The value proposition is one of the nine dimensions of the Business Model Canvas, a planning tool allowing entrepreneurs to visualize and assess the viability of their business model from a strategic approach.
Overall, the value proposition highlights whether the business really delivers value to the customer. It is the prospect’s motive for consuming your product, rather than the competitor’s.
The value proposition is developed by identifying a brand’s vectors, which show how it should be perceived by the market. It is the value that the company proposes to provide (deliver).
Therefore, the value proposition:
- explains the relevance of a product / service, i.e. how it solves a client’s problem or improves their situation
- specifies benefits
- establishes differentiation, signaling to customers why they should buy from your company and not from the competitor.
Though it is critical to the success of any business, many entrepreneurs do not give proper attention to the formulation of the value proposition, nor do they understand its development. This results in the loss of opportunities and, consequently, of business.
A frequent mistake is describing the value proposition in a superficial way, just to fill in the field in the Canvas model, even though it can actually make a difference in terms of business results.
Several important requirements for the elaboration of a value proposition can be observed in Figure 1.
The value proposition should state the benefits of your product / service concisely, clearly and objectively. People should understand it right away. Take care with its length. It should provide sufficient information in a clear and, above all, convincing message. If people have to think hard to understand it, you risk losing them.
You must use the customer’s language in the value proposition. You must know their language to effectively describe your company or product / service and how they will benefit from it.
Another aspect that deserves attention is the way in which the company differentiates what it has to offer from competitors. Identify your strengths and evaluate what customers find most relevant at the time of purchase. It is important to be unique in the customer’s mind.
With a well-developed value proposition, the company and the brand will be able to attract and convert more customers, increase loyalty and differentiate themselves from the competitor.
Let’s use WordPress, the platform we use for the Professor Annibal website, as an example of a value proposition.
- What the company sells: a platform for creating a website or blog.
- Who the target audience for this service is: people who want a personal blog or a business website.
- Benefits: outstanding design, a personalized domain, best-in-class support, easy to use, advanced metrics, and compatibility with mobile devices.
Generally, the value proposition is expressed in a short statement with a title, subtitle and text, allied to compelling visuals, such as photos or graphics. The basic model is composed of:
The title: Explain the benefit offered in a short and objective sentence. It must mention the product / service or customer.
A subtitle: Two or three lines that explain what the company does, who the product / service is for, or why it is useful.
Bullet points: list the key benefits or services the company offers.
Visuals: Use an image that makes the main message tangible.
A well-developed value proposition seeks to answer the following questions:
- What product / service does the company sell?
- Who is the target audience?
- What is (are) the principal benefit(s) the company provides to the customer?
- What makes your offer unique? How is it differentiated from the competition?
Following these simple guidelines, you will be able to write a proposition of differentiated value for your business.
Why not write one now?