A step-by-step guide to defining your unique value proposition
When it comes down to it, your business exists to deliver value to your customers. If your customers don’t value your product or service, they won’t buy it. To succeed, therefore, it is critical for your marketing team to have a deep understanding of the value proposition of each product or service you sell.
What is a value proposition?
The Merriam-Webster dictionary offers the following (among others) definitions of value:
Value: The monetary worth of something
Value: Relative worth, utility, or importance
So, what is a value proposition? Price (monetary worth) is an expression of the relative worth or importance of your product or service to customers. Your value proposition captures and expresses what your customers value about what you are delivering to the market. Your brand message is how you communicate this value to your target audience.
We believe that value is not the same as utility. Many marketers feel very comfortable talking about what their product or service does, how it works, what the features and functionality are. What they often overlook to their peril, is why their customers should care. What transformation are they enabling for their customers? How will their customers be better off after using their product/service?
Do I care more that your team has 16 patents between them or that your product saves me time by reducing the steps it takes me to complete a time-consuming task. Am I moved by the fact that your product has 3 features more than your competitors or that it puts more money back in my pocket?
PRODUCT LAUNCH FACTS AND FIGURES
According to Harvard Business School professor Clayton Christensen, each year more than 30,000 new consumer products are launched and 80% of them fail.
On average, the cost of launching a new product is in the neighborhood of $15 million.
Eighty-four percent of customers say it is somewhat or very important that the company they buy from is innovative.
Why do products fail?
Failure to understand customer wants and needs
Fixing a non-existent problem
Targeting the wrong market
VALUE PROPOSITION DEFINITION
Value is always relative
In the second value proposition definition offered by Merriam-Webster, we focus on a key phrase: relative worth. Your value proposition should always be an expression of the unique value you deliver relative to alternatives available to the customer. That’s is why some marketers refer to it as a unique selling proposition. Your unique value proposition should be a key part of your strategy to differentiate from your competitors.
What this means is that discovering your value is more than a bake-off with your competitors. It is not enough to create a feature matrix and then check off which features your competitors have. Rather, it is about understanding if you are offering more of what the customer values. How you deliver that value is of lesser interest to the customer. It is also important to understand if your value drivers are defensible or easily replicable by competitors. Price, for example, is not a defensible differentiator and competitors can easily reduce their prices as well.
Discovering your differentiated value is more than just a marketing exercise. It should be the foundation of your product/service development strategy too. It requires your team to understand what your competitors offer and how it is valued by their customers. Then, explore how they communicate this value to their customers on their website and other external messaging platforms.
CREATING A VALUE PROPOSITION
Is there a problem?
Research shows that new products fail when they don’t fill a real customer need in the market. Considering that a study from Harvard Business School estimates that 95 percent of consumer products fail, the price of not identifying a real customer need is extremely high.
Developing a unique selling proposition, therefore, requires a deep understanding of the target customer and the meaningful problems they face. If your product or service doesn’t solve a real problem for them, they will not value it.
In our work with clients, we are always surprised how challenging it is for marketing teams to answer the question: “What problems does your product/service solve for clients?” Nine times out of ten, the response we get is something like: “We help them do X.” When we push back and ask what problem this solves for the client, they get visibly uncomfortable. It often takes multiple attempts to get them to get to the crux of what the actual problem is. This is why it is often extremely helpful to bring in an outsider to guide your team through this process.
The challenge is to put yourself in your customer’s shoes and experience the pain and frustration they are feeling by not having your product or service. How is not having your product stopping them from succeeding?
At Sugarbird Marketing, we have created the following problem statement for our brand messaging services: