If you are a small business owner who aspires to be successful and compete effectively, having a strong value proposition can make all the difference when it comes to attracting your preferred customers and differentiating your products and services in the marketplace.
Yet many small businesses are unaware of the concept, or how to deploy it effectively. So let's demystify the term "value proposition" and offer a few thoughts on how you can start to apply the concept to benefit your business!
Put simply, a value proposition is a statement to prospective customers explaining the benefits of buying your product or service, in a way that convinces them that your offering is better than others on the market.
Here's an example of a value proposition: "Our award winning magic beans help organic gardeners who wish to grow high yielding crops and avoid using harmful fungicides, unlike Brand X's beans which are lower yielding and more prone to leaf blight".
It's a lighthearted example but with a serious (and hopefully memorable!) point. In this one statement we capture the product (magic beans); the target customer segment (organic gardeners); a problem they want to fix (don't want to have to use fungicides); a benefit they want to realise (get better yields); add some 'social proof' (the beans are 'award winning'); and finally some points of differentiation (other brands are lower yielding and less disease resistant).
Which of your customers' problems does your product or service solve?
If you're anything like me, you may find it's actually quite fun - and insightful - to develop some value proposition statements for your own products or services. Why not choose a particular customer segment you wish to target; identify the problems those customers have; then build a proposition statement around those needs?
Remember, the proposition should succinctly describe a number of important things:
1. who is your target buyer - who are you trying to help;
2. what's the product/ service you provide;
3. what specific problem(s) does your product or service solve/ what specific desired benefit(s) does your offering provide;
4. why should prospects do business with you, rather than your competitors; and
5. if possible, offer some 'proof' to substantiate your proposition.
A deep understanding of the needs and motivations of each customer segment provides the foundation for building effective value propositions. If you're unclear about the reasons why prospects would buy your products, or why they should prefer your offerings to others on the market, that could indicate a problem in your business. If you cannot express why customers should choose your products or services, how will you compete effectively or grow your business?
One final thought; creating value for customers is not just about the features of the product/ service, or the price. Other variables in the "marketing mix" are often just as important; how your products are promoted and positioned; how they are accessed by the customer; the people in your business that support and deliver the product; the processes in your business that underpin delivery; the physical aspects of your offerings.
If you decide you need to strengthen your existing value propositions, consider how each element of the marketing mix affects the value perceived by your customers.
Can we help you build effective value propositions for your business? Contact us today for a free consultation.