Value Proposition How Would You Define YOUR Value Proposition? F - PowerPoint PPT Presentation

Value Proposition

How Would You Define YOUR Value Proposition?

F oc us c ome s Target fr om c le ar ly market unde r standing the value of your ide a VALUE Problem Solution

What is a Values Proposition? A value proposition has four parts:

A value proposition is a promise of value to be delivered and acknowledged and a belief from the customer that value will be appealed and experienced.

Uber – The Smartest Way to Get Around

Uber’s Value Proposition  One tap and a car comes directly to you  Your driver knows exactly where to go  Payment is completely cashless  Everything about this directly contrasts the typical experience of getting a taxi – no phone calls to disinterested dispatchers, no painful conversations trying to explain to a stressed-out cabbie about where you need to be, and no fumbling for change or worrying you’ve got enough bills in your wallet.  Just a fast, efficient way to get where you’re going. This is reinforced by the aspirational messaging toward the top of the Uber homepage, which states that “Your day belongs to you.”

Digit – Save Money Without Thinking About It • The world of personal finance is ruthlessly competitive space, and there are tens of thousands of apps designed to help people manage their money more effectively. • However, few have as good a value proposition as Digit, a relatively new service that helps users “save money, without thinking about it.” Digit's value proposition, offering hands-off savings

Digit’s Value Proposition  Digit allows users to securely connect their bank accounts to the Digit service, which then algorithmically examines users’ spending habits and regular expenses. It then begins to “optimize” users’ accounts to squirrel a little money away here and there into an FDIC-guaranteed savings account, from which users can withdraw their savings at any time.  The key differentiator of Digit from other savings apps is that the process is entirely automated. Users literally don’t have to do a thing for Digit to start putting money into a saving account; a few bucks here, a few bucks there, and before you know it, you’ve got a decent amount put away for a rainy day, all the while maintaining sufficient funds for regular outgoing expenses to be taken care of. It’s actually kind of amazing.  Saving can be a major financial hurdle for many people, especially those on reduced or limited incomes. By automating the entire process, Digit offers users a completely hands-off solution to saving. It’s not for everyone – but then again, no product, service, or app is – but it is unique, and its value proposition makes this clear.

Value Proposition Definition  Your Value Proposition is: a statement that includes your important customer and market Need along with your new, compelling, and defensible  Approach to address that need with superior  Benefits per costs when compared to the  Competition and/or other alternatives   Successful Value Propositions are quantitative and easy to understand and remember  The four parts of your value proposition are the fundamentals: they must always be answered

Improve Your Value Proposition, Be Quantitative Need • Not: The market is growing fast • Rather: Our market segment is $2B/yr and growing at 20%/yr Approach • Not: We have a clever design • Rather: We have created a patent-protected, one-step process that replaces the current two- step process with the same quality Benefits • Not: The ROI is excellent • Rather: Our one-step process reduces costs by 50% and results in an expected ROI of 50% per year with a profit of $30M in year 3 Competition • Not: We are better than our competitors • Rather: Our competitors are Evergreen Corporation and Bigway, which use the current two- step process Qualitative statements are not persuasive!

Creating a Value Proposition Communicating the Benefits of Your Product, Service or Idea, Simply and Clearly Step 1: Know your customer Thinking from the perspective of your customer, ask the following: Who is he or she? What does s/he do and need? What problems does s/he need to solve? What improvements does s/he look for? What does s/he value? Tip: If you don't know, ask! It's easy to try to second guess what your customers want. And very easy to get it wrong. So do some market research: This could be a simple matter of asking customers directly, or organizing a focus group or surveys. 'Market research' is not just for external customers, it works for other 'markets' too: Depending on your product or idea, your 'market' could be employees, colleagues, or even your spouse. Step 2: Know your product, service or idea From your customer view point: How does the product, service or idea solve the problem or offer improvement? What value and hard results does it offer the customer? Tip: Include numbers and percentages To grab your customer's attention even faster in this financially-oriented world, your value proposition should also speak percentages and numbers: How much will your customer gain, save or improve? How much more efficient will he or she become? How much safer, smarter, faster, brighter will the solution be? And so on. Step 3: Know your competitors Keep on thinking from the perspective of your customer, and ask: How does your product or idea create more value than competing ones? Tip: This can be quite difficult. See our articles on USP Analysis , Core Competence Analysis and SWOT Analysis for useful tools for doing this. Step 4: Distill the customer-oriented proposition The final step is to pull it all together and answer, in 2 or 3 sentence: "Why should I buy this specific product or idea?" Try writing from the customer viewpoint by completing the following, (also include the numbers and percentages that matter!): "I want to buy this product or idea because it will..." "The things I value most about the offer are..." "It is better than competing products or ideas because..." Step 5: Pull it all together Now, turn around your customers 'answer' from step 4 into a value proposition statement.

Creating a Value Proposition Communicating the Benefits of Your Product, Service or Idea, Simply and Clearly Example Here's a simple example. Let's say that you sell lawn mowers, and your customer is someone with a large back yard. Step 1: Know your customer Your customer is a businessman with quite a large house, who likes the "meditative feeling" of cutting his own lawn, but gets bored by the job when it takes too long. He's looking for a good quality of cut, for the job to be done quickly and enjoyably. Step 2: Know your product or idea The product is a ride-on mower with a 25 horsepower (powerful) engine and 45 inch (wide) cutting blades. Step 3: Know your competitors The mower goes faster and cuts wider than the competition. Step 4: Distill the customer-oriented proposition "Our mower cuts your grass in 50% of the time of 'big brand' mowers in its class. And it leaves the lawn looking beautiful too!”

DEFINITION - VALUE PROPOSITION  A value proposition describes why a customer should buy a product or service  It targets a well defined customer segment  It convinces prospective customers that a particular product or service will add more value or better solve a problem than competitive products or services

Map Customer to Value Proposition Value Proposition Customer Segment Products Wins Gains JOB Results Services To Be FIT Pain Features Pains Killers DONE Getting The Customer Value Proposition Right Is Critical To Success

Explore Customer Pain What does your customer find too costly? (e.g., too much time, too much money, requires substantial effort, …) What makes your customer feel bad? (e.g., frustrations, annoyances, . . .) How are current solutions underperforming for your customer? (e.g., lack of features, performance, malfunctioning, accuracy…) What negative social consequences does your customer encounter or fear? (e.g., loss of face, trust, power, status . . .) What’s keeping your customer awake at night? (e.g., big issues, concerns, worries . . .) What common mistakes does your customer make? (e.g., usage mistakes, inappropriate priorities . . .) What barriers are keeping your customers from adopting solutions? (e.g., upfront investment, learning curve, resistance to change . . .) 17

Explore Customer Gains Which savings would make your customer happy? (e.g., time, money, effort, risk . . .) What outcomes does the customer expect and what would go beyond expectations? (e.g., quality level, more or less or something . . .) How do current solutions delight your customer? (e.g., specific features, performance, quality . . .) How would you make your customer’s job or life easier? (e.g., flatter learning curve, more services, lower cost of ownership . . .) What positive social consequences does your customer desire? (e.g., makes them look good, increase in power or status . . .) What are customers looking for? (e.g., good design, guarantees, specific or more features . . .) What do customers dream about? (e.g., big achievements, big reliefs . . . ) How does your customer measure success or failure? (e.g., performance, cost . . .) What would increase the likelihood of adopting a solution? (e.g., lower cost, less investment, lower risk, better quality . . .) 18