A successful person is not always the one who earns millions of dollars every month. Of course, no one would refuse to become a millionaire, but being successful means far more than just rolling in money. First of all, it means understanding your purpose in life and recognizing sense in your occupation.
The same thing can be said about business. No one doubts that one of the main reasons for launching a new business is to make money. But what value does this business bring to the customers? It is the first question you should ask yourself as a novice entrepreneur.
Nowadays, we deal with different kinds of businesses every single day. You buy products in grocery stores, purchase clothes in brand-new showrooms, order custom writing services, and go to the gym. What value does each of these businesses bring? Leading a healthy lifestyle, standing out from the crowd, and gaining high marks at school or college – all these are the values people pursue.
So, why would customers choose your offer? Before diving into the wide and complicated world of entrepreneurship, answer this question. But try to do it in a simple and laconic manner.
The value proposition is one of the key concepts in strategic marketing. It is often formulated in the form of a promise that answers the question of how the company’s product will satisfy the needs of the client, relieve pain, and provide benefits. But that is not all. Another crucial reason for formulating a value proposition is to outdo competitors.
It is important to remember that the value proposition is not just a description of your product or service. It must explain how your product solves customer problems and preferably why it does so better than the other ones.
Unique and Exclusive
One of the most common mistakes people who only start their business path make is putting a sign equal between a value proposition and a company’s motto. A unique value proposition is not a slogan, a catchphrase, or a position statement. It is rather an explanation you provide your customers with.
For example, Nike’s “Just do it” is a motivational slogan that does not show people the brand value. The value proposition of this corporation is based on four main pillars:
- accessibility (globally available);
- customization (both online and offline selling);
- innovation (new materials, cutting-edge designs);
- status (cooperating with famous athletes).
Scheme for Formulating Value Proposition
Peter Thomson, a digital strategist, has developed his value proposition canvas template, which is now used by many businesses and is especially helpful for those who are new to the sphere.
The scheme includes two basic segments – the first one helps understand the product or service better, and the second one focuses on the emotional component, namely, understanding customers’ feelings.
Analyzing the Product
This step is merely a description of the product, its main characteristics, purposes, and benefits. You can skip this step if the product belongs to a mass-market domain. But if it is something brand-new, you must describe all its features.
Be clear about how the product will improve the customer’s life to best articulate the advantages.
This step deals with the emotional side of purchasing a product, not its practical value. Still, impressions are a central element that will help define the essence of a brand and its market positioning.
Analyzing Target Audience
However considerate we might 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 some no-name companies. When it comes to cars, people dream about Ferrari or Lamborghini, not some simple vehicles to get from one place to another.
People always have needs. And your strategy is to find them as fast as possible. Sometimes you may do that even faster than the clients themselves. How? The problem is that some people do not know what their needs are. These are called latent needs. So, the faster you recognize customers’ latent needs, the faster your product will be purchased by them.
When buying a particular product or service, people often doubt whether it is worth paying their money. Where is the guarantee that the purchase will meet all the requirements? Changing any product to which you are used to a new one is associated with the so-called “pain of switching.” So, show your clients that this process will not be painful.
Components of Effective Value Proposition
Of course, there are no universal formulas, given that all businesses are different and provide unique values to their customers. Still, an approximate scheme for rookie business people might look like that.
- A catchy headline to attract the buyer’s attention. It is better if the phrase is easy to remember.
- A subtitle that provides a short explanation of what you offer, how you do that, and why your product matters.
- Visual elements: videos, images, graphics. Note that people tend to remember images faster than words.
- Lists that include the key features of your offer.
When everything is ready, and you are eager to share your ideas with people, the next question might be, “what channels do I use to communicate my offer to the audience?” And here is the answer. Given that we live in a digitalized world, almost all the platforms are online:
- social media pages (your value proposition must be the most noticeable element so that people understand where they are);
- website homepage (place it above any other detailed information);
- package of the product (it is a great idea to always remind buyers why they have chosen you);
- brochures (it may seem a bit obsolete, but sometimes paper brochures work, especially if distributed at conferences, meetings, or other events).
When starting a business, focus on both practical and emotional components. Do not forget that you sell your product or service to real people who have problems, needs, and desires. Thus, formulating a unique value proposition is the first step to reaching out to your audience.