consumer markets that your company is going after (multiple players in your ecosystem)
- Your vendor category description = how your market defines the company
- Your product or solution description = products and/or services offered by your company
- Your benefit statement = what the target audiences get which they cannot get from competitors
- Proof & reasons to believe you = how does your company back up and demonstrate the benefits
In the next few blog posts I will break each one of these five elements into its component parts.
For now, if you think you need a better Value Proposition statement, just take a piece of paper and jot down thoughts for items 1 to 5. You may be surprised how easy it is (or not).