How to Create Value Propositions that Win Early Sales
While established companies have familiarity and brand as a currency of trust among customers, a startup has to rely heavily on building trust through a strong value proposition that leaves the customer feeling understood and motivated to act. Therefore, value propositions are important for startups to win early sales. Developing a strong value proposition can be challenging. It requires a deep understanding of what a customer wants to accomplish and why it is important. Initially, a startup assumes answers to these questions of what and why, but they usually need to be tested and refined to find a scalable business model. This post will cover how to develop and test value propositions that win early sales.
What is a value proposition?
A value proposition promises customers or users what end outcome they will derive from using the product. Value propositions are not taglines; for example, Nike’s “Just Do it,” while catchy, does not specify the value gained by wearing Nike. Nor does it reveal positioning statements describing unique benefits compared to competitors.
“Value propositions are not trickery, they’re a chance to cut to the chase and give people what they really want.”
Value propositions succinctly summarize what the customer gets as a result of the product creating desired gains and relieving existing pains. The essence of every compelling value proposition is understanding what people want, and making it clear that you get where they’re coming from.
Why are they important?
Value propositions are important for a few reasons:
Build trust with customers
In the absence of familiarity and an established brand, a startup relies on demonstrating empathy with a value proposition that leaves the customer feeling understood. This empathy enables customers to feel confident in making a purchase. Customers make split-second decisions to click on an ad, continue a phone call, or bounce from a website. Having a strong value proposition that resonates with the customer is the difference between being noticed and being ignored.
Are the foundation for great design
A strong value proposition is the foundation of great design. Designers create better user experiences when they understand a customer’s desired outcome, the pains to be relieved, and the gains to be created. It gives them a clear vision of how a product will function and what features will deliver value. This clarity saves time and money in the design process due to fewer design iterations and not building unnecessary features.
Provide clarity across the startup team
A startup team is comprised of diverse backgrounds and specializations. Startups face the risk of teams working in silos or being misaligned on how value is created and delivered to customers. A strong value proposition can keep team members aligned in what value is being created for the customer and how. This ensures consistency across landing pages, digital marketing, sales conversations, and design.
Qualities of a strong value proposition
Simple
Keep value propositions to 10-14 words about the end outcome for a customer or user. They should not be overloaded with multiple features or benefits that dilute the message. Like classical novelist Miguel de Cervantes said about proverbs, value propositions are “short sentences drawn from long experience.” A deep understanding of the customer or early adopter will help to be concise. For example, Google Drive’s value proposition, Easy and secure access to all of your content, is concise and addresses the main problem: access to content and the main objection: security.
Empathetic
Creating a strong value proposition requires a clear picture of your target customers, the outcome they seek, and what is getting in the way of achieving it. The value proposition then takes all this and communicates with customers in a way that speaks their language. The value proposition for Clue, an app that helps women track their menstrual cycle, is Never be surprised by your period again. Although we don’t typically look at typeface in a value proposition, its use here conveys the frustration of being caught out at the start of a period.
Unique
To create value for customers, there needs to be something unique in the problems you are solving or gains you create. What is it about the existing alternatives that is lacking? Use competitors’ or customers ’ makeshift solutions as the basis for uniqueness. Navigation app Waze’s value proposition, Get the best route in real time with help from fellow drivers, highlights its uniqueness in how it crowd-sources valuable information in real-time to create better routes.
Valued
If we are saving time or money, what will customers do with those resources as a result? If we meet an emotional need, what does that help them do or become? If customers pay with their money or time as users, they need to get something important to them. Goodbudget’s value proposition, Budget with a why – Spend, save, and give toward what’s important in life, implicitly speaks value. It works because most people have strong opinions about what’s important in life and will experience emotions and imagery in response to the value proposition.
Here are some additional examples of great value propositions. Take a look at how they incorporate the four qualities.
Pitfalls in creating value propositions
Creating a value proposition can be tricky work. Watch out for these pitfalls:
Don't summarize the product
Value propositions are not a one-sentence summary of the product. Don’t describe the technology or functionality in the value proposition.
As an example, a wearable and app that measures fatigue among a company’s workforce should not use a value proposition such as a wearable that provides real-time data that indicates who is at risk for fatigue. It is best to emphasize delivering outcomes to customers and users. A much stronger value proposition would be Knowing where your fatigue risks are before work starts.
Don't use comparative statements about being better
There is a tendency to use comparative words in value propositions, such as faster, more effective, or more efficient. Using these words results in value propositions that are vague and not unique. They do not communicate value well and don’t define whether something is incrementally or exponentially better.
Using a dating app as an example, comparative words might result in a value proposition, such as a faster way to find a date or a more effective way of finding a partner. Now, let’s compare that to outcome-focused value propositions such as Meet the love of your life or Find your match for a wild night of sex. There is no comparison as to the clarity of what value is being promised.
Don't make exaggerated claims
Exaggerated claims (e.g. Best cup of coffee in the world) are problematic for several reasons. Consumers are less likely to believe exaggerated claims, so it immediately creates distrust, which is already scarce with startups. They are also an old form of marketing when messages were delivered to the masses. Marketing in startups is focused on niches. In this world, hyperbolic claims are generic and don’t make you stand out from the competition. If your competitors can make the same claim, you don’t have a strong value proposition.
How to test a value proposition
Developing value propositions can be challenging in the early stages of a startup, it is often an iterative process that requires testing with customers. Testing business ideas generally fall into one of two styles:
Discovery experiments that help to generate new customer insights
Validating experiments that test the validity of insights by achieving measurable customer results.
Discovery experiments are qualitative. Examples include customer interviews with open-ended questions or going to where your customer is experiencing the pain points and making observations on behaviour. There is a lot of content on designing customer interviews, and a good resource to start with is the book Talking to Humans by Giff Constable.
Validating experiments are quantitative and use clear calls to action to test behaviour. The goal of these experiments is for the customer to take a specific action to convert from an unaware prospect into a paying customer. Examples include A/B testing with ads, landing pages, buy-now buttons, and pre-sales.
Using the lean startup methodology, we validate the product before we build it. To do this, we run an offer with our early adopters. An offer is a stand-in for the solution that validates sufficient customer pull for that solution. The offer combines the solution's value proposition, price, and demo to achieve early sales. It is the real test of all the discovery and validating experiments done to that point.
As an offer promises value, the customer must trust that the startup will deliver the value and be motivated to act on the solution. The value proposition is a big part of creating that trust and motivation. For the startup to grow, it needs to make good on that promise.