For everyone who has ever struggled with identifying a clear, concise, and compelling value proposition, Barry Horwitz shares an article that clarifies the issues and identifies the pitfalls.
In his book, Your Music and People, Derek Sivers addresses a problem faced by musicians: being asked to describe the kind of music they play.
Saying “all kinds,” doesn’t help. That, according to Sivers, is like saying, “I speak all languages.” Nor does claiming to be unique, since all musicians rely on “notes, instruments, beats, or words.”
A better approach, he advises, is to come up with an interesting phrase that will get people thinking. Something like, “We sound like the smell of fresh baked bread.”
Sivers wasn’t talking about “value propositions” per se. But he was making a related point — the way you describe your organization’s work can have a profound impact on both how well you are understood and how long you are remembered.
What is a Value Proposition?
A value proposition is a simple concept (maybe that’s why the really good ones are so rare). One definition I like is:
“A value proposition is a promise of value to be delivered. It’s the primary reason a prospect should buy from you.”
Notice that it is fundamentally based on the customer’s perspective, something that distinguishes it from its sometimes jargony brethren, the vision statement, mission statement, and purpose statement.
What a Value Proposition Is Not…
… full of business or technical jargon — and simply descriptive:
Here’s an example a student submitted to me as stated by the CEO of the startup at which he was interning a few years ago:
[COMPANY] is a SaaS-based technology platform that leading organizations use to design, run, and measure positive impact programs, including, but not limited to, corporate culture, well-being, social impact, and sustainability.
In addition to the excessively formal phrasing (“including, but not limited to”), and the large number of buzzwords, this description is generic; it could be applied to all sorts of organizations serving any number of markets. It may capture how those inside the company think about their offer, but I doubt it connects with prospects, investors, and others on the outside.
… a list of features:
As the old business adage goes, people don’t want to buy a quarter-inch drill; they want a quarter-inch hole.
Likewise, people don’t select your product or service because of its features, but because it fulfills a need or solves a problem. Your value proposition should focus on that.
… a tag line:
While it is possible for a tag line to also work as a value proposition, these are the exceptions; in most cases, the two are not the same and serve different purposes.
Key points include:
- The music analogy
- Value propositions for nonprofits
- The tagline value proposition combo
Read the full article, Music that Sounds like Fresh-baked Bread, on HorwitzandCo.com.
Umbrex is pleased to welcome James Wilton with Monevate. James Wilton spent 3 years at McKinsey and Company, where he led the pricing service line at Fuel (McKinsey’s practice for startups), and recently left to found Monevate, a pricing strategy consulting firm focused on serving growth-stage companies.
He has ~15 years experience in consulting roles, with ~9 years focused on pricing strategy transformation and new product pricing. Prior to joining McKinsey, he served as the Head of Strategic Pricing at RELX Group, and led the pricing practice at SBI.
James lives in Saratoga Springs, NY with his wife and 2 (soon to be 3!) boys. He loves stand-up and sketch comedy (used to perform!), and trying new food and wines.
James would be keen to collaborate on any projects in compatible time zones (US and Europe) involving B2B/B2C pricing, packaging and value proposition.
Kaihan Krippendorff asks a most pertinent question to help companies identify a strategy that will improve customer relations and revenue.
The former president of Starbucks, Howard Behar, told me a few months ago that the most important decision Starbucks made, that led to many of the disruptive choices this category-defining company made, was their decision to be “in the people business serving coffee” rather than the “coffee business serving people”.
In other words, Starbucks decided to view their “customer” as the worker in their store serving coffee. Their purpose was to create great jobs and lives for them.
Tony Hsieh, CEO of Zappos, said, “We were going pretty well as a shoe company but our growth really took off when we realized were a customer service company that happened to sell shoes.”
Hartford Steam Boiler, whose strategy I will dig into in a later post, seems to be an insurance company but actually sees itself as and, more importantly, acts as an engineering company that happens to monetize through insurance.
This article explains how the following questions help define a growth strategy.
- What is our actual business (e.g., consumer electronics and not medical devices)?
- How does that kind of company behave differently?
Read the full article, The Most Important Strategic Question To Ask: What Business Are You In?, on Kaihan’s website.