Definition: Value proposition refers to a business or marketing statement that a company uses to summarise why a consumer should buy a product or use a service. This statement convinces a potential consumer that one product or service will add more value or better solve a problem than other similar offerings will.
Building a great product does not necessarily guarantee success. In addition to these next-generation products, unicorns like Airbnb, Uber, and Slack relied on clear, well-articulated value propositions. The best value propositions will explain what your startup does and why your startup is uniquely qualified to address consumer problems. Companies that fail to craft a unique value proposition statement struggle to engage potential investors, attract customers, and much more.
“Many entrepreneurs lost out, due to never truly articulating a compelling value proposition,” says Michael Skok, VC and Forbes contributor. “Establishing a substantive value proposition is critical if you want to start the journey from your ‘idea’ to building a successful company.”
Follow these simple steps to build a compelling value proposition and take your startup to new heights!
5 Steps to Building a Compelling Startup Value Proposition
#1. Specify Your Target Audience
Who are you trying to market to? By taking a closer look at audience demographics — gender, location, income, employment status — you can craft a value proposition that matches consumers. To properly define and assess your target market, Mandy Porta, contributor at Inc. recommends analysing the following:
Current Customer Base: What do your current customers appreciate about your product/service? Do your customers share any key characteristics or interests?
Competition: What types of consumers are your competitors targeting? Has your competition overlooked a niche market of high-value customers?
Once you have a better understanding of your target audience, you will be well-equipped to craft some messaging that aligns more closely with consumer values, preferences, and beliefs.
#2. Outline Customer Pain Points
What is your target audience seeking to accomplish? What will customers gain from doing business with you? Make a list of the problems customers come to you with and link those pain points to the value that your products/services provide. Try to communicate this value with specificity and clarity.
According to Marketing Experiments, communicating with greater specificity resulted in a 58 percent increase in conversions. For example, one participating business split-tested two value propositions:
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The second headline drew significantly more interest because it spoke to something nearly every customer cares about — time. In short, details matter when it comes to addressing customer pain points.
#3. Determine Unique Differentiators
Next, turn the magnifying glass on your company: is there a feature you provide that no other competitor can match? How about a proprietary software algorithm that allows you to deliver unique results? Does your startup utilise an unusual methodology your customers would find valuable?
Think about what makes your startup unique and determine if it makes sense to include that information in the value proposition. If you truly cannot think of anything that differentiates you from competitors, it is time to revisit your MVP (minimum viable product) and come up with something new.
#4. Research Consumer Language
Remember, the purpose of your value proposition is not to impress your peers; it is to engage your customers. Industry jargon, buzzwords, and boring technical explanations should be avoided. Instead of guessing the language your target audience uses to describe their problems, why not go straight to the source?
Conduct focus groups, send surveys, engage in forums and observe your consumers on social media to learn more about their speaking patterns in relation to your product. Make note of frequently used words, phrases and language that can later be used when crafting copy.
#5. Write Your Unique Value Proposition (UVP)
Once you have gathered all your information, it is time to write your startup’s value proposition. Most UVPs consist of two elements: A block of text and a visual.
While there is no universal format you must follow when constructing a UVP, Peep Laja, founder of CXL Institute, recommends including the following elements:
- Headline:Emphasize a benefit or invoke curiosity in a headline.
- Subhead: Explain what you offer, who it is for and why they should care.
- 3 Bullet Points:List the key benefits or features of your product.
- Visual:Accompany your text with a supporting hero shot or image.