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  • Writer's pictureMichael Campagna

6 Steps to Creating a Value Proposition That Sells (+ Examples)

When it comes to marketing your small business, it's vital that you have a clear understanding of the problem you solve for customers. More than that, you should be able to articulate the solution to their problem in a way that's clear and concise. That's where a value proposition comes in, and this article will break down the main ways you can go about creating one for your business.


selling a product

What is a value proposition?

A value proposition is a foundational element for any small business's positioning strategy. If you want your brand to stand out in the marketplace today, it is not enough to create the exact same product or deliver an identical service to that of your competition. You need to find an angle that sets your brand apart from competitors to a specific group of people.


Practically speaking, a value proposition constitutes the messaging framework that your brand will use in reaching your target audience. It will often be prominent on your website or your primary elevator pitch to customers when talking to them about your offer.


Ultimately, a value proposition is the primary differentiator of your brand, demonstrating its unique characteristics within a specific industry, to a particular type of customer, when compared to competitors.


In a world of small businesses trying to do everything for everyone, a value proposition will keep your business grounded and centered around a cohesive message, conveying your unique value to your target customers.


Why does having a clear value proposition matter?

A value proposition offers several distinct benefits for your brand.


First, a value proposition acts as a powerful qualifier for your business - it shows prospective customers what they can expect (and what they should not expect) from working with you. As we will discuss later in this article, this is an invaluable consideration that draws your ideal customers to your brand faster while saving you from wasting time on customers who were never really interested in your offer.


Additionally, a value proposition serves as a unifier for your brand's messaging and marketing efforts. Not only will your value proposition demonstrate your value to customers, it will give your internal team a centralized message to follow.


Lastly, a value proposition will be the main differentiator for your brand in the marketplace, demonstrating the ways your business is distinct from competitors. When new customers come across your brand and hear your message they should automatically understand the key distinctions between your company and your competition.


Let's take a look at a few ways this value proposition can be created for your brand.


1. Identify your target audience

The reason you develop a value proposition in the first place is to clearly articulate to your target audience what you do and how you do it better than the competition. If what you are saying does not speak to that target audience, they won't be interested in what you offer which will ultimately hurt your bottom line.


When determining whether or not to buy from you, your target audience is looking for a guarantee of value. Whether you are trying to sell them a new phone or an ice cream cone, there is a certain level of value expected for each that, if not achieved, will keep the customer from returning or recommending your product in the future.


The problem that many small businesses face is a lack of clarity around their value. They understand the ins and outs of the brand like no one else, but when it comes to their target customer, a myopic view of their business is keeping them from adequately communicating their value.


Think about some of the customers you have helped or worked with in the past. Why have they chosen you and why do they prefer your services over someone else? What do you offer that they will not find elsewhere?


While it might be intimidating to create a statement that draws some customers in while alienating others, that should be a relief to you as a business leader. It essentially means more time for you to focus on those customers who are interested in what you offer.


When it comes down to it, a value proposition should help to naturally narrow your audience for you. It should tell your prospective customers exactly what to expect from you, making it abundantly clear whether that is something that speaks to their need or not.


Key question: What motivates your customer base to purchase from you?


2. Analyze your competitors

It's not enough to be aware of the audience you serve, you also have to understand what sets you apart in the marketplace - why would someone choose you over the competition?


In their revolutionary book, Blue Ocean Strategy, W. Chan Kim and Renée Mauborgne take a different approach to positioning businesses in the marketplace. Instead of looking at your competition and trying to keep up with their strategies, they argue the effectiveness of carving out your own unique place in the market. Instead of competing in the "red ocean" which is overrun with competitors all fighting for the same customers, they look for the "blue ocean". The way this can be successfully done is through achieving two important characteristics: differentiation (something unique to your brand) and affordability (a product/service that is a cheaper alternative to the competition). By achieving both, they argue that your brand will create a market all its own, in the same way that brands like Cirque du Soleil and Salesforce have done.


By "coloring outside the lines" in this way, your brand can play by its own rules instead of fighting for the attention of your target market.


To identify a potential "blue ocean" in your industry, start by pinpointing the insufficiencies of your competition. This requires a deep knowledge of your target market and the things they value most.


Spend some time conducting a competitor analysis and find out what they offer (and don't offer) to their customer. By first analyzing your target audience and then the competition, you can identify the needs that your customers have and the ways the current competition is failing to meet those needs.


Key question: What is something your brand can offer that your customers won't find with any of your competitors?


3. Determine your unique benefit

Now that you know your target audience and your competition, it's important to identify the specific characteristics that set your brand apart.


Do you offer higher quality products? Something unique that customers can't find elsewhere? A faster delivery system? A more fun experience? Better customer service?


There are an endless number of possibilities, but at the end of the day, a value proposition is all about the superior characteristics of your brand that matter most to your target audience.



Brand Positioning Matrix
The Brand Positioning Matrix

One of the best ways to highlight your unique value in the market is to choose the top two qualities in which your business excels and to plot those on an x-y axis (as shown in The Brand Positioning Matrix above). Once you have created that, you can identify where your business falls on this spectrum (hopefully somewhere in the top right quadrant) and where your competition lands as well.


By highlighting two qualities instead of one, you differentiate your brand from a wide variety of competitors in the market who might excel in one area but not the other. On the other hand, if you continually highlight more than two qualities, you run the risk of creating something confusing for your audience.


This is the foundation of a good positioning strategy and will give your team (and your clients) a visual representation of the qualities you have chosen to prioritize and the ways you outperform the competition in those areas.


When it comes to choosing these two characteristics for your brand, make sure they meet the following two criteria:

  1. They matter to your customer base - without this, you will be frustrated by a lack of demand

  2. Your brand excels in those areas - without this, your customers will be frustrated by your inability to meet expectations


Example: Southwest Airlines

Southwest Airlines is an example of a brand that strategically positions its messaging in this way. The company markets itself as the airline with "low fares, no hidden fees, and exceptional hospitality." The first two would fall under the category of affordability while the third highlights their superior customer service.


Notice that they don't claim to be the fastest airline or the most luxurious airline. Sure, they might be as quick as any other competitor and even offer luxury options, but those are not the exceptional characteristics they are presenting to their customer base. They have established themselves (both internally and externally) as the affordable airline with superior customer service and make strategic decisions that align with those value propositions (see the diagram below).



Southwest Airlines Positioning Matrix
Southwest Airlines Brand Positioning Matrix

In a similar way, your goal should be to determine the intersection between your brand's superior qualities and what is valued in your target audience. Once you find that intersection, you can move on to the next step...


Key question: What is a guarantee that you can offer to your customers based on a need in the current market?



4. Construct a memorable message

Now that you have a general idea of the strengths of your brand relative to that of your competition, you can begin creating a message around those insights.


When it comes down to it, your value proposition is only as effective as the message you use to convey it. If you use insider language or unclear messaging, your target audience will usually not take the time to understand it and simply assume you are not a good fit.


Ensure that wherever your audience encounters your brand they see some variation of this message and understand what it is that you do better than anyone else. There are a few considerations to keep in mind when constructing a message that sells:


Use clear language

The goal of your value proposition should be to convey your unique benefit to your target audience as clearly as possible. Many small businesses will opt for catchy slogans to convey this message, and while slogans and taglines have their place, your value proposition is meant to provide clarity over anything else. After a customer hears your message, they should clearly understand what it is you are selling and see how that product or service can make their lives better.


Set specific expectations

What outcome can your customer base expect from working with you? As we discussed before, their decision to make a purchase is directly tied to the perceived value of your brand. Create a message that demonstrates that value and shows them the ways their lives could be better by choosing your product over someone else. At the same time, do not overpromise or make false claims about your expertise, this will only hurt you in the long run.


Demonstrate your differences

As previously mentioned, it is important to understand the unique differences that set your brand apart from competitors. While you do not have to mention specific competitors by name, your unique qualities should speak for themselves, demonstrating the ways your offerings are better suited to meet the needs of your target audience.


Example: Uber

As a company that has revolutionized the transportation industry, Uber is a unique brand to observe. A look through the homepage of their website will show their emphasis on availability (operating in 10,000+ cities) and affordability (with discounts prominently displayed online). While the nature of their ride-sharing services sets them apart from alternatives, like taxis or car rentals, highlighting these specific qualities differentiates them from more direct competitors like Lyft who tend to be more expensive and less available worldwide.


Key question: What statements, phrases, and specific words would show your customers your unique benefit and provide them a compelling guarantee should they choose to work with you?


5. Create a compelling offer

While a message will peak the interest of your prospective customers, a compelling offer will lead them to take a specific action.


Oftentimes that offer is a product at a discounted rate or even a free giveaway in exchange for their email address. The key here is to build trust with your customer base and to show them that your product or service quality aligns with the value guaranteed on your website and elsewhere. Your goal should be to determine the offer that will speak most directly to your customer base.


Example: Generation Tux

Generation Tux is a platform designed to make the process of buying and renting a quality suit or tux as convenient as possible. The homepage of their website promises to provide "The perfect suit or tuxedo. Delivered." By offering a free home try-on to every customer renting from their website, they allow customers to see their quality and convenience firsthand, before ever paying them a dime. Once prospective customers see how great their rental could look and how convenient the process is, the next logical step is to finalize their rental. This is a prime example of an offer that aligns with the value proposition of a brand.


Key question: What is a compelling offer you can provide to your customers that aligns with your value proposition?


6. Test and refine your value proposition

Once you have clearly articulated your value proposition and created a compelling offer, the only thing left to do is to test it out on your target audience. Ask for feedback from current customers, put variations of it on your website and socials, conduct surveys or focus groups, and use the feedback you receive to refine it.


As the interests of your customer base change, you should not be afraid to change your value proposition (and even your entire product) with them. The optimal product for your target audience will take time to develop. Lean into this process and relentlessly innovate around the unique benefits you articulated earlier in this article.


Key question: In what ways should your value proposition be changed or improved to better meet the needs of your customer base?



marketing plan challenge


Value propositions and innovation

Another benefit of creating a value proposition is that it will hold your brand to a specific, high level of value, leading to more innovation over time. Think about it, if your brand positions itself as the quickest delivery service in your industry (or in your area), that guarantee of speed will lead you and your team to try all of the fastest methods to maintain this level of rapid service. If you highlight your superior customer service, you will stop at nothing to provide a greater experience than that of your competition.


Value propositions are a powerful way to articulate your brand's internal and external standard of operation, who you are and who you are not.


Conclusion

In conclusion, creating a unique selling proposition is an essential part of any small business's marketing strategy. By identifying your unique benefit and communicating it effectively to your target audience, you can differentiate yourself from your competitors and attract more customers. Remember to keep it short, memorable, and test it out to ensure it resonates with your audience.

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