crafting a value proposition
For a successful business, you need to get an idea of what your potential customers want and need, and then build something that addresses these needs. You also want to do so differently than your competition. How will your product be substantially better than existing solutions? Your value proposition answers that question.
Crafting a value proposition is a crucial step on the way to the success of your product and you might feel stressed by the task because you want to do it perfectly. Don’t worry - in this article, we’re looking at the most important steps in creating a value proposition and share a template that you can use as an orientation.
What is value proposition design?
Value Proposition Design is the process of visualizing, designing, and testing how you will create value for customers. It can help you by making the patterns of value creation easily visible. In the process, you can find out how you can directly target your customers’ most important jobs, pains, and gains.
It can also help to align your team and of course: minimize the risk of building something that nobody needs.
Value Proposition Design integrates with your business model creation (where you describe how your organization creates, delivers, and captures value) by focusing on the details of how exactly you are creating value for your customers - and how that differs from other solutions.
Definition of value proposition
A value proposition is what you expect to be the reason why customers will choose your product or service over another. It can be expressed as a clear statement or slogan that articulates the unique benefits and value that a product promises to its potential customers.
It answers the question, "Why should a customer choose this product or service over another?" by highlighting how the product addresses the specific needs of a customer segment, how it’s solving their problems, or how it’s fulfilling their desires.
You can also think of your value proposition as a set of opportunities you will address (as well as those that you won’t address).
Differentiating products in a competitive market
In a competitive market, you have to differentiate your product or service from others. You want your target group to know why they should choose you over other solutions. And you want to make sure that the thing you’re going to build actually matches the needs of your target group and therefore achieve product market fit.
A powerful tool that can be utilized in value proposition design, for when you’re planning to enter a competitive market, is the Value Curve Method.
You can use it to visually represent the relative value of different product or service offerings compared to competitors. The visualization as a simple chart helps you focus on the things that differentiate you from your competitors and develop a clear and easily explained value proposition.
On the horizontal axis, you have the factors that are important for your targeted customers, the needs they want to address, the pains they want to relieve. What you put here should be based on user research.
On the vertical axis, you put the score for each of the factors listed on the horizontal axis. The less a factor is addressed by the solution, the lower the score. When the solution solves the need/pain perfectly, the score is highest.
A Value Curve can look like this:
When you plot a graph for your own product/solution together with your competitors' graph, you can compare them visually, find strengths and weaknesses, identify your unique selling points (USP), and formulate your value proposition.
You can reshape your value curve, by asking yourself, what you can reduce, if there are factors you want to eliminate or raise, or if there is a potential to create something from scratch that does not yet exist.
Keep in mind that you don’t want to be the best at everything, but that you want to address the needs of your specific customer segment in a unique way — and better than anyone else.
How to craft a strong value proposition using a value proposition template
One well-known template is the Value Proposition Canvas from Strategyzer. It works best if you do a live workshop with your team. You can watch this short video about how to use the Value Proposition Canvas, to get a quick introduction. Another helpful template is the Problem Statement Canvas by Marius Ursache.
In this article, I’m sharing my own adapted template which combines the above-mentioned and some other influences into an easy-to-use table. It focuses on clearly matching problems/opportunities and solutions. It’s also easier to extend, because of the simple table format.
You can access my Value Proposition template on Googledocs and then copy, customize, and download it as needed.
If you don’t have much time, you can just go through the template and fill in the sections.
But if you prefer to have some more information, I’ll give you an overview here with a step-by-step process of using the template:
Define your target group
In this first step, you create the customer profile. You define the user segments that you will focus on, their jobs to be done, their emotions, and the (measurable) impact that their actions have regarding the job to be done. The goal is to find a group of people with specific needs that are not met.
Look at the status quo in the market
Here, you collect some context. What’s the market situation like? Who are the competitors? What are existing solutions and their disadvantages?
The problem space
In this area, you collect the problems together with the situation in which they occur and the pains they create.
In the problem space, it’s not just about problems. You also collect opportunities, together with the potential gains.
How do you discover these? In the beginning, you usually find the needs, problems, and opportunities by doing user interviews or conducting surveys. However, you can’t expect to know everything about the problem space before you start. You also need to make some assumptions. Later, when you start implementing, you verify them by building prototypes, testing, and iterating on solutions.
Why are problems and opportunities in separate sections? In this template, we divide them into problems (with a focus on concrete needs or pain points) and opportunities (focused on desires), to make sure we’re thinking of both the negative aspects that need to be fixed and the opportunities for exciting new solutions that positively improve the customer’s lives.
The solution space
Here, you collect solution ideas and connect them to the problems and opportunities which you documented in the problem space. How might they relieve the respective pains? How might they be a gain creator?
You should also note down the type of value you want to create here: if this solution might be a must-have (basic need), a performance benefit, or a delighter. These types of value are based on the Kano Model.
How to identify the types of value:
- must-have features are those that solve basic needs. Customers expect them and take them for granted.
- Performance benefits (or performance features) are where you start to differentiate yourself from your competitors. Customers value them and compare them.
- Delighters are solutions that can have the biggest impact in distinguishing your product/services from your competition and that are an important part of your value proposition. Customers don’t expect them but will notice, appreciate, and remember them.
Write down your value proposition statement
By now, you should have a good overview about what your unique solution you could offer to your target audience and how it will differ from the current solutions. You can summarize your value proposition in the form of a value proposition statement.
How are you unique? To answer this, think of the performance benefits and delighters that you identified. They will be the main ingredient of your value proposition. Write down, how your solution will address the core problem, provide distinct benefits, and outperform competitors.
In addition, you can use the value curve method (see above), if you want to thoroughly assess how to differentiate your product in a competitive market.
Examples of successful value propositions
Trello
This is one of my all-time favorite products for organizing my work and side projects. Their value proposition statement is "Trello’s boards, lists, and cards enable you to organize and prioritize your projects in a fun, flexible, and rewarding way." This captures with which solutions Trello is addressing the core problem of the target group (with boards, lists, and cards). Plus, they promise to do it in a fun, flexible, and rewarding way, which is their unique benefit. Trello was very successful in providing value and was acquired by Atlassian for $425 million in 2017.
Airbnb
"Belong Anywhere"
When Airbnb first started operating in San Francisco in 2008 they didn’t appear to be a competition to the mainstream tourism accommodation sector. Airbnb was catering to a niche market that valued the personal connection with the host and living in an authentic neighbourhood, whereas hotel guests preferred traditional hotel facilities.
However, with Airbnb's value proposition, which focuses on unique experiences and a sense of belonging, they were extremely successful and became a serious competitor first for low-budget and later for higher-budget hotels.
With their value proposition to “Belong anywhere” they promise to provide distinct benefits and their unique offer to travelers, who are looking for the opportunity to immerse themselves in local cultures by staying in unique accommodations.
Tips for testing and refining a value proposition over time
Using the value proposition template will help you start, but as you proceed in product development, you will need to iterate on it, to be successful in the long term.
For your product development, I suggest to adopt continuous discovery habits. Talk to customers every week. Collect what you learn and structure it, for example in the form of an Opportunity-Solution tree.
This way, you will continuously discover user needs every week. The Opportunity-Solution Tree by Teresa Torres can help you prioritize and continuously decide what to build. You pick opportunities that match your desired outcome, focus on one after the other by doing experiments, and continuously build and ship solutions.
As you talk to customers every week, you should regularly revisit your value proposition with the latest insights in mind and check if you need to adapt it.
Keep in mind that your overall goal is to achieve Product-Market fit and build the right features.
The value proposition must be supported by a profitable business model. So as you learn and adapt, both your value proposition and your business model might change.
Conclusion and key takeaways
A value proposition tells potential customers why they should choose your product/service rather than your competitors, and makes the benefits of your solutions crystal clear.
To be able to craft such a “crystal clear” value proposition, you need to invest some effort into figuring out how you will actually provide value.
It makes sense to start with the customer in mind. Imagine their situation, their tasks, their problems, and their emotions. Also, look at the status quo and analyze the context like competitors and existing solutions. What are their disadvantages?
Collect problems (pains) and opportunities (possible gains). And only then you should start to think about potential solutions, that you could build to address these problems and opportunities.
Make sure that your solutions don’t just address basic needs, but also contain at least one performance benefit and one delighter. Because those are what your value proposition will be made of.
You can also spend some more time comparing your possible solutions and features to your competition with a value curve, as a very direct and visual comparison.
Discovering user needs and finding solutions to actual problems can be fun - don’t be afraid to start and let my Value Proposition template guide you!
This post was first published on the Logrocket blog