Why a customer value proposition is essential for marketing your business

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Posted by

Mar 3, 2023

It’s the raison d’etre of a business, answering the critical question of why a customer would choose your product or service instead of your competitors’ version. We look at how to write a customer value proposition, what makes a good one and why it’s an essential part of a business marketing strategy.

What is a customer value proposition?

The term ‘value proposition’ is thought to have been coined in a McKinsey & Co. industry research paper in 1988, which defined it as “a clear, simple statement of the benefits, both tangible and intangible, that the company will provide, along with the approximate price it will charge each customer segment for those benefits.”

A customer value proposition falls under the umbrella of value propositions but is more narrowly focused on the business’s ideal customer; those who are most likely to buy from you.

Essentially, it is the reason why a customer would choose your particular business above others. It communicates, in a few words, how a business idea will solve a customer’s problem or make their life easier, the specific value against customer need and why it’s better than what competitors have to offer. It is also a declaration of intent, both inside the company and in the marketplace.

What makes a good customer value proposition?

An essential element in a company’s marketing plan, a compelling customer value proposition highlights what makes a business offering stand out. Therefore it has to speak to the product’s target customer in a way that is relevant and appealing to them. It should address your ideal customer’s specific wants, needs and challenges and show how your product is the ultimate problem solver to make their lives easier.

“When crafted correctly, the value proposition can determine how your clients define your worth,” says decisionlink.com

“In the ever-growing business landscape, the competition gets fiercer by the day. Therefore, you need to come up with unique differentiators to convince your ideal customers to choose you above your competitors.”

A strong value proposition should be: 

  1. Relevant — says exactly how your company’s product or service can improve a situation or solve a particular problem for your customer.
  2. Different to all the rest — by clearly stating the competitive advantage that makes your brand stand out from all other alternatives available in the market.
  3. Quantifiable in value — by delivering distinctive and measurable benefits to your clients.
  4. Persuasive – helping to turn a prospect into a paying customer.
  5. Stand-alone – intuitive, so that readers or listeners can instantly understand the delivered value without further explanation.

As long as they are “on brand,” unique, and specific to the company in question, value propositions can follow a variety of formats. But importantly, they must be front and centre of your business, communicated to the customers directly by being placed prominently on your company website landing page or on other marketing and advertising materials.

How do I write a customer value proposition?

According to Harvard Business School’s Institute for Strategy & Competitiveness, one of the best ways to begin to write a customer value proposition is by brainstorming three key questions:

1. Which customers are you going to serve?

An effective value proposition must resonate with its intended audience, so start by identifying exactly who you want to sell to and put yourself in their shoes. Are they a high level executive or a middle manager? Knowing precisely to whom you are speaking will help you work out how to explain the specific problem your product or service solves. Each audience may share a similar need, but the solution they want may vary. 

2.  Which needs are you going to meet/which problems are you going to solve?

Be empathetic with your customer. Putting the problem the product will solve and how you will solve it into writing shows that you understand your audience’s needs and pain points and can provide the perfect solution. A potential customer can read your statement and self-identify if the product is right before contacting your sales team – so your sales team spends more time talking to prospective clients that are already interested.

3. What relative price will provide acceptable value for customers and acceptable profitability for the customer?

Most businesses will be up against competitors with similar products or services on the market. The value proposition is your chance to show why your product is different by communicating the benefit (or value) of your solution and why it is worth the price. For example, this might include how it saves customers time, is easy to integrate into systems they already have, reduces risk through guarantees or warranties, or offers unique expertise and reliability that your customer can trust.

How should a customer value proposition be structured?

In terms of how to structure your customer value proposition, Investopedia recommends crafting a strong, clear headline that gets across the delivered benefit to your customer; a single, memorable sentence, phrase or even a simple tagline. It might even incorporate catchy slogans that go on to become part of successful advertising campaigns

You can also add a sub-headline and images to expand on the explanation of the delivered value and give a specific example of why your high-quality product or service beats the competition. This is a way to bring across the key features or benefits of your product or service.

This kind of structure allows consumers to scan the value proposition quickly and pick up on product features. Companies will often conduct market research on the different options to determine which messages resonate the best with their customers.

Two great customer value proposition examples

1.       Uber:

‘Tap the app, get a ride

Uber is the smartest way to get around. One tap and a car comes directly to you. Your driver knows exactly where to go. And payment is completely cashless.’

This value proposition is simple, clear and effective. The problems of traditional taxi use – from waiting around until one comes along, having to hail it down, describing where you want to go and then fumbling with coins to pay – are effortlessly encapsulated within the solutions it describes.

2.       Slack:

‘A messaging app for teams who put robots on Mars!!

NASA’s Jet Propulsion Laboratory is one of tens of thousands of teams around the world using Slack to make their working lives simpler, more pleasant and more productive.’

Slack’s value proposition is simply that it makes users’ working lives ‘simpler, more pleasant and more productive’ – implicit are the pain points that many office-based workers face such as complicated diaries, switching between different communications channels and software applications and an underlying worry about their productivity. To top it off, it mentions one of its most awe-inspiring customers – NASA’s Jet Propulsion Lab – so readers may believe that if it’s a product good enough for people who send robots to Mars, it must be good enough for anyone.

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