Building A Value Proposition For Startup Brands

Thomson DawsonOctober 15, 20134 min

For many startup CEOs in their first and second rounds of funding, their focus is usually on product development rather than creating a value proposition that will form the strategic direction of their fledgling enterprise.

Your value proposition is not about the products or services you sell. Your value proposition must articulate a highly valued outcome the customer desires. Think of your value proposition as a “castle in the mind” of your customers and clients.

In every business category today, more businesses are being commoditized by the sheer abundance of choices customers have. This is true if your business sells products or provides services. This is true for businesses large and small.

Customers have abundant choice. It’s customers who decide who leads and who follows. When customers have abundant choice, the competition is always fierce. Those entrepreneurs who eventually grow up to dominate their market represent a compelling “idea of value” in the minds of customers that is simply not available from the alternatives in the category.

Here are some fundamental questions that will require you answer with clarity of vision and confidence in your actions if you are to create “competitive advantage” to your business from the value you bring to the marketplace:

•  How do you differentiate your enterprise in ways that matter to your customers?

•  How do you command premium prices and greater profit margins when everyone else is fighting to break even?

•  How do you gain radical advantage over your would-be competitors in an ultra-competitive marketplace?

Customers care about their desires and outcomes far more than the functions of your products and the details of your services. It is of critical importance for startup CEOs to understand this distinction. Your value proposition is more about beautiful castles (outcomes) rather than bricks and mortar (your products and services).

Remember buying is an emotional decision too, not simply made out of necessity or convenience. The more emotionally engaging your value proposition is, the more competitive advantage you’ll gain in your marketing and sales activities. To build castles in the mind, you must focus on uncovering ideas and insights on what clients and customers care about most.

Product features, claims of expertise and quality delivery are table stakes. Not enough to distinguish the real “value” and promise your enterprise makes to customers. When there is abundant supply, customers need something more than superficial claims to make purchase decisions, and more importantly, become loyal advocates of your business.

A value proposition is a simple statement answering the question of why should a customer do business with you. There are the six pillars that startup brands must consider when creating your value proposition to customers and clients:

1) The Target Audience

You must identify the attributes that define the ideal customer segment your business serves. What attributes comprise your ideal client or customer? What are the specific factors that determine who your ideal clients? It could be any number of attributes like: industry, location, size, attitudes, motivations and demographic descriptions. You must define those people who closely represent your most fervent customers and clients.

Defining these attributes will allow a prospective client on the receiving end of your marketing and sales conversations to determine “check, they work with companies like ours or people like me”.  More importantly you have a specific and well-defined target to aim your marketing at.

2) The Customer Need / Business Problem

You need to consider the specific ways your products or services fulfill customer needs. Customer needs are often unspoken. For example, customers weren’t expressing a need for Apple’s iPhone. However once realized, customer’s couldn’t live without it. What needs do you fulfill that are unrealized by your customers, and once revealed to them, will have them standing in line to do business with you?

Knowing how you help your ideal customers understand the context that enhances your relevance to their needs is a critical element in creating your value proposition that enhances your competitive advantage.

3) The Value Of Your Solution

What are the functional and emotional benefits customers receive from your products? What is the business value of your solution to your clients? You must always provide more “use value’ in the mind of your customer than they pay you in cash value. This will make your price irrelevant and enable your business to command premium prices. If you need an example of this principle at work, look at the success of startup brands like Netflix and Zappos.

This will help your current and future customers and clients realize WHY they should fulfill their need or solution by purchasing your products and services.

4) Your Products And Services

Notice that your products or services are not the first order of importance here. Your offerings do not lead your value proposition. We are taking a customer-centric approach and framing your offerings within the context of the needs you help your customers fulfill, or the solutions you provide that improve the client’s condition. It’s about providing outcomes (experiences) customers love!

5) The Reasons To Believe

How do you substantiate your claims? How do you deliver what you promise? How have you demonstrated your products and services work for customers and clients?

You must prove your value by providing compelling reasons to believe. You can use stories, case studies, testimonials and any number of methods to provide proof your offerings deliver on the value promised.

6) The Point Of Difference

Why are your products preferable to other alternatives available? You must have a compelling, emotional benefit that is highly valued in the minds of customers and clients and difficult for your competitors to match. It’s not enough to be different for difference sake. Your difference must also be highly valued!

These six pillars form the DNA of a value proposition statement that will drive your product development, enterprise capabilities, company culture, marketing communications, sales conversations and most importantly–your organization’s behavior in the marketplace.

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