How to create the effective value proposition

What is a value proposition in business? How to convince a customer to pick your offer and achieve a competitive advantage? You can find the answer to these and other questions in our article.

Effective value proposition – table of content:

1. Definition
2. Mechanism that has never been as important as it is today
3. What to focus on?
4. What does a value proposition canvas diagram look like?
5. Value proposition design: product representation
6. Examples

Definition

Why is the recipient willing to enter into a transaction with you and spend a certain amount of money on the product you offer? The answer to this question is the value proposition: a proposition that convinces the potential consumer that what your offer is better than competitors’. However, achieving competitive advantage is a multi-step process with many hurdles to overcome. Today, let’s see how to develop an effective value proposition to influence that advantage for your benefit.

Mechanism that has never been as important as it is today

The process of computerization of our societies has resulted in an incomparably wider range of opportunities for the customer to make choices than it was at least a dozen years ago. Companies offering specific goods must therefore react much faster, formulating and verifying the created values – practically in real-time.

For a significant number of customers, the value proposition is the first differentiator that convinces them to use (or not use) a product. This is not easy, as the potential consumer’s attention is fleeting. According to psychological mechanisms, the cognitive effect lasts only a dozen or so seconds – during this time the seller must “captivate” the recipients and encourage them to purchase or at least check out the item.

What to focus on?

The value proposition is a concise, structured set of the most important information, arranged in a single file. It should always have an unambiguously positive overtone: it must be created in the language of benefits, highlight the company’s strengths, and convince of its competitive advantage.

In any business model, you should start by defining the target audience and which values constitute major factors that convince potential customers to take advantage of your offer. One way to embed the proposition in a viable business model is to create the value proposition canvas. It functions as a useful tool designed to define how a company creates and shares value.

What does a value proposition canvas diagram look like?

The value proposition canvas consists of two separate areas: the value proposition and the consumer segment.

The design of the value proposition should begin with an in-depth analysis of the target audience. It is a way to understand:

• what goals the customer wants to achieve by using a particular offering;
• what types of needs arise for the customer;
• what negative aspects (pains) appear in the consumer’s decision-making process;

The analysis of these aspects will reveal all positive as well as negative perceptions of the recipient that arise during the planning and implementation process. They will also help identify issues that have an unambiguously positive impact on the process. This is because the customer value proposition should influence:

• the emotional sphere (the joy of purchase, the prestige of having a particular thing);
• the rational sphere (the possibility of saving, reducing expenses);
• the sphere of enrichment (benefits obtained, the chance to increase profit).

Value proposition design: product representation

Another aspect of creating a value proposition is related to highlighting the most important features of the product. It is useful to list all items (intermediates and products) that will be included in the value proposition. The customer value proposition will focus on two things: reducing the disadvantages or enhancing the advantages of the goods.

Reducing “pain” – does the product invoke negative feelings? Does it increase the risk of bad, from the consumer’s point of view, outcomes or emotions?

Appealing to the benefits – what perks come with the product? What kind of emotions does the offer evoke? In what ways is it beneficial to the consumer?

Creating a value proposition in a canvass-based model is an excellent starting point for developing extensive concepts in the future. It does not immediately require the creation of an entire business model. It is an intuitive, quick, and reasonably easy to construct blueprint based on the two primary determinants that drive the customer’s decision-making process: benefits and pains.

Examples

“The e-commerce platform made for you. Whether you sell online, on social media, in-store or out of the trunk of your car, Shopify has you covered.” – Shopify

The value proposition created by the e-commerce platform Shopify focuses on highlighting the advantages associated with the site’s universal appeal. Using simple wording, Shopify caters to both big players and startups selling their products on a small scale. Shopify also emphasizes security issues, which are extremely important when it comes to selling online.

“Welcome to the world’s most popular website builder. 39% of the web is built on WordPress. More bloggers, small businesses, and Fortune 500 companies use WordPress than all other options combined. Join the millions of people that call WordPress.com home.” – WordPress

The value proposition formulated by WordPress focuses on customer needs. The site visitors immediately know that the service enables them to create their website easily. The advantage of the product is emphasized, setting it apart from the competition Also, WordPress considers itself the most popular website building platform in the world, which even further strengthens its appeal.

If you run your own online store, check out how to create product description for an e-store.

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