While building out a marketing or sales plan, chances are you’ve encountered the term “value proposition” and the urgent need to craft a spectacular statement. It may seem simple, yet there are thousands of articles and experts working to explain and exemplify the term, because, as you guessed, it’s not as easy as it seems. Although writing a sentence or selecting a few words to represent your business itself isn’t difficult, summing up the entire essence of your company that guides your communication strategies is all but simple.
In the entrepreneurial journey, grasping the potential of a well-implemented value proposition can be a game-changer, but what about four types of value propositions? This critical piece of business jargon represents more than a common buzzword; it's the cornerstone of how a product or service resonates with its intended market. For entrepreneurs and small business owners, understanding and articulating compelling value propositions is not just beneficial—it's essential for carving out a niche in today's competitive landscape. So, what is a value proposition, and what are the four types?
The Buzzword Breakdown
In every Kill the Jargon (KTJ) article, we’ll simplify the word or term by explaining it in layman’s terms, provide business case examples, and underscoring why your business will benefit from understanding and implementing the term. Our KTJ series aims to help you comprehend and execute important, yet commonly misunderstood business terminologies, because in order to fully adopt these specific ideas or concepts, it’s imperative to first know what it. Trying to build something without knowing what you’re creating first is like building a house without a blueprint: it may work if it’s just a birdhouse, but that Beverly Hills mansion always has a master plan.
To understand a value proposition fully, it’s important to identify how it fits into the grand business plan. Although under the marketing sector, the value propositions drives all communication both externally and internally, informing your target audience, but also aligning your team in the direction your business is moving. Understanding your business is one thing, but being able to communicate it outwardly is crucial to ensuring your company stays afloat.
What is Value Proposition?
Definition
A value proposition articulates the unique value a product or service provides to its customers, distinguishing it from competitors. It is a clear statement or list of words that articulates how a product solves customers' problems or improves their situation, delivers specific benefits, and resonates deeply with them, expressing why they should buy from your company instead of the competition.
Essentially, it is the promise of value to be delivered and a belief from the customer that they will experience your promised value. It answers the question, “If I am your ideal customer, why should I buy from you rather than one of your competitors?” (MECLABS Institute) To make matters a little more complicated, there are actually 4 tiers to value propositions creation: primary, prospect-level, product-level, and process-level.
Commonly, you will see value proposition referred to in the primary sense, and occasionally the product-level sense, but rarely will you see them articulated as such, which can be more confusing than helpful. Marketing expert and "How I Made It In Marketing" podcast host Daniel Burstein explains each tier and how they work together to hone in on articulating value to your target audience.
Keep It Simple
Imagine going on a run, and you come across two lemonade stands. One stand offers a special cup of lemonade that comes with a free cookie and promises you’ll feel super refreshed on that hot day. The other stand sells regular lemonade. The first stand's guarantee to make you feel refreshed and less “hangry” is their value proposition: a delivered value to you (the customer) that solved your problem. It's a way of saying, "If you buy our lemonade, we see and meet your need for a thirst-quenching, hydrating drink with a little snack just for funsies." So, a value proposition is like telling friends why they should choose your lemonade stand over the other one, because you offer something extra special that makes them feel better.
Business Case Studies
To see how an effective value proposition can influence a business, let’s take a look at 4 cases (including a blast from the past). We’re going to analyze Shopify, Evernote, Charity: Water, and . . . wait for it . . . Webkinz.
Business Case No. 1 Shopify: The All-in-One Platform
Shopify's value proposition shines as a beacon for new entrepreneurs overwhelmed by the prospect of starting a business. It promises an all-encompassing solution "from first sale to full scale," addressing the fundamental needs of starting, selling, marketing, and managing a business on a single platform. This comprehensive support system is designed to soothe the anxieties of starting a new venture, making Shopify an exemplary model of a clear and compelling value proposition.
Business Case No. 2 Evernote: Simplifying Organization
Evernote’s value proposition targets the universal desire for efficiency and organization without the hassle to help you “remember everything.” By promising a solution that saves time and boosts daily productivity, Evernote speaks directly to the needs of its users, offering a seamless way to organize notes, ideas, and tasks across multiple platforms. This clear articulation of benefits, focused on solving a widespread problem, makes Evernote's value proposition a powerful example of understanding and addressing customer needs.
Business Case No. 3 Charity: Water: Commitment to a Cause
Charity: Water sets itself apart in the non-profit sector with a value proposition centered on transparency and impact. Promising that 100% of donations directly fund clean water projects, it addresses common concerns about how contributions are used. This commitment not only distinguishes Charity: Water from other organizations but also builds trust and encourages donations by aligning with donors' desires to see their contributions make a tangible difference.
![A screengrab of charity: water's homepage and their promise to use "100% of your donated funds [to] clean and safe drinking water."](https://static.wixstatic.com/media/cbb6b9_5d862c6773fe49d3a58720695e30ad38~mv2.png/v1/fill/w_980,h_716,al_c,q_90,usm_0.66_1.00_0.01,enc_auto/cbb6b9_5d862c6773fe49d3a58720695e30ad38~mv2.png)
Business Case No. 4 Webkinz: Pioneering the Virtual Pet World
We’re doing a throwback with this one. Who remembers Webkinz, the stuffed animals that came with a year-long access code to personify your fuzzy new friend online and engage with human friends virtually on webkinz.com? With the rise of the internet, Webkinz upgraded the value of stuffed animals. The specialty wasn’t just their ability to bring stuffed animals to life (virtually, of course); that would be their unique selling proposition (USP). Their value proposition was creating an immersive experience, being more than just a toy and more than just a game. This approach not only captivated their target audience but also created additional revenue streams through the sale of plush toys, in-game purchases, and subscription services. The success of Webkinz highlighted the potential of hybrid business models that bridge physical products with digital experiences, setting a precedent for the industry.
Impact on Your Business
Why is it worth taking the time to create genuine, effective value propositions? Well, the proof is in the pudding, except the pudding might be very old and very, very stale since it was whipped up in the early 1900’s. Research-based MECLAB Institute analyzed the history of value proposition, tracing the concept back to Walter Scott’s 1903 Psychology of Advertising book. The idea of differentiating your business from a competitor’s business to captivate ideal customers has been a vital point of entrepreneurial survival for centuries.
Bringing it into today’s timeline, remember that an effective value proposition aligns all business functions, both internally and externally. It is crucial to ensure everything produced by your company is in sync with providing consistent messaging, meaning your sales and marketing teams need to know what their content guidelines are for attracting ideal customers, as well as the customer service and product / service development teams to positively benefit those customers.
Still need more? How about seeing your value propositions engage and retain high-quality customers and politely dismiss those not in your target audience? A clearly stated value proposition identifies the customer’s problem or need, and concisely tells them how you’re the best solution. Remember, attention spans are short, so providing a distinct statement will help your target audience confirm that you’re their best fit, and let others know they may not find what they’re looking for with you (and that’s ok). After all, you began your business with those ideal customers in mind; help them find you and serve them well.
The Power of a Strong Value Proposition
Grasping the concept of a value proposition is more than a quick dictionary lesson; it's a strategic tool for powerful business growth. By clarifying and communicating your unique value, you pave the way for market success, differentiating your offerings in a crowded marketplace and building lasting, quality customer relationships.
The significance of a value proposition lies in its ability to convey the specific benefits a business offers in meeting its customers’ needs, making it an indispensable option in the competitive market landscape. These real-world examples serve as a testament to the transformative power of a well-positioned value proposition. For entrepreneurs and small business owners, understanding and implementing this concept can be the key to driving and securing customers, ultimately driving success.
In crafting your value proposition, consider the lessons from these examples: clarity, relevance, trust, and specificity. Putting all the pieces together, a well-crafted, personified value statement should answer the final question: "If I am Prospect [X, Y, Z], why should I [take specific action] in purchasing / using Product [X, Y, Z] from your business rather than any other options I have?" Whether offering a product, service, or cause, your value proposition should resonate with your target audience, promising them a solution that only you can provide.
If you found this "Kill the Jargon" article helpful, leave a comment telling why (or even why not), how you will implement value propositions in your business, or where you've seen the benefits of impactful value propositions. To share your thoughts, join our free membership and connect with other entrepreneurs. Discover more KTJ articles on its dedicated VTO blog post page.
About the Author:
Em is the co-founder of L2Business and Director of Communication. With a passion for writing and helping others, "Kill the Jargon" is Em's favorite L2 project. When she's not busy with the business, you can find her yelling at the TV watching her alma mater Texas Tech or any hockey game she can find. Let's connect on Facebook!
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