What is a Value Proposition? Definition & Examples

Arguably, a crucial component of your startup's overall sales strategy is its value proposition.

A value proposition explains to potential customers why they should choose you over your rivals and spells out the advantages of your goods and services upfront.

But a value proposition is not only for increasing the lead-to-customer conversion rate.

What other powerful effects a value proposition has and what a good one looks like, will be shown in this article.

A value proposition is a key concept in business that refers to a concise summary of the unique benefits that a company's goods or services provide to customers. Virtually, it's a statement of purpose that helps define a business both within its internal operations and the marketplace.

The term "value proposition" is believed to have originated in a 1988 McKinsey & Co. industry research paper. This paper defined the value proposition as "a clear, simple statement of the tangible and intangible benefits the company will provide, along with the approximate price it will charge each customer segment for those benefits."

In essence, a value proposition is a company's promise to its customers about the value they can expect to receive from its offerings.

The best product in the world can't be solved if the outcomes and benefits aren't presented.

The product might be destined to be ignored and undervalued if the value it offers isn't communicated, though.

The advantages that your product can offer customers are part of your value proposition. The various ways your product adds value to clients by taking into account the functional, symbolic, emotional, and economic value of your product, is what a value proposition should underline.

With considerable input from marketing, customer support, and sales, the product team should have a say in the process of establishing a value proposition. Everyone will be aware of the main points to concentrate on thanks to the combination of product and consumer viewpoints. PMs (product managers), in particular, should make an effort to participate in the refining process. PMs have the chance to offer input during this process regarding the values they believe to be most crucial.

Also, a clearly defined value proposition will give every department of your company a clear understanding of why their function is essential to satisfy your customers.

Be it the product development team, front-line service staff, customer service, etc., to understand what value it should deliver or for the marketing team, sales team, advertising agency, etc. to clarify how to communicate and represent your company - a value proposition is the definition of your company.

A value prop. is also vital since it facilitates critical business discussions, including how to target an offering. One of your most critical duties as a leader is to assist your team in saying no to all other customer profiles so they can say yes to the profile you serve the best.

From the investor's perspective:

As a startup, defining your product and making sure your consumer base requires it are two of the most crucial tasks you must complete. Direct communication with clients is the best approach to guarantee their requirements are satisfied. The next stage is to use that data to develop a value proposition that will help you clearly express the goals of your product AND outline the financial benefits.

The value props are the financial value, the intended use of the funds, and the anticipated outcome. main points.

Non-monetary benefits like sustainable, ethical, and responsible elements may also contribute to the value. When it comes to private equity investments, the offer is only sometimes as clear as it is in other situations, such as when it comes to secured loans or B2B financial products.

While some initial research will be necessary, you may start by talking to various team members about this component of the value proposition. SDRs, marketing people, and customer care representatives can fill in the blanks regarding the issues that your clients hope to fix by utilizing your good or service.

This part is mainly about listing all benefits your products have.

The benefits must be specifically collected for each of your products or services, helping to create a value proposition for single products or services straight to the point.

Next, you should make a connection between your customer's pain points and how your advantages can solve them. Each pain point should be solved for the benefit of your company.

You can write down the pain point and how it can be solved in 1 to 2 phrases.

Finish by refining your value proposition to make it memorable. Is there a certain customer service that only your company offers? Do you provide any extra services that other businesses charge for? While maintaining the focus on the buyer's demands, these components can assist in distinguishing your value proposition from rivals.

Once you are familiar with these procedures, you can quickly include them in value proposition templates by doing as follows.

To give you a better understanding of how a value prop. can look like, here are a few templates:

Instead of focusing on the features themselves, Blank saw the need to focus on the benefits derived from the features in a simple sentence. By following this formula, you'll connect the target market and their pain points to the solution:

"We help (X) do (Y) by doing (Z)"

Moore created a template that's more specific in identifying the industry categories alongside the benefits customers value. This makes a more clear value proposition formula as follows:

"For [target customer] who [needs or wants X], our [product/service] is [category of industry] that [benefits]"

According to HBS, a value proposition is executed best when it answers the following questions:

What is my brand offering?

What job does the customer hire my brand to do?

What companies and products compete with my brand to do this job for the customer?

What sets my brand apart from competitors?

Now that we've gone through the steps and templates to follow, here are some great examples of real value propositions:

Grammarly's value proposition is straight to the point regarding the problem they solve. Writing mistakes can happen to everyone and nobody can avoid them completely.

The heading is short and explains the benefits that you have when using the software.

Customers can easily use the company's product on the go because it functions in desktop programs and websites all over the internet.

They demonstrate how the technology simplifies writing tasks and boosts users' consciences when communicating.

Tortuga Backpacks serve ambitious travelers who dislike the idea of being burdened by cumbersome luggage. It is a travel bag designed for and by travelers. "Pack everything you need for your next big trip" is totally focused on the brand's key selling point: you can fit all of your travel essentials into one bag.

The value proposition focuses on something that is a big pain point for many travelers: paying for luggage that can only be used for a certain event. A hiking backpack is made to be comfortable but isn't suitable for business trips. Or a carry-on-sized back isn't made to be used for the mountains. However, Tortuga focused on creating an around a product that serves as many travelers as possible.

After the Apple AirPods were announced in 2016, memes and jokes circled around on the internet but over time these little headphones have become one of the best-sold apple products.

They have emerged as a surprise status symbol and a hit for the company. Customers line up outside Apple stores on AirPods launch dates as they do for new iPhones.

Apple could solve a common problem: The headphone cable was always a part of headphones that tended to get broken over time. Wireless Bluetooth headphones are the perfect solution if they can be charged on the go. Apple could provide these benefits and as the value proposition shows, these headphones can replace standard headphones seamlessly.

The value proposition shows the main benefits and is straight to the point.

GlockApps is an email deliverability tool for salespeople and marketers to check if emails are going to spam, to see the sender score, and more.

The problem is that emails are directly sent to the spam folder, which isn't uncommon. However, knowing when this is a problem is challenging if you don't know what to look for. You're missing out on tons of revenue by not making it into the inbox, but you remain unaware of it.

The value proposition shows the main tasks one can do with the software. All email service providers can be checked.

For those who never heard of the brand. It's a dutch bike manufacturer that created a unique, modern, and minimalistic designed E-Bike. To that, they created the VanMoof app, which is a perfect extension for everyone who loves technology or just wants to have all data in one place to experience the whole brand.

The value proposition shows the benefits of tracking and managing your bicycle in one place.

Often the little computer for tracking distance is not connected to the internet and is always separately mounted on a bike. The VanMoof app allows users to get all data from their rides sent to the VanMoof app.

VanMoof's value proposition allows the reader to recognize what else a VanMoof bike has to offer.

A value proposition is important for every organization to define itself internally and to present itself to the outside world.

Be it to get the interest of investors or to gain more customers, a proper value proposition is what makes your company stand out from the pack.

Creativity combined with a clear statement is what can make your value proposition unique and what stays in minds of people.

Sometimes less is more.

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