How do you write a winning value proposition?

An awesome value proposition identifies your target audience, gets their attention, and generates an emotional response to the product or solution you’re selling. Every company needs a value proposition; in fact, if your company has a broad range of products, then you might need many separate value propositions.

But how do you write a great one?

At last week’s Communitech Strategic Marketing P2P group, Cameron Hay (CEO Front Burner Consulting) spoke to the group about value propositions. It was a great session, and I took plenty of notes =)

What is a value proposition?

A value proposition is a short, memorable description of what you do and the problems you solve, and should immediately give prospects a reason to care and pay attention. It’s also instructive to consider what a value proposition is not: it is not a detailed description of your product’s specifications – many start-ups and engineering-driven (inside-out) organizations fail to appreciate this nuance.

A value proposition is focused on your target customer; it doesn’t need to, and probably shouldn’t, resonate with everyone. If it does, then either you haven’t sufficiently segmented your market (and your promotional and sales efforts will be dangerously diluted), or your value proposition isn’t precise enough.

Why you need one

There are at least three distinct audiences for a value proposition:

1. The Market: your value proposition generates interest and draws prospects into your sales funnel, creating excitement and garnering attention
2. Investors: your value proposition shows investors that you have a clear, focused understanding of your target customers and the problem you solve for them, and conveys that there is sufficient significance and urgency in the opportunity that it is worthy of investment
3. Yourself: your value proposition becomes a mission statement that clarifies why you exist and keeps the customer’s perspective at the forefront of your decision-making

That being said, you probably have many day-to-day activities that can benefit from having a value proposition… Just the other day we sent out a webinar invitation and used Geoffrey Moore’s positioning statement to craft our email.

…you probably have many day-to-day activities that can benefit from having a value proposition

Know your audience

Your value proposition should be based on a deep understanding of your prospects and what it is they’re trying to achieve. If you’ve done things correctly, then your value proposition will evoke an emotional response (e.g.,”I need that!”, “That will solve my problem!”) and draw them in. If you’ve done things really, really well, then your prospect will start paraphrasing your value proposition to their peers (likely more prospects).

To craft an awesome value proposition, you must know your customer…deeply and honestly. Get out of the office. Talk to them. Study not just what they say, but also how they act. You must understand how prospects would prioritize solving the problem you address: is it their number one priority? Number two? Will there be any money left over when they get to wherever you are on the priority list? How motivated are they to seek out your solution?

Again, many start-ups and inside-out companies err here: they assume that there is motivation to solve a problem, but maybe the problem isn’t urgent enough or big enough. Maybe your solution is a “nice to have”, but not a “must have”.

Finally, be honest with yourself when you’re assessing the market opportunity. Is the problem pervasive enough to be a worthwhile opportunity?

Once you think you’ve got an awesome value proposition, engage with your customers and put it to the test, and try not to be defensive if it’s not working. If you’re really talking to prospective customers, then their feedback is invaluable.

Once you think you’ve got an awesome value proposition, engage with your customers and put it to the test, and try not to be defensive if it’s not working. If you’re really talking to prospective customers, then their feedback is invaluable.

If you’re struggling…

If you’re struggling to create a compelling value proposition, then:

• Maybe you don’t yet really understand your target customer
• Maybe you don’t really understand their problem, their job, or their motivation
• Maybe your solution isn’t fully formed
• Maybe you haven’t figured out how your solution benefits the customer
• Maybe your business needs to shift
• Maybe there is no business in what you’re doing

Putting pen to paper fingers to keyboard

Cameron shared with us eight value proposition templates (I think I’d only seen three of these before, so was excited to see the others) to kickstart our value propositions:

1. Geoffrey Moore’s Value Positioning Statement
2. Venture Hack’s High-Concept Pitch
3. Steve Blank‘s XYZ
4. Patrick Vlaskovits & Brant Cooper‘s CPS
5. Dave McClure‘s Elevator Ride
6. David Cowan’s Pitchcraft
7. The VAD (verb; application; differentiator) approach
8. Eric Sink‘s Value Positioning

Geoffrey Moore’s Value Positioning Statement

Template: For <target customer> who <statement of the opportunity>, our <product/service/name> is a <product category> that <statement of benefit>.

Cameron’s example: For non-technical marketers who struggle to find return on investment in social media, our product is a web-based analytics software that translates engagement metrics into actionable revenue metrics.

I mentioned above that we used this template for a webinar invite…here it is: “Intended primarily for product users, the Sandbox Community Webinar series provides technical education and exclusive peeks into the latest releases to help you get the most out of your investment.”

Venture Hack’s High-Concept Pitch

Template: <proven industry example> for/of <new domain>.

Cameron’s examples: Flickr for video. Friendster for Dogs. The Firefox of media players.

Take note that this one requires familiarity on the part of the audience, and assumes they understand how the proven model will apply to the new domain.

Also, I caution you to avoid using the somewhat similar: Like <recognizable name> but better. I have heard this too many times.

You can find more information and some other great examples here.

Steve Blank’s XYZ

Template: We help X do Y by doing Z.

Cameron’s example: We help non-technical marketers discover return on investment in social media by turning engagement metrics into revenue metrics.

Patrick Vlaskovits & Brant Cooper’s CPS

Template: Customer: _____. Problem: _____. Solution: _____.

Cameron’s example: Customer: I believe my best customers are small and medium-sized business markets. Problem: Who cannot easily measure campaign ROI because existing solutions are too expensive, complicated to deploy, display a dizzying array of non-actionable charts. Solution: Low-cost, easy to deploy analytics system designed for non-technical marketers who need actionable metrics.

This one’s obviously a bit wordy and less pitchy.

Dave McClure’s Elevator Ride

Template: Short, simple, memorable; what, how, why; three keywords or phrases; no expert jargon

Cameron’s example: Mint.com is the free, easy way to manage your money online.

Note that the elevator ride assumes to a degree that you are already talking to your prospect.

David Cowan’s Pitchcraft

The ideas behind Pitchcraft are to highlight the enormity of the problem you’re tackling, to tell the audience up front what your company sells, to show differentiation, and to establish credibility.

Cameron’s example: One person dies of melanoma every 62 minutes. We offer a dermatoscope app for iPhone that enables people to easily diagnose their skin, leveraging patented pattern-recognition technology trusted by the World Health Organization.

Pitchcraft tends to be popular with highly complex and scientific problems, although I’ve seen it used on pitch TV shows like Dragon’s Den and Shark Tank for a range of products.

The VAD Approach

Template: verb, application, differentiator

Cameron’s examples: Share Powerpoint and Keynote slides including audio (Slideshare). Create and write blogs via email (Posterous). Make VOIP calls easily and cheaply (JaJah).

Note that the VAD approach assumes you’re talking to your prospects already, and that they implicitly understand your value.

Eric Sink’s Value Positioning

Template: superlative (why choose this product), label (what is this product), qualifiers (who should choose this product)

Cameron’s examples: The easiest operating system for netbook PCs. The most secure payment gateway for mobile e-commerce.