The Simple Formula of Value Propositions

3x3

Stage 2 companies must already have a clear and compelling value proposition if they’re successful enough to have grown out of start-up, right?

Well, yes and no.  They do have enough traction in the marketplace to show that they have a value proposition that works.  But it’s actually unlikely that the company has a systematic way to communicate the value proposition.  And if that is the case, it will find that revenue growth is harder and harder to achieve – and in a competitive market, the company may start to lose ground to other companies who are communicating their message better.

What should a value proposition look like?  When I started out in marketing, I worked with an excellent marketing agency, who explained that the “brand positioning statement” should follow a classic formula of, “For [market segment], Our Brand is the [product category] that [customer benefits] by [points of differentiation].”

So, for a clear and compelling value proposition, you need:

–          A clearly defined target market segment or customer profile – is it marketing directors who work with global brands, or owners small businesses in cities, or…

–          A definition of the product category – the marketing agency I worked with explained that orange juice could be defined as a breakfast drink or as a health drink, so picking the product category has a big impact on how the product itself is perceived

–          A description of the customer benefits – what are the pains you alleviate (lost revenue, production downtime, etc.) and gains you enable (new revenue sources, talent retention, etc.)

–          The points of differentiation – choosing from all the ways that your product works or the ways you deliver your service, what are the ways that set it apart from the competition?

Once you have your value proposition, make sure you reinforce it with everyone in your company, and you use it to focus your marketing and sales messages.