How to Develop a Value Proposition for Your Business
What a business value proposition is and why it is important
Your value proposition is the promise you give to customers that you will deliver something of value to them. It's a statement that explains: (1) the benefit you offer; (2) who will benefit; and (3) why you are the best choice to deliver that benefit.
What Is a Value Proposition in Business Development?
As you develop your business, your value proposition defines both the purpose of your business and your relationship with your customers. It should be clear and concise.
To create an effective value proposition, you need to know and understand your target demographic. Ask yourself:
- Who are your customers?
- What do they care about?
- What problem do they have that you can solve?
- Why are you the best business to solve that problem?
- What benefit will customers gain from working with you?
Once you understand your customers' needs and values, you'll be able to create a value proposition that appeals to them.
Why Is a Value Proposition Important?
Your value proposition doesn't need to be something you share directly with customers, but it should form the basis of every product or service you create, as well as all your marketing strategies.
For example, if you are a sales consultant, your value proposition could be:
Clients who work with me grow their business, large or small, by a minimum of 30% a year. They accomplish this without working 80 hour weeks or sacrificing their personal lives.
This type of value proposition, which includes clear results that benefit customers, can serve as a guide for your business decisions. It tells you what type of services you should be focusing on, what clients you want to work with, and what important information your marketing should include.
The Three Parts of Your Value Proposition
A value proposition is made up of three components:
- Your target customer. Define the people who will benefit from your services, including their values and needs.
- The problem you solve. What solution are you offering? How will this solution impact customers' lives?
- What sets you apart. Why should customers choose you instead of a competitor? Consider your experience, price, results, connections, or any special skills.
If you are having trouble creating your value proposition, you may need to conduct market research in order to better understand your target demographic.
Test Your Marketing Proposition
A clear value proposition can help your business grow. But one that is too vague or confusing can lead to wasted resources, unclear messaging, and miscommunication with customers.
To create an effective value proposition, ask yourself:
- Is it relevant? What you are focusing on should matter to your target market.
- Is it believable? Your message should be not only compelling but realistic.
- Can you defend it? You must be able to offer proof that backs up your statement.
- Is it flexible? Leave room for your business to grow and change without losing ground with customers.
- Is it emotional? Your prospects and customers have to connect with you emotionally in order to feel compelled to make a purchase.
For every business, understanding both your own goals and your customers is key to creating a value proposition that positions you for growth.