Value Propositions often get lost in marketing planning, but they’re pretty essential. They help to answer the question on every customer’s lips, “Why should I choose you?”. It’s been proven that brands with strong Value Propositions tend to do better, they help businesses grow faster and can even boost marketing campaigns.
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). They believed that behind every winning strategy was a superior Value Proposition — “a clear, simple statement of the benefits that a company will provide.”
With this in mind, the best Value Proposition are measurable, based around tangible benefits. A current example of this is Amazon’s Prime Now, which states: “We offer 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. It should start 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 in question outweigh the cost to the customer. The aim is to maximise the benefits that customers value most, the more differentiating benefits, the better.
Extract from virgin.com article.
By Nick Couch, founder of Bright New Thing.