This article was written for virgin.com about the benefits of strong Value Propositions.
A Value Proposition is a short statement that sets out the benefits (value) of a brand to customers. Or put simply, it answers the essential question on every customer’s lips: “Why should I choose you?”.
Value Propositions are proven to help businesses grow faster and can even boost marketing campaigns, yet they’re often overlooked in the marketing mix.
According to the research agency, Millward Brown, their analysis of top brands over a 10 year period showed the brands that combined strong propositions with marketing campaigns achieved an average growth of 168%, compared to a 27% increase for brands that had ‘excellent advertising’ but weak propositions.
The term ‘Value Proposition’ first appeared in an internal McKinsey report in 1988 called, ‘A business is a value delivery system’ (Michael J. Lanning and Edward G. Michaels). It stated, “We believe that behind every winning strategy must stand a superior value proposition – a clear, simple statement of the benefits that a company will provide.”
“The success of any value proposition is ultimately whether the benefits (of the product or service) outweigh the cost to the customer.”
Writing a Value Proposition starts with the customer and an understanding of their needs. Each customer group (segment) might have a different Value Proposition highlighting the benefits that are most relevant to them. The success of any Value Proposition is ultimately whether the benefits (of the product or service) outweigh the cost to the customer. The aim is to maximise the benefits that customers value most. The more differentiating, the better.
With this in mind, the best Value Proposition are often based around tangible benefits. A current example of this is Amazon’s Prime Now, which states: “Prime Now offers 2-hour delivery on thousands of everyday essentials and household items plus the best of Amazon, delivered straight to your door.” In a sentence, three benefits are clearly stated – a 2hr delivery service (speed), thousands of essential everyday items (range), and delivered to your door (convenience).
Weak Value Propositions tend to do the opposite, focusing on factors that are vague, undifferentiated and at worst, fall into the bucket of “so what?”. Saying, “We deliver great service” or “We’ve got the best team” might be true, but rarely cut through to customers and don’t make good value propositions.
Writing a Value Proposition takes time, but it needn’t be rocket science. Remember to maximise the benefits that appeal most to your customers…and that set you apart from the competition.