How to Create a Unique Value Proposition
Entrepreneurship is often painted as a rosy and glorious endeavor. The plot is almost always the same – start a business, make millions in a few years and then sit back to enjoy your success, travelling the world and sipping mojitos under the Caribbean sun as the money flows into your account. In reality, things are not so rosy. The world of business is a tough one.
The competition is stiff, and if you want to succeed, you have to stand out from the crowd and showcase your awesomeness to prospective clients. You have to show your uniqueness, the need that you alone can fulfill.
Without this, your brand will drown in the noise of the competition and your dreams of success and mojitos will soon be nothing more than nostalgic memories. If you don’t want to go down this route, you need to start thinking about crafting a unique value proposition for your business.
A value proposition is one of the most important conversion factors. It determines whether a prospective customer will buy from you or move on to your competitor. It is the secret sauce that makes customers pay attention to your products and services even when competitors are offering similar products and services at cheaper prices.
The less know your company is, the more important your value proposition, which is why you need to nail your value proposition right from the start.
Today, we have come up with a handy guide to walk you through the process of creating a unique value proposition for your business.
But before we get into the process, let us first understand what exactly a value proposition is.
WHAT IS VALUE PROPOSITION?
In order to understand value proposition, you first need to understand why customers buy from you. Customers don’t just buy from you because you are selling a product they need. After all, you are not the only one selling the product. Customers buy from you because you fulfill their needs in a way no other company can.
Either you help them save time, you eliminate an inconvenience that your competitors do not, you give them extra value for their money, you offer experience or resources that your competitors don’t, and so on. That unique way in which you fulfill your customer’s needs is your value proposition.
Also known as a unique selling proposition, your value proposition is your unique position within the marketplace that separates you from and gives you an edge over your competitors. It explains what benefit your products and services provide, who the benefit is meant for and how uniquely well you provide the benefit.
In other words, it describes your target audience, the problem you are solving for them and why you are best placed to solve the problems compared to any alternatives your target audience might have. Without a unique value proposition, your customers have no reason to buy from you instead of your competitors.
You should avoid mistaking your unique selling proposition for a slogan, a tagline, or a positioning statement. This is a mistake that many business owners make often. While taglines, slogans and positioning statements are important accessories to your brand, they don’t wield much influence over a customer’s decision to buy.
It does not matter how good your slogan is, a customer will not buy from you if you are not solving their problem in the best way possible. Your selling proposition shows the customer that you will not only solve their problem, but that you are also the best person for the job. In a nutshell, a great unique value proposition should have:
- Relevancy – explains how your products and services solve customer problems or how they improve the customer’s situation.
- Quantified value – should show the specific benefits customers will derive from your products and services.
- Unique differentiation – should show customers why they should buy from instead of your competitors.
When creating your unique value proposition, you should use the language of your consumers.
A common mistake that business owners make often is to use fancy buzzwords when coming up with a unique value proposition. How many times have you seen companies claiming that they have ‘miracle products’ that provide benefits that have ‘never been seen before’, or words like ‘value added interactions’?
Such phrases only hype a product or service without showing any tangible benefit for the customer and should therefore be completely avoided when creating your value proposition.
Instead of such phrases, your value proposition should be clear, direct, bold, and factual. It should describe your products and the problem they are solving the same way customers describe it (how many times have you heard customers looking for a product that provides value-added interactions?).
This means that you need to step outside the office and talk to your customers in order to find out what exactly their problems and needs are.
WHY IS A UNIQUE VALUE PROPOSITION IMPORTANT?
When getting started, many business make the mistake of trying to do a lot of things. They try to solve different problems for different people, and they want to do it well.
For instance, someone launching an online fashion retail shop might attempt to be well known for high quality shoes, best looking t-shirts, most glamorous wedding dresses and lowest prices. Someone launching a restaurant might try to be known for the best fries and the best coffee and the juiciest ribs.
The problem with this approach is that when you try to become known for everything, you end up without being known for anything.
Businesses with a unique selling proposition don’t try to be everything for everyone. Instead, they focus on something specific and then become known for being the best in that particular thing.
This not only allows them to provide the best possible value to their niche, but it also cuts out the number of businesses they have to compete against. Going back to our two examples above, let’s assume that a bride-to-be is looking for a dress for her approaching wedding. Will she opt for the retailer that also sells shoes, t-shirts and jeans or one whose sole focus is wedding dresses?
If you are want to eat some well-made pork ribs, will you opt for a restaurant that tries to have the best coffee, the best fries, the best burgers and the best ribs, or one whose sole focus is well-done pork ribs?
In both cases, I’m assuming you’d go for the latter option, because of their unique value proposition. They are not trying to be everything for everyone. Instead, they are focused on solving a single problem in the best possible way.
In addition to helping you stand out and create a strong difference between your business and your competitors, a unique value proposition also has several other benefits, which include:
- Helps you make a strong first impression.
- Helps you attract the right prospects, thereby increasing both the quality and the quantity of your leads.
- Helps you improve your operational efficiency.
- Helps you increase your revenue.
- Helps you gain market share in your targeted niches.
- Helps increase your conversion rate since you speak directly to your targeted niche and provide solutions that are specific to their needs.
- Ultimately helps you to increase the lifetime value of your customers.
TIPS ON HOW TO CREATE A GREAT UNIQUE VALUE PROPOSITION
Coming up with a great value proposition takes a lot more than coming up with a creative slogan.
You need to know your business and your customers inside out and understand how your products and services fit into the market.
Below are some tips you need to keep in mind when coming up with a great value proposition for your business.
Define Your Buyer Persona
The first step of creating a great value proposition is to define who you are trying to market your products and services to.
A value proposition is not meant to appeal to everyone with enough money to purchase your products and services. Instead, you want your value proposition to speak directly to a specific segment of the market, so your first step is to determine who this segment is.
Which people will buy your products and services?
Whose problems are you trying to solve. Don’t make the mistake I mentioned above of trying to be everything to everyone. That just doesn’t work. If you are solving a problem for brides-to-be, focus on brides to be.
If you are solving problems for entrepreneurs who just started their first business, focus on them and forget about seasoned entrepreneurs who have launched a string of successful businesses.
Don’t be lazy when it comes to defining your buyer persona [link to article on Buyer Personas]. You should research and find out as much as you possibly can about them. Some questions you should consider in this stage include: Who are your target customers? What is their age group? What is their gender? Where do they live? Are they married or single? Do they have kids? How much money do they earn? Where do they like spending their free time? What are their greatest problems?
The idea is to fully understand your target customers so that you can come up with a message that speaks specifically to them, a message that they can identify with. For instance, if you are selling wedding dresses, instead of trying to sell to everyone, you might focus on customers who want a lavish and exquisite wedding.
With this in mind, you should have a clear understanding of the things that your target customers (those who want a lavish wedding gown) look for in wedding dresses, the anxieties they have about their wedding dresses, how much money they are willing to spend on a wedding dress, and so on.
Research Your Competitors
Remember, the main aim of a unique value proposition is to set yourself and your business apart from your competitors. In order to do this, you need to know who your competitors are and their way of doing things.
Just like you did with your target customers, conduct a competitor research and try to find out as much as you can about them.
Find answers for questions like: Who are your competitors? What is their mission statement? How are their products and services similar to yours? How do they differ from yours? What kind of staff do they employ? What is their business model? How is it similar to or different from yours? What customer segment are they serving? How do they serve their customers? What do their customers like about them and their products or services?
Researching about your competitors allows you to identify sections of the market that they are not covering well and other weaknesses in their strategy. You can then exploit their weaknesses and focus on areas they do not cover to differentiate yourself from them.
It is impossible to differentiate yourself without first knowing what others in the same field are doing and then coming up with a way to do it better.
Identify What is Unique and Compelling About Your Product or Service
Next, you need to look keenly at the product and service you are offering and find out what makes it different from the other alternatives available in the market. Compare your products and services to those of your competitors. What can your products do better? What benefits or value do they provide that competitors’ products do not? Do your products help customers do their work faster? Are they easier to use? Do they use energy more efficiently? Are they cheaper?
A good way identifying something unique and compelling about your product or service is to examine it through a technique known as the 3Ds technique.
This technique involves checking whether your product or service meets the three Ds, which are Discontinuous innovation, Disruptive business models and Defensible technology. Below is a deeper explanation of the 3Ds technique:
- Discontinuous innovations – Does your product or service offer transformative benefits over other existing products by approaching the problem differently, instead of offering marginal improvements?
- Disruptive business models – Does your product or service provide value and cost benefits that can help spur the growth of a business?
- Defensible technology – Does your product or service have intellectual property that you can protect to deny competitors entry and thereby gain competitive advantage?
If your product or service checks any of the three boxes, you have found something unique about your business. If it checks all three boxes, you have something unique and compelling on which to base your value proposition.
Another technique you can use to find a unique selling point is to dig deeper into the reasons that people are buying your products. Apart from the obvious reason, there is usually a deeper reason why people buy stuff. On the surface, it might appear that someone buying a milk shake at McDonald’s in the morning is doing so because they are hungry.
Upon further investigation however, they might be buying the milk shake because they want something to keep them occupied during a long and boring drive to work. Similarly, it might seem that someone who bought a Mercedes did so because they needed a vehicle for the commute to work. Why not buy a cheaper Toyota then?
Upon further investigation, it becomes apparent that they bought the Mercedes because they want to improve their social status.
With this is mind, try to find out the deeper, psychological reason why people are buying your products and then use it to come up with a value proposition for your products. For instance, if you are a career coach, it is obvious that anyone who buys your coaching class wants to improve their career.
But why do they want to improve their career? Probably so that they can be paid more. But why do they care about being paid more? Probably so that they can buy their dream car or home, or go for the vacation they have always been dreaming about.
So, in this case, you are not merely helping people improve their careers, you are actually helping them live out their dreams. You can use this in your value proposition to show the actual value clients stand to gain by purchasing your products or services.
Another option is to think about something about your product that goes against the grain, something that is not in line with your particular industry. For instance, let’s assume you are a martial arts coach who wants to launch a martial arts coaching class. Martial arts is typically male dominated.
If you set up a martial arts coaching class specifically for women, you can use this in your unique value proposition. This will resonate with all the women who have always wished to take martial arts classes but could not because they found it intimidating to train together with men.
In this case, you show that your business is unique by providing a safe place for women to train in martial arts.
Dispel Myths and Stereotypes
Another great way of coming up with a unique value proposition for your business is to dispel common myths and stereotypes about your industry. For instance, the auto repair industry is well known for dishonesty. There is no shortage of scams and rip-offs that auto repair mechanics use to get an extra buck from car owners, especially women.
In such a situation, if your business can buck the stereotype and provide honest service to car owners, you can use that promise as your unique value proposition. However, you should be ready to follow through with your promise. Don’t promise honest repairs and charges only for a customer to be charged for a repair that wasn’t actually done.
With these tips, you will be able to come up with a great unique value proposition that sets your business apart from the competition and shows prospective customers why you are the best person for the job.
EXAMPLES OF GREAT UNIQUE VALUE PROPOSITIONS
Below are three examples of great unique value propositions.
Uber’s value proposition is that they provide the smartest and most convenient way to get around. Their value proposition is captured in the following words:
Tap your phone. Get where you are headed.
Uber differentiates itself by showing the convenience it offers over the traditional taxi industry that it came to disrupt. No calls to dispatchers, no difficult conversations trying to explain where you are or where you want to go, no worrying whether you have enough change in your pocket. Simply tap and ride.
What better way to set themselves apart from traditional taxis?
Starbucks’ value proposition is also surprisingly simple. They stand for and are well known for their premium coffee beverages. Their focus is on being the best providers of premium coffee beverages. They don’t try to be anything else. They don’t try to be the best coffee house with the lowest prices and the best sandwiches or the best smoothies.
While you can also get teas, pastries and other treats in a Starbucks, premium coffee is their main focus. The rest are treats that they just happen to sell, which you can buy to go along with your delicious coffee.
It is this unique value proposition that has turned Starbucks into one of the most recognizable brands in America and the third-largest fast food restaurant chain in the world by number of locations.
Apple also nailed the iPhone’s value proposition. Below is the iPhone’s value proposition:
Every iPhone we have made – and we mean every single one – was built on the same belief. That a phone should be more than a collection of features. That, above all, a phone should be absolutely simple, beautiful, and magical to use.
With these words, Apple differentiates the iPhone from all other smartphones.
With hundreds of phones in the market, Apple knew that trying to market the iPhone on its set of features wouldn’t work. After all, several other smartphones boast the same features.
Instead, Apple decide to set the iPhone apart by offering a unique user experience that no other smartphone manufacturer could match. This simple value proposition has helped Apple remain at the top of the smartphone market for almost a decade.
Coming up with a great unique value proposition is about setting yourself apart from your competitors.
To do this, you can’t attempt to be known for everything. Instead, focus on one thing that you can do better than anyone else and that you want to be known for and use it as your unique value proposition.
Coming up with a great value proposition is also about making a connection with your audience and turning them into loyal brand ambassadors.
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