Last week at the Northeast Region Cleantech Open Academy in Boston I conducted a workshop entitled Smart Marketing for Startups. The focus was on crafting a value proposition. Although this was geared toward startups, having a strong and compelling value proposition is critical for all businesses, and for each product and service they sell.
Your value proposition is a statement that summarizes why a consumer should buy your product or use your service. This statement should convince a potential consumer that your particular product or service will add more value or better solve a problem than other similar offerings.
Source: Investopedia: http://bit.ly/valproposition
An effective value proposition will help:
- Attract customers’ attention
- Generate interest
- Establish credibility
- Grow sales faster and more profitably
So, how do you generate an effective and compelling value proposition?
The first step is to select and focus on a target audience. Consider all your target audiences. How can you categorize them? How can you prioritize them? I recommend analyzing your target audiences in terms of two schemas:
- Importance / Performance Matrix
- SWOT Analysis
1. The Importance / Performance Matrix
The Importance / Performance Matrix compares customer priorities to your solution’s performance in terms of resolving those important needs. Clearly, you want to focus on customers who care the most about the things you do best.
Source: Institute for Manufacturing, University of Cambridge:http://www.ifm.eng.cam.ac.uk/dstools/choosing/import.htm
2. The SWOT Analysis
The SWOT Analysis is a strategic business planning technique that evaluates your Strengths, Weaknesses, Opportunities and Threats. Strengths and weaknesses are internal; opportunities and threats are external. It’s important to match your strengths with opportunities.
Traditional SWOT chart
SWOT / TOWS Matrix
|Opportunities||S-O strategies||W-O strategies|
|Threats||S-T strategies||W-T strategies|
- S-O strategies pursue opportunities that are a good fit to the company’s strengths.
- W-O strategies overcome weaknesses to pursue opportunities.
- S-T strategies identify ways that the firm can use its strengths to reduce its vulnerability to external threats.
- W-T strategies establish a defensive plan to prevent the firm’s weaknesses from making it highly susceptible to external threats.
Source: Quick MBA: http://www.quickmba.com/strategy/swot/
Value Proposition Worksheet
|We are better than alternatives, because…|
To complete this chart, please read the following guidelines. Once you have your value proposition, test it out with friends and with friendly customers and prospects, refine it, and use it to tell your story.
Value proposition worksheet guidelines
- What characteristics define clients or likely prospects?
- What is unique about them?
- What role(s) do they play?
- What are their titles?
- Who has the budget, authority, need and time frame for a solution?
NOTES: Each unique “client” set should have a separate chart. Pick one to start. Consider attributes that would be searchable in a database.
- What problems do they need to solve?
- What are the reasons to buy?
NOTES: After we have a list, we can prioritize the list. We may be able to organize the list according to categories of buyers within each client group.
- What does MY COMPANY/PRODUCT do?
- What are the steps in the process?
- How does it work?
NOTES: Describe solution in terms that address client needs or pain points. Use customer terminology (aka the “voice of the customer”).
WE ARE BETTER THAN ALTERNATIVES, BECAUSE:
- How is MY COMPANY unique?
- How is it better than existing alternatives and approaches?
NOTES: List top alternatives, including doing nothing. Who are key competitors? What do they offer? How else can people solve the same problem?
- How does MY COMPANY/PRODUCT directly address each pain point?
- What benefits can clients expect?
- What do clients say about how MY COMPANY has helped them?
- Have any 3rd party organizations certified or endorsed MY COMPANY/PRODUCT?
- Can we point to specific examples that demonstrate the impact?
- What are the anticipated results and benefits for the target customers?
- How can you prove the value?
NOTES: Use statistics and client testimonials, as well as patents and certifications. The results should be defined in terms that directly address client needs or pain points, using customer terminology and meaningful numbers. If you don’t have actual customers yet, consider putting together a few scenarios to demonstrate cost savings.
Once you have a value proposition you can proceed with the rest of your marketing strategy and plan. Happy marketing and happy selling!