"A value proposition is a clear statement of the tangible results a customer gets from using your products or services. It’s outcome focused and stresses the business value of your offering." — Jill Konrath

Characteristics of a Good Value Proposition

Basics

An effective value proposition is:

• Very targeted to the interests of the listener — it is not generic.
• Expressed in clear, direct language.
• Jargon free — it uses language the listener will understand.
• Unique in at least one area where you excel over your competition.

Making your value proposition more compelling

Studies have shown that sales materials have more impact if they include:

• Customer testimonials
• Reviews, reports, and articles by unbiased sources
• Names of well-known customers or sponsors
• Guarantees
• Have calls to action
• Added benefits like:
  • Free delivery
  • Free setup
  • No contracts
  • Unlimited usage
  • ... and more

It is a good idea to have a professional help you design your print ads and your web site.

Differentiating yourself

You will always have competition, so you need to distinguish yourself from them. You need to stand out. Take one or more attributes that you or your products/services have that separate you from the competition and emphasis those in your value proposition. The attribute(s) must be understandable to the target market — they must appeal to your target audience. For example, you could say "We are the  1st choice among gen-Xs" if it were true — this would appeal to those people who are part of that demographic. If your service or product is new, then you could emphasis the demonstrable savings. Your intent here is to "own" the distinguishing attribute in the target marketplace.

Being memorable

In sales materials, users hunt for facts and pay attention to:

• Research shows specific facts attract people's attention when related to a desired benefit.
• Headlines are the #1 thing that people notice on a website. — Eyetrack III
• Simple related visual elements such as graphics and pictures add to the impact of your material.

Approaches

There are two main approaches to creating a compelling value proposition. They are:

• Needs before benefits — Look at your target market and then define your benefits in terms that match their needs.
• Benefits before needs — Look at your benefits and then define your target market in terms of those most needing the benefits you offer.

Needs-Before-Benefits Approach

Defining pain points

Most people will act to avoid or minimize pain. What you want to do is identify your target market's main pain points to which you have a solution. In other words, mold your service or product in terms that they understand will reduce their pain. However, pain comes in different levels of intensity:

Pain Points (ordered from most to least compelling)

Type of Pain	Description	You have a solution
Is pain fatal?	Is the pain so serious that someone will get fired; the business will go bankrupt; or the problems prevent business from operating?	Recruit person most directly responsible as your evangelist.
Is the pain unavoidable?	Is the pain caused by a mandate from management or government?	Recruit person or group most directly affected as your evangelists.
Is solution needed urgently?	Is pain one that needs to be fixed as soon as possible; or is it one of the current  top priorities for the firm?	The top-level management will want to hear about your solution.
Are there no good solutions yet to the pain?	Are you the only one addressing this pain point?	If the pain is recognized as a problem, then the market should be ready for you.

Differentiating your solution

There are a number of things that help make your solution unique and compelling:

• Different viewpoint — Does your solution look at the problem in a way that is different from any of your other competitors?

• Is your solution patentable — This allows for better legal protection and increases barriers to entry by potential competitors.

• Disruptive technology — Is your solution so different that it offers orders of magnitude better performance or greater returns on investment?

Are you worth the risk?

Any time that you become the new kid on the block, you have a problem about credibility; and your solution has a problem about fitting into an existing ecosystem. Ideally, your solution should cause the least amount of disruption with the maximum amount of gain. Typically, a prospective customer is looking for a minimum 30% increase in productivity and similar reduction in cost. The greater this figure, the more likely you are to get a new customer. Of course, you need to deliver on your promise and hopefully exceed it.

If an investor is thinking of funding you, they typically want a 10x return on their investment. For Angel investors, this is over a term of 3-5 years. VCs typically allow for a longer timing horizon.

Creating your needs-based value proposition

Focusing on your potential target markets needs, the steps you need to take can be spelt out using the following table:

Steps in Creating Your Needs-Based Value Proposition Statement

Pain	Solution/Benefit Name	How it eliminates pain	What makes you different
Processing orders is killing us	Automated order processing	Integrating order entry with shipping automation.	Only integrated solution

Benefits-Before-Needs Approach

This approach is often used when you have a startup, without any real customers or clients. In this situation, you believe that you know the benefits you can deliver, but can not clearly identify the target audience who could best benefit from your solution.

This is sometimes called "A solution in search of a problem." However, this is often where the visionaries come into their own. The classic example of this is Steve Jobs who created the Mac, iPod, and iPhone before there was any demand for those products.

Defining Benefits

Suppose that you know that your manufacturing process offers greater speed, lower operating costs, and higher quality when producing widgets than anyone else. It does this by integrating three manufacturing stages that are usually separate steps when producing widgets. At this point, you need to find your target audience: manufacturers or potential manufacturers that would be interested in a more efficient and cheaper way of producing widgets.

The order of the importance of the benefits are subject to change because speaking to potential buyers you will get a better idea of what is most important to them: cost, speed, ease of use; manpower, etc.

Benefits (ordered from most to least compelling)

Benefit Name	Pain Addressed	Prospect
70% lower cost	High cost of producing widgets make it unprofitable to be in that market. This will force the manufacturing to be eliminated or shipped overseas.	Those already in the market; or those who would consider going into that market if the costs were low enough to be competitive.
3x production rate	Inability to sell in volume when production rate is so low.	Those looking to enter commodity marketing of product.
Better Quality	Quality of existing production methods have high a rejection rate, increasing the product costs significantly.	Those wanting to sell products to an "up-market" target audience who demand higher quality.
Second Supplier	Those needing to produce the product have second source for vital equipment, especially one that offers other benefits that the primary supplier does not.	Those manufacturers who have had cost, quality, or market constraints imposed on them by current technology and suppliers.

Differentiating your solution

Using this approach, you still need to differentiate your solution from your competitors as described in Differentiating your solution.

Creating your benefits-based value proposition

Focusing on the benefits you offer, the steps you need to take can be spelt out using the following table:

Steps in Creating Your Benefits-Based Value Proposition Statement

Benefit	Pain it addresses	How it eliminates pain	What makes you different
Automated order processing	Processing orders is killing us	Integrating order entry with shipping automation.	Only integrated solution

Resources

All of these links are of value to anyone interested in value propositions and other sales issues:

• Jill Konrath's Sales Blog
• Evidence-Based User Experience Research, Training, and Consulting
• Eyetrack III: What News Websites Look Like Through Readers’ Eyes
• The Art of Creating a Magnetic Value Proposition