What do Acorns, Algolia, and Andela have in common?
They are all on Forbes’s 2020 Next Billion Dollar Startups list. Their names all start with an A, but that hardly matters.
Another thing they have in common is that they all have strong and compelling value propositions.
- Acorns promises you a simple way to save and grow your money with an all-in-one app.
- Algolia promises companies an AI-powered search engine that finds what customers are looking for. Every time.
- Andela promises companies looking for engineers a vetted top-team of engineers without the overhead.
If I was in the market for any of those services, I know who I’d turn to. If you are looking to create a value proposition that outclasses even the three As’, you’re in the right place.
We’ll show you how you create a compelling value proposition WITHOUT using the same Value Proposition Canvas that everybody else uses.
What is a value proposition?
Let’s keep it simple.
A value proposition is the benefit your customer gets by buying what you’re selling.
It’s a clear statement about the outcome of using your product, service, or solution. It takes your mission statement one step further and defines the value you add to your customer’s life.
Or as Adrian Sprenger, our Entrepreneurship Manager, explains in more detail:
It describes what benefits a company promises its customers with a particular product or service. Hence it is the business model’s central element. The value proposition emphasizes the benefits for the customer to convince them that they’ll get value for their money, which includes functional benefits and emotional ones.Adrian Sprenger, Entrepreneurship Manager
You don’t sell a product. You sell its benefits.
Nobody bought the first iPod because it had 10GB of storage. Everyone bought it because they wanted a thousand songs in their back pocket.
When you buy an umbrella, do you care about it being nylon or do you care about staying dry in apocalyptic rainfall?
Features don’t sell. Benefits do.
Your potential customer wants to know what they get out of the deal. They don’t care about big numbers and fancy features.
When we’re at the SIP talking to an entrepreneur looking for office space, we don’t try to sell them a large coworking with free coffee and lightning-fast wifi. We sell them the possibility to connect with the right people that matter for their startup who already have their offices with us.
Not sure if you need a value proposition?
Adrian has the answer:
If your product is on the market, you can’t help having one. The important question is how it comes across. Is it targeted to the customer segment that you want to address? Is it actually making their job easier by addressing their pain points and needs? You want to help the right customers—those for whom you actually developed the product or service—recognize it as the solution for their particular pains and needs in the job they want to accomplish.
Sold? You want to create your own value proposition? Great, let’s go.
How to write a compelling value proposition (without using the Value Proposition Canvas).
A good value proposition is concise and easy to remember. The perfect value proposition needs to
- be clear and easy to understand.
- communicate a specific outcome your customer will get.
- explain how you are different and better than your competition.
- be readable and understandable in less than five seconds.
The Figam value proposition is a perfect example.
I can read it in three seconds and feel like it’s a must-have for every design project. Something like this is what you should aim for.
Who knows, maybe your value proposition will be the next flashy example I can use in a blog post.
Summon your staff in a workshop room and follow the next six steps to write your value proposition.
1. Know your customer.
No need to jump on HubSpot’s Persona Creator tool just yet. Your value proposition is the starting point of a new idea, so I’ll forgive you for not having a fleshed-out persona just yet.
Right now, you just need to figure out who (very broadly) your customers are, what goals they have and what obstacles they’re facing.
Put on your deerstalker and light the pipe. You need to do some investigating because your customers won’t always just tell you what they need.
2. Know your offer.
To get to know your offer inside out, do a brain dump. Get the gears upstairs turning, pick up a pen, and write down everything that comes to mind about what you’re selling.
If you have a hard time getting the gears turning, here’s some lubricant oil:
- What does your product or service do?
- How does it do that?
- What can it do that’s not its main purpose?
- What elements of it are not necessary for its main purpose (e.g., the clipper on a ballpoint pen).
- In what situation do people use it?
3. Find your USP (Unique Selling Proposition).
Calling it a USP is a fancy way of saying…
What do you do that your customer wants, and nobody else does (as good)?
If you aren’t the only one selling what you’re selling, you need something else to set you apart from your competition.
Before I tell you how to find that something else…
A short story about the greatest USP ever.
Avis used to struggle as the second-largest car rental service in the US. When they hired the famous ad agency Doyle Dane Bernbach, Avis was close to going bankrupt. Hertz was dominating the market.
Avis put all its hope into Doyle Dane Bernbach, and DDB delivered. They came up with the campaign that would triple Avis’s market share in just four years.
We’re only number 2. So we try harder.
With this USP, Avis turned their pain of being second into a unique advantage. From this USP spawned amazing headlines like:
“Avis can’t afford not to be nice.”
“Avis can’t afford to make you wait.”
Today, Avis is alive, kicking, and stronger than ever. One could argue that it was the “We try harder” campaign that saved it.
Back to you.
Are you ready to find your USP? Yeah? Let’s do it.
- Get the list of your customer’s main goals.
- Make a list of your top competitors.
- Create a matrix with those two dimensions.
- Fill the matrix with your competitor’s products that fulfill your customer’s goals.
- For each cell, find your unique angle that gives you an edge over the competition.
I read a story about a 12-year old girl that used to babysit for $5 an hour (just like all her friends). With one little tweak, she raised that rate to $20 AND got more calls than before.
How’d she do it?
She didn’t just look after the kiddos, but she promised a top-to-bottom cleaned house by the time the parents got back—including the laundry and dishes.
She was the only kid to offer that all-around service.
4. Write your value proposition (without the Value Proposition Canvas).
In his book, Crossing the Chasm, Geoffrey Moore tells us about an easy-to-follow template used by many Fortune 500 companies. He calls it the value positioning statement.
For (target customer) who (statement of the need or opportunity), the (product name) is a (product category) that (statement of key benefit – that is, compelling reason to buy). Unlike (primary competitive alternative), our product (statement of primary differentiation).
Here’s an example of how that value position statement framework looks in action.
For IT entrepreneurs who need to find financing opportunities, the SIP is a coworking space that helps them connect to the right people. Unlike traditional coworking spaces, we have in-house accelerator programs and a network you can use to find investors.
If that made you want to become a resident at the SIP, mission accomplished.
Let’s put the pieces together and get you a value positioning statement just like this one. Got all your notes?
- Who your customer is (see: “1. Know your customer”).
- What your offer is (see: “2. Know your offer”).
- What differentiates you from your competition (see: “3. Find your USP”).
All that’s left to do is filling in the blanks of the value positioning statement template and you’re done. Easy, right? That’s because you’ve done the hard work in step one to three.
If it’s still not easy, reach out and let us help.
5. Revise your value proposition with mockups.
You wrote out your value proposition? It’s crispy clear, simple, and specific? I’m proud of ya! You’ll have fun with what comes now.
Slap your value proposition on every possible surface (as a mockup).
Test how it looks on billboards, brochures, business cards, social media posts, websites, and even your favorite mug.
Your value proposition needs to work outside of your lab. People walking past a billboard should immediately know what it says. It should make your website visitors want to keep scrolling. If I scroll past it on Instagram, it should make me want to follow you.
If you feel like your value proposition ticks those boxes, it’s time to let the world see.
6. Test your value proposition in the real world.
Start small by sharing your value proposition with your network. If you get good feedback, start using your value proposition in your ads and on your website, especially where you want the reader to take some form of action.
If it gets more action than before, you’ve done the job. Congrats! If it doesn’t get more action, it’s time to go back to the drawing board and start over at step one.
Bonus tip: If you have found more than one value proposition you like and you can’t decide which one to put out there, launch a small ad campaign on social media. The ad with the most results will be democratically voted to contain the best value proposition.
What to do with your value proposition.
Your value proposition is central to your marketing strategy and your brand. Management, marketing, sales, and product development should all be aligned to it.Adrian Sprenger, Entrepreneurship Manager
Remember, with your value proposition, you promise a specific outcome for those using your product or service.
Your value proposition is a powerful tool to help you make decisions for your company. If the decision you’re about to make doesn’t serve your promise, don’t make it.
On the outside, it’s what will make your potential customers choose your solution over that of your (obviously inferior by a long shot) competitor.
You can (and should) use your value proposition in your elevator pitch, on your website, in presentations, on brochures, and even on business cards. Your value proposition doesn’t always need to be written out. Depending on where you put it, you’ll need to shorten it, and that’s okay.
Here’s what our value proposition at the SIP would say if we hung it in our coworking space entrance: “Where important people meet.“
Now, get creative and use your value proposition for internal development and external communication wherever you can.
If you’re struggling with finding new customers, read our definite guide to finding new customers.