What Is A Value Proposition?

What Is A Value Proposition? Understanding The Basics

If you’re starting a small business or you’re looking to overhaul your branding at your current startup or business, you may have heard of the term “value proposition.” What is it, and what does it mean for you and your business? Find out the basics below. 

 

What Is a Value Proposition? Defining The Term 

A value proposition is a statement outlining the benefits (value) of working with your company or choosing a particular product. It’s a promise that differentiates your brand from others – and quickly sets it apart from the competition.

In short, a value proposition is a business or marketing statement designed to provide a summary of why customers should purchase a particular set of products or services – and show why these are a better choice than the competition. 

Want an example? Let’s go with GEICO and their famous tagline, “15 minutes could save you 15% or more on car insurance.” This is an excellent example of a value proposition. 

It outlines the benefit of choosing GEICO – saving money – and assures customers that switching to GEICO can be quick and easy. Not only that, but it also mentions the specific product (car insurance) that customers are buying.

In that single value proposition, you get everything you’d need to understand the benefits (value) of switching to GEICO – and encouragement to do so. That’s a very compelling value proposition. 

 

Why Do Value Propositions Matter?

So, do you need to bother creating value propositions for your company? Yes. Value propositions are a powerful tool when you design a business plan. They can help align your business goals and brand and have several great benefits.

  • Communicate value quickly and easily – A great value proposition quickly communicates the value of your services or products in just a few sentences – instantly connecting with customers and helping your brand “stick” in their minds more effectively.
  • Brand and product differentiation – Not only can you communicate your value, but you can help differentiate yourself from the competition. You can emphasize your company’s unique attributes or products compared to “the other guys” and convince customers to choose you.
  • Addresses customer’s pain points – A “pain point” is any customer’s problem that can be solved with the right products or services.

    For example, a customer with a clogged drain has a few pain points – they want to unclog their drain fast, they don’t want to pay too much, and they want to get back to their day-to-day life. A plumber with the value proposition “We Unclog Your Drain In 2 Hours For $95 – Or It’s Free” would address all of these pain points – leading to a higher likelihood that their services will be chosen.

 

Use Value Propositions To Set Yourself Apart & Bring In More Customers 

Now that you know what value propositions are and how they work, it’s time to do a little bit of thinking and come up with your own. What problems does your business solve? What sets you apart from the competition? How can you directly appeal to a customer’s pain points? If you can answer these questions, you’ll be able to come up with a powerful value proposition for your company.