What makes a value proposition compelling? Does it set you apart from your competitors? Is it unique to your market? As Jack Trout says, “Differentiate or Die.” A value proposition should be a clear and concise series of factual statements that show the tangible results of your products and services. It must be targeted to the customer. It’s not about the characteristics of your products and services, but how they meet the specific needs of your customers. In other words, the customer is the key to the entire process; therefore they drive the value proposition.
So what makes a compelling value proposition? We believe there needs to be three key components for developing a value proposition that gets the customer’s attention.
First, your value proposition needs to be specific. What you uniquely claim that set’s you apart from your competition? Everyone talks about increasing revenue, decreasing costs and improving customer retention, but what makes you different. What do you specifically deliver that the customer will see as a benefit to their business? Here is what Dell has put together:
Dell Computers began with a unique value proposition that it would custom build a computer, exactly as and when a customer orders it, and deliver it at a very competitive price, because it’s “just in time” system eliminated the cost of overhead and mistakes in calculating demand.
Dells makes their value proposition specific by talking about the uniqueness of their just in time system which has set them apart from their competition by delivering exactly what the customer wants and when at a very competitive price.
The second component of your value proposition needs to be targeted. Who are you addressing? Are you trying to go and inch deep and a mile wide or a mile deep and an inch wide. Can your products and services be for anyone as Wal-Mart touts- Everyday Low Prices? Or are you addressing a very specific market niche like BMW- The Ultimate Driving Machine? As we said early it’s all about the specific needs of the customer. Do they have a need for low prices (what they value) or prestige (high price and luxurious as a BMW)? Again, knowing your target audience is critical to your success by understanding it’s not about selling your products and services as much as it is about meeting your customer needs.
Other great examples of companies that were targeted in “7up- The Uncola”, McDonald’s-consistency, Avis- “We try harder”, and my favorite is Domino’s Pizza – “Fast delivery in 30 minutes or it’s free”! There is so much competition in the pizza business that in the Yellow Pages Pizza is its own category set apart from the restaurants, yet Domino’s targeted those that wanted their dinner immediately in less than 30 minutes. The funny thing is, in the beginning Domino’s tasted like wet cardboard. Getting fast was more important to the customer than good tasting pizza!
The third component of your value proposition is that it must be tied to your company’s strategy. You would be surprised at how many companies develop a value proposition without taking into account their strategic direction. Without a clear strategy you cannot define your value proposition. What many companies do is merely a positioning statement which does not convey value in the eyes of the customer. A great example of this is MasterCard. Many years ago their corporate strategy and tagline line was “Accepted Worldwide”. The convenience of using your card in Europe 40 years ago was a hassle with many of the credit cards and MasterCard addressed the need for hassle free charges around the world. As time moved on their strategic direction changed as the other credit card companies gained the same capability. Today MasterCard helps you achieve your dreams- “For Everything Else There’s MasterCard”.
Having a value proposition that is specific, targeted and tied to your company’s strategy is critical in capturing your customers.