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What is a Value Proposition? Definition, Template, Examples & Tips [Updated for 2021]

Definition: What is a Value Proposition?

A value proposition is a clear & concise business statement about 1) Who your customers are 2) What you do 3) How you do it 4) Why you do it. It highlights to prospective customers in just a few words what makes your business unique and why they should work with you. Check out the templates & examples below.

Definition: What is a Value Proposition Canvas?

A Value Proposition Canvas is a tool created by Dr. Alexander Osterwalder to help businesses identify product/market fit. The canvas is a simple framework that aligns product features with a customer’s desire to mitigate pain and create value. A well thought out canvas leads to compelling Value Proposition Statements.

Introduction to the Value Proposition


You started your small business because you believe in the value that your product or service has to offer. But sometimes it’s hard to translate that value into a meaningful message that resonates quickly with potential customers. The best way to communicate the value your business creates is to develop a value proposition statement. This is the cornerstone of your company mission, branding, and ultimately, your ability to bring in revenue. A value proposition helps you target your ideal audience, shows the benefits your business provides, and convinces potential customers to choose you over your competitors.

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We’ve put together this guide to explain why a value proposition is important to your business, how to create your own, and to provide examples of successful value propositions in the market.

What is a Value Proposition?


Think of the value proposition as a promise to your customers of the value you provide. You can also think of it as your competitive advantage over other vendors. A value proposition is a concise and clear explanation of what your business does and why. It highlights what is unique about your offering and why your buyers should work with you. A value proposition is similar to an elevator pitch but is even more succinct and to the point. Additionally, while elevator pitches are used with business partners and investors, value propositions are ideal messages for potential customers.

No matter if your business is B2B or B2C, selling a product or service, funded or growing organically, you will need to answer these 4 questions:

  1. Who is your audience?
  2. What is your product or service?
  3. How will you provide value or alleviate pain points? How are you different from available alternative?
  4. Why do you do what you do?

Your answers to these questions help you target the right buyer so that you can convert them into a customer and make the sale. Stand out amongst the competition by making your value proposition easy to understand, results-oriented, and possible to read in just a few seconds. Do not make the mistake of trying to be all things to all people. Speak directly to your ideal target audience.

Let’s be clear about something. There is a lot of content in cyberspace that is flat out wrong about what a value proposition actually is. It is not a tagline. It is not a slogan. It is not copywriting. It is not the title on your landing page. It is not a mission statement, vision statement, or elevator pitch. We will articulate the differences between each of these in forthcoming articles here at LinkedPhone.

While you are creating your value proposition(s), remember that the focus is not on what your product can do, but rather, what problems you solve for your customer. Building a message that speaks to their needs helps you connect with your customers personally.

Who Needs a Value Proposition?


Every business should have a value proposition or propositions. No matter who your customer is, the ability to explain the benefits of purchasing your business goods is integral. Value propositions can be used by multinational retail brands, small Etsy shops, consumer services, business services, industrial goods, real estate agents, and many more ventures.

Whether you are selling custom furniture or developing software for local government agencies, the only way for customers to find you, and decide to work with you, is to highlight why your product is better than your competitor’s. You likely know exactly why your business is valuable. You are halfway to creating your value proposition already!

Why is a Value Proposition Important?


Value propositions aren’t about features; they’re are about helping people achieve their goals. Your buyers want to hear a compelling reason how your product can help them fix their problems and achieve their goals better than any other product. No one wants to hear a salesperson list every feature of their product or component of their service and what it does.

To sell is to tell a story. Stories elicit emotions. Emotions help us process, understand, and remember a message. If a business can’t make an impression, potential customers will move on to one that does.

As we learned in Building a StoryBrand, your customer is the hero of your story. While being helpful and personable during a sale is important, ultimately the customer doesn’t really care about you and what you want – they care about the value you can offer them. They need to feel assured of the value your product or service will provide them. Your story, and your value proposition, is about their success.

Value Proposition Template


The following value proposition template will help you craft the perfect statement for each of your audiences. In this short message we communicate all 4 components, as discussed above, of the perfect value proposition.

Below, we provide an example of applying our value proposition template to LinkedPhone’s general audience – entrepreneurs and small business owners. Use the template to create a value proposition that resonates with your own audience and subsets of that audience.

When writing your value proposition, be sure to really focus on the “why”. In the case of LinkedPhone, we seek to evoke feelings of freedom, choice, and movement.

While the above value proposition works for general audiences like entrepreneurs and small business owners, to really resonate with potential customers it’s best to craft a message for each specific industry or tribe. A different message can be crafted to emotionally resonate with accountants, Etsy sellers, freelancers, small retail businesses, sales teams, etc. We’ll discuss this in greater detail below.

How to Write a Value Proposition


Grab a notebook, whiteboard, or your laptop and start brainstorming! Remember that a strong value prop is able to clearly communicate what your company does and how you are different from your competitors.

Step 1: Understand Your Audience

If you don’t know who your target audience is, or should be, let’s take one step back and talk about buyer personas. They are the ideal customers for your business. A buyer persona is a fictional representation based on real life personalities, buying habits, and marketing channels. Some companies even name their personas (think, Homeowner Harry or Caterer Carol), and list their personality traits.

SMB Advisors advises that, in order to create a buyer persona, you need to determine these attributes:

  • Desires: What does your buyer want to achieve?
  • Challenges: What is stopping them from achieving their desires?
  • Outside Interests: What does your buyer care about? For example, if you are selling camping equipment, your ideal customer might also hike, mountain bike, and prefer rugged backpacking vs glamping. They may describe themselves as adventurous, outdoorsy, and a nature lover.
  • Communities: Where do they go for news and information? Are there active Facebook Groups for your buyer (ex. Mom groups, animal lovers, etc)? Perhaps they turn to LinkedIn to find out what their peers recommend before purchasing new software. They may subscribe to The Economist or Vogue magazine. Know where they spend their time and how they consume information. This is important when seeking to become a part of their community.

Step 2: Use the Value Proposition Canvas to Align Your Product with Customer Value

A Value Proposition Canvas is a tool created by Dr. Alexander Osterwalder to help businesses identify product/market fit. The canvas is a simple framework that aligns product features with a customer’s desire to mitigate pain and produce gains. A well thought out canvas leads to compelling Value Proposition Statements.

You can’t appeal to everyone but you can be the perfect solution to the right audience. The best way to learn what your customers need from you, is to ask them directly. Next, talk to your salespeople, they have their finger on the pulse of every sale.

Ask your existing customers to participate in an interview about their needs. Reach out to customers across all sizes, industries, and locations. They bought your product to solve a problem, big or small. If you sell landscaping services, find out from your repeat clients why they chose your business. You may learn that the main reasons are the value for the price, your prompt customer service, and that you complete projects on time.

Your salespeople will know what product messaging hits the mark and which messages fall flat. They’ve listened to many potential buyers explain their biggest challenges, and have the rapport to ask customers if the results matched their expectations.

Step 3: Assign a Value Proposition Statement to Each Buyer Persona

There is no perfect value proposition that resonates with all of your ideal buyers. For maximum impact, create multiple value propositions for each buyer persona you’d like to target. If you’re doing any form of targeted marketing like social media marketing or email campaigns, you should craft a different value proposition for each buyer persona to achieve maximum impact.

For example, if you provide IT services to small businesses, large businesses or government agencies, they will have different definitions of value. A small business owner may want a cost effective, fast, and reliable vendor. A company that sells nation-wide may want a vendor who prioritizes data security and has superior customer service. Government agencies may see value in supporting a small business in their district that is able to meet face to face.

Let’s continue our analysis of the various buyer personas for LinkedPhone. In a two-minute brainstorming session, we came up with various benefits each buyer persona values most. We’d then use this information to craft a unique message for each buyer persona’s landing page or email campaign.

What NOT To Write in a Value Proposition


Avoid common errors when crafting your value proposition. This includes industry jargon, overpromising and fluffy phrases.The most effective value propositions are direct and easy to understand.

Elevator Pitch Effectiveness - Practice Makes Perfect

Avoid Vague Meaningless Descriptors

Don’t use superficial statements that are vague and, frankly, meaningless. As Eric Berggen, Managing Director of Customer Value Innovation at Axios Partners, puts it, “High quality, easy-to-use, and complete solutions, are just feel good statements. Are any of your competitors claiming to have low quality, hard-to-use products that don’t solve the customers’ problem?”

Small Business Mobile Productivity App Features - Flexibility

Don't Be All Things to All People

Don’t err on the side of too high level with an unfocused proposition. You can’t provide the same value to each customer. The value of your low cost product may be it’s price and the option for a short term contract. The value of your highest priced product may be it’s expert customer service package and extensive customizations.

Elevator Pitch Component - Options and Versions

Don't Hide Limitations

Don’t hide your product’s limitations. Conversely, make it clear. Being transparent builds trust. If you say that your limousine service has the most competitive price in town, be clear that the trade-off is less amenities. Your price point sets you apart from your competitors and is the most important factor for some.

Good Value Proposition Examples


Square Logo - Value Proposition

Square

Our story starts with you. Square was established to give every business owner an easier way to take credit cards. We’ve grown our commitment since, offering a complete suite of business tools and equitable loans that give every eligible business with a dream access to funding. From side gigs to sports stadiums, we’re helping power businesses to succeed on their own terms.

Shopify Logo - Value Proposition

Shopify

We help people achieve independence by making it easier to start, run, and grow a business. We believe the future of commerce has more voices, not fewer, so we’re reducing the barriers to business ownership to make commerce better for everyone.

Amazon Logo - Value Proposition Example

Amazon

Teams around the world invent on behalf of our customers every day to meet their desire for lower prices, better selection, and convenient services. One way we guarantee a wide selection of products is through the 1.7 million small and medium businesses around the world selling on Amazon.com and offering more options for customers.

Stripe Logo - Value Proposition Example

Stripe

Payments infrastructure for the internet. Millions of companies of all sizes—from startups to Fortune 500s—use Stripe’s software and APIs to accept payments, send payouts, and manage their businesses online.

AirBnB

Airbnb is a community-based online platform for listing and renting local homes. It connects hosts and travelers to facilitates the process of renting. Moreover it cultivates a sharing-economy by allowing property owners to rent out private flats.

Tesla Logo - Value Proposition Example

Tesla

We make sustainable energy products accessible and affordable to more and more people, ultimately accelerating the advent of clean transport and clean energy production.

Apple Logo - Value Proposition Example

Apple

Why there’s nothing quite like iPhone. Every iPhone we’ve 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 simple, beautiful and magical to use.

Uber Logo - Value Proposition Example

Uber

Tap the app, get a ride. Uber is the smartest way to get around. One tap and a car comes directly to you. Your driver knows exactly where to go. And payment is completely cashless.

Slack

A message app for teams who put robots on MARS! NASA’s Jet Propulsion Laboratory is one of tens of thousands of teams around the world using Slack to make their working lives simpler, more pleasant and more productive.

Time to Start Storytelling


The value proposition is a valuable exercise for any business owner who wants to understand who their buyers are, what problems they need solved, and how to show that your company has the solution. Telling your customer’s story builds trust and leads to better conversion rates. But most importantly, it builds confidence for salespeople and business owners.

Small Business Resources by LinkedPhone

Add a Business Line to Your Cell Phone
Small Business Podcasts
Books for Business Growth
Small Business Mobile Apps
Top Entrepreneur Forums
The 30-Second Elevator Pitch
Perfect Voicemail Greetings
Add Click-to-Dial To Your Website
What is VoIP? How Does it Work?
Guide to Small Business Software
What is a Virtual Phone System?
How to Share a Team Phone Number
Toll-Free vs. Local Business Number
Learn the Parts of a Phone Number
Inspirational Small Business Quotes
Mastering the Art of the Cold Call

A special high five to Tahera Ali Khan for her outstanding research and contributions to this article. We love working with and supporting like-minded entrepreneurs. Thank you Tahera! ❤️

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