A lot of us misunderstand value proposition as a tagline. But value propositions are far more critical to a company compared to taglines.
Value proposition matters so much for a startup because it is the deciding factor for the potential customers to use a company’s products or services. Therefore, let’s dive deep and understand the value proposition better and its role in a startup company.
What Is a Value Proposition?
Have you ever wanted a product because it has an exciting offer? This may be due to a good value proposition the company set.
A value proposition is a very critical element in marketing. Customers are most likely to choose a product with a clear value proposition. Therefore, it is vital for business owners to carefully craft the company’s value proposition.
On the other hand, a value proposition is a weapon for a company to show why customers need to choose its products or services. Let customers see the product advantages through a clear value proposition that differentiates it from competitors’ products.
As the name suggests, value proposition means the value promised by companies to their customers if they choose to buy the products. The company uses value propositions to persuade customers.
Therefore, the value proposition must be compelling so potential customers have enough faith in the products and services. A value proposition is also an excellent way to boost sales and customer loyalty.
Many consider the value proposition the same as a tagline, but these two are different. The main difference is value proposition highlights the benefits a customer may get by using the company’s product. Meanwhile, taglines are catchy phrases created to capture potential customers’ attention and keep the company on top of their minds. Tagline is usually quite implicit compared to the value proposition and doesn’t highlight the product’s benefits.
The core of the value proposition is showing the concrete benefits of the products or services to attract customers. A value proposition can usually be found on the first page of a company’s website so visitors can easily find it.
How to Make Value Proposition Canvas
Value proposition canvas is a tool to map out a company’s value proposition. This tool typically has two parts to it.
The first part is the customer profile, which describes the customer’s wishes or pain points. The second part is the value map or value proposition. This part describes how the products or services may benefit the customers and fulfill their wishes.
A value proposition canvas needs to have product advantages and benefits for customers and the reason why customers have to choose the product.
Here are ways to create a value proposition canvas:
- Understand the company’s visions and missions
The first step is to identify the company’s vision and mission, starting from the reason the company is established to the current and future business purposes.
We can craft a value proposition canvas that matches the company’s identity through this identification process.
- Extensive Research on The Potential Market
Good research is always required by anyone who seeks to gain the proper insight into the company’s growth and development. To attract customers, value propositions must be as convincing as possible so customers believe in the products offered.
Thus, extensive research is required to determine what the customers need. This can be done in many ways, such as by creating a questionnaire or doing a direct interview.
- Analyze the Competitors
Every company and business always has competitors. Businesses must map out their competitors and their products or services. We may find out, from a clear competitor research, the advantages and weaknesses of our products. By understanding this, we can prepare the right strategy and develop a unique selling proposition (USP) through value proposition.
- Put the Solutions to Customer’s Pain Points
A good product or service can solve the market’s problem. Therefore, a product’s solution needs to be put in the value proposition canvas.
A good value proposition also needs to attract potential customers. Therefore, companies need to mention all the benefits customers may get when they use the company’s products or services.
Elements of Value Proposition
In value proposition, there are a few elements companies need to apply. The most important one is the differentiation factors between the company and its competitors.
The elements in value proposition aim to communicate the ideas that the products or services can provide added value and benefit for the potential customers.
Here are a few elements that the company needs to apply in its value proposition.
- Newness
The first element that any value proposition needs to consist of is newness. It means that a value proposition has to offer innovation to the customers.
For instance, product innovations or new advantages compared to competitors’ products. This newness element is commonly tied to new technologies as well.
- Performance
The next element is performance. This element translates to the company’s product and service performance, such as product features or customer service quality.
- Customization
Customization refers to flexibility or feature adjustment according to the customer’s needs. Flexibility may be determined by researching the customer’s needs and wants.
- Solution
Another essential element of the value proposition is the solution. A good product needs to answer to customer’s problem. This solution must be stated on a value proposition so customers can better understand our product.
- Design
The next element is design, which refers to the visualization of the product design. This design needs to be adjusted to the customer’s needs and wants.
- Brand
The brand element in value proposition refers to how the customers feel when they use the company’s products. For instance, they may have a fancy and exclusive experience or an earthy and eco-friendly experience. All of these feelings can be created through the correct branding.
- Price
Price is another essential part of value proposition since it may determine the customer’s decision to buy a company’s product or service.
Typically, customers are more attracted to lower price, but more expensive and luxurious product also has its own market. The main thing is ensuring that the quality of the product or service is always worth the price.
- Accessibility
This element shows how accessible a product or service is to potential customers. Products that can reach larger crowds with no demographic or geographic boundaries are bound to be liked by more customers.
Components in Value Proposition Canvas
Aside from understanding elements in the value proposition canvas, we also need to know the components. Here are the components that every value proposition canvas requires:
- Customer jobs
Customer jobs consist of customers’ behavior, problems, and needs. It also describes the customer’s social, emotional, and functional wishes.
- Pains
Pains refer to a customer’s negative experience with a product. This negative experience triggers negative emotions and unwelcome situations. Therefore, customers will seek a solution to their pains.
- Gains
This component is the opposite of pain. Gains mean the benefit and advantages customers wish to see in a product. The benefit may come from many aspects, including social, emotional, and financial.
- Products and Services
The next component is the products and services the company offer to help solve customers’ problem and the customer’s jobs.
- Pain Relievers
In value proposition canvas, this term refers to how the product created may become the solution to a customer’s pains.
- Gain Creators
Gain creators describe how a product or service may benefit the customers
As we can learn from the explanation above, a tagline is not enough to attract customers. A company, or in this case, a startup, needs to have a clear value proposition so customers can understand what they can get from the products or services we offer.
