In this section of the business model, I’ll show you the different types of partner relationships, how to decide what partners to choose and what to consider – the common mistakes that people make.
What Are Key Partnerships?
A business partnership is when companies (commercial entities) form an alliance, which is either exclusive or loose. Loose relationships mean that both parties can still partner with further entities, whilst exclusivity limits to either company to that that one relationship.
Most partnership relationships are for the simple reason that most businesses want to have a spread of other businesses to reduce risk and provide opportunities for growth.
When considering a partnership there are several factors that need to be considered.
Link to Value Proposition.
Selection criteria.
Partnership agreements.
Defining terms and service levels.
Development of a win-win relationship.
1. Value Proposition and Key Partnerships
The key partnerships building block refers to the commercial companies that help to deliver the overall value proposition. These companies can supply needed infrastructure, services, materials, parts, products and so on. They are instrumental in helping you develop your overall business model.
One way of viewing partners is they can be outsourced suppliers of key activities and resources that you need but are not core to your business.
Another factor for consideration is fluctuations in demand. As an example, if you are in the business of producing events you might hire sound equipment rather than purchase it.
The reason for this is that you have a fluctuating demand for it and there are plenty of suppliers.
Key partnerships provide a huge variety of ways to create value and it is often a combination of partners that makes an organization unique.
2. Selection Criteria
The goal when choosing partners is to optimize value. Traditionally, the focus has been to drive down costs by sourcing more flexible solutions from partners for activities that are non-core.
However, quality and not price are a key factor when deciding which partner – your brand and business can be severely damaged if a poorly chosen supplier doesn’t provide consistent service levels or products to the quality you need.
Selection criteria help you to create a checklist in simple terms of the most important factors for selection. There are hard and soft factors. Hard factors are the specifications of the service or products.
However, often an overlooked but equally important factor is the soft factors.
Soft factors are related to how well two businesses can work together. Some of the soft factors for partner relationships are:
the similarity of the cultures.
vision and values of the two companies.
ambitions and attitudes.
In a nutshell, if the people are at polar opposites of culture and values then the partnership is more than likely to be bumpy or even fail.
3. Partnership Agreements
Both parties need to agree to different factors that have operational, intellectual and financial implications. The first stage is to define the elements of the partnerships and then define how they will affect each partner.
Of course, as discussions progress and the details are clarified, legal conditions have to be considered and agreed upon as well.
4. Defining Terms and Service Levels
Terms set out intentions in a clearly and concisely. The terms of an agreement comprise of financial, legal, operational and administrative aspects. In addition, there needs to be a summary fo the interactions and exchanges.
This enables all parties to focus on the important matters without having to go through the exhaustive details within the overall document. Service levels are the minimum delivery level required.
As an example, a web hosting service might commit to 99.5% uptime.
5. Developing A Win-Win Partnership
There are always areas for negotiation especially for high-value contracts involving complex services. However, if when entering negotiations you aim to not compromise or work towards some common ground then you are entering a win-lose agreement. Whilst, you might feel as though you have won, often suppliers then look to cut corners to make up for difficult to meet agreement conditions and margins.
A much better way of operating is to aim for win-win agreements.
Business Model Key Partnerships
Key Partnerships building block of the Business Model Canvas
Some considerations for choosing a partner are:
Optimization – efficiencies and scale.
Reduction of risk and uncertainty.
Outsourced activities and resources.
1. Optimization
For these types of partnerships, the goal is to identify and partner with companies that provide low-cost solutions because of their scale. As an example, many companies including Spotify use Google Cloud. Soem of the reasons for this are:
cheaper than buying, running and owning web servers.
Google Cloud can easily scale as a business grows.
Google Cloud infrastructure is global.
2. Reduction of Risk and Uncertainty
By jointly working together partners can reduce investment risks and uncertainty. Often this is the case with highly technical research and development programmes.
3. Outsourced Activities and Resources
When areas of expertise can be sourced through partner companies it is often more beneficial to outsource to them rather than hiring teams of people. This leaves a company able to focus on its core activities that fit to the value proposition.
Types of Key Partnerships
There are different types of partnership that could be useful to your business, such as:
Buyer-Supplier partnership: This is the most common form and it could help you to have a reliable and systematic source of supplies for your business.
Co-opetition: Partnering with another company producing the same thing to gain more market share, reduce risks and create synergies.
Strategic Alliance: this kind of partnership is formed between non-competitors.
Joint Venture: Partnering with a complementary company to produce a new product.
Key Questions
What if we found a partner who could manufacture core resources for cheaper than we can do it ourselves?
Who else could stock our products?
What other services could benefit from integrating what we do?
How can we use our spare capacity to solve problems for other companies?
Whose brand could we leverage to build our credibility?
What services will other businesses require in the future that don’t exist today?
Red Bull and GoPro. GoPro sells more than portable cameras, while Red Bull sells more than energy drinks. They are both lifestyle brands that have similar goals. This illustrates how they both overlap in terms of audience and brand. They have the following in common:
Fearless
Adventurous
Extreme
Action-packed
Spotify partnered with Uber because they both had the same goal of getting more users even though they had different products. Uber riders can pick out a Spotify playlist to choose what they’ll listen to during their ride. This helps both Spotify and Uber fans have a better experience during their ride in the car.
Over the past 10 years we’ve been lucky to have a tremendous amount of content, practice and experience shared to help us build and design better products, services and businesses. One of the core concepts being adopted broadly from this body of work is the hypothesis — a tactical, testable statement used to help us frame our ideas in a way that encourages experimentation, learning and discovery. The idea is that we write our ideas, not as requirements, but as our best guesses for how to deliver value and with clear success criteria to tell us whether our idea was valuable and we delivered it in a compelling way.
While there are many templates, the one I’ve been teaching for the past few years looks like this:
We believe [this outcome] will be achieved if [these users] attain [a benefit] with [this solution/feature/idea].
I like this template because the act of filling it out is the first test of the hypothesis. If you and your team can’t complete this template in a way that you believe that’s a good indication you shouldn’t be working on that idea. But, assuming you’ve come up with some good ideas, you end up creating a new challenge for the team.
SO MANY HYPOTHESES, SO LITTLE (DISCOVERY) TIME
If you only have one hypothesis to test it’s clear where to spend the time you have to do discovery work. If you have many hypotheses, how do you decide where your precious discovery hours should be spent? Which hypotheses should be tested? Which ones should be de-prioritised or just thrown away? To help answer this question I’ve put together the Hypothesis Prioritisation Canvas. This relatively simple tool and a companion to the Lean UX Canvas can help facilitate an objective conversation with your team and stakeholders to determine which hypotheses will get your attention and which won’t. Let’s take a closer look at the canvas.
WHEN SHOULD WE USE THIS CANVAS?
If you’re familiar with the Lean UX Canvas, the Hypothesis Prioritisation Canvas (HPC) comes into play between Box 6 (writing hypotheses) and Box 7 (choosing the most important thing to learn next). If you’re not familiar with it, the HPC comes into play once you’ve assembled a backlog of hypotheses. You’ve identified an opportunity or problem to solve, declared your assumptions and have come up with ideas to capitalise on the opportunity or solve the problem.
WHAT KINDS OF HYPOTHESES WORK WITH THIS CANVAS?
The HPC is designed to work with any hypothesis you come up with. It can work with tactical, feature-level hypotheses as well as business model hypotheses and everything in between.
HOW DO WE USE THE CANVAS?
The canvas is a simple matrix. The horizontal axis measures your assessment of the risk of each hypothesis. This is a team activity and is the collective best guess of the people assembled of how risky this idea is to the system, product, service or business. The challenge with assessing risk is that every hypothesis is different. Because of this, your risk assessment will be contextual to the hypothesis you’re considering. For example, you may have to integrate modern technology with a legacy back end system. In this case the risk is technical. You may be reimagining how consumers shop in your store which is risky to your customer’s experience. Maybe you’re considering moving into an adjacent market after years focusing on a different target audience. The risk here is market viability and sustainability. Every hypothesis needs to be considered individually.
The vertical axis measures perceived value. The key word here is “perceived.” Because this is a hypothesis, a guess, the value we imagine our ideas will have is exactly that, imagined. It won’t be until a scalable, sustainable version of the idea launches that we’ll know whether it lives up to our expectations. At this point we can only guess the impact the idea will have on our business if we design and implement it well.
We take each hypothesis we’ve created to solve a specific business problem and map it onto the HPC’s matrix. Once we’ve completed this process, we assess where each hypothesis landed.
BOX 1 — TEST
Any hypothesis that falls into this box is one we should test. Based on what we know right now this is a hypothesis with the chance of having significant impact on our business. However, if we get it wrong it also stands the chance of doing damage to our brand, our budget or our market opportunity. Our discovery time is always precious. These are the hypotheses that deserve that time, attention, experimentation and learning.
BOX 2 — SHIP & MEASURE
High value, low risk hypotheses don’t require discovery work. These are ideas that have a high level of confidence and, based on our experience and expertise, stand a good chance of impacting the business in a positive way. We build these ideas. However, we don’t just set and forget these solutions. We ship them and then measure their performance. We want to ensure they live up to our expectations.
BOX 3 — DON’T TEST. USUALLY DON’T BUILD.
This is, perhaps, the least clear quadrant because there are ideas that may fall here that have value despite the “low value” indication on the matrix. To be clear, hypotheses in Box 3 don’t get tested. In most cases they don’t get built either however there will be times where ideas land in this box that we need to build a successful business but that won’t differentiate us in the market. For example, if you’re going to do any kind of commerce online you’ll need a payment system. In most cases, how you collect payment is not going to differentiate you in the market. These types of ideas often end up in Box 3. They’re table stakes. We have to have them to operate but they won’t make us successful on their own. In these cases we build them, ensure they work well for our customers but don’t do extensive discovery on them prior to launch.
BOX 4 — DISCARD
Hypotheses that we deem to have low value and high risk are thrown away. Not only do we not do discovery on them, we don’t build them either. These are ideas that came up in our brainstorm that we’ve not realised won’t add the value we’re seeking.
Ultimately the value of the HPC will be realised if and how your team uses it. Take it out for a spin. It’s intended to be a team activity. Let me know how it works for you, where it can be improved and whether you find it useful or not.
As an engineer, my primary specialization is control systems. I spent much of my career in the aerospace industry, which uses high-performance control systems. Currently, I’m in the process industry that also utilizes control systems. While I’m less involved now in the actual control in terms of reporting overall performance, I’ve always been around control systems. So, it’s natural that I model business optimization using these systems. I use a control system for leadership and behavior modeling to manage organizations.
Control Systems
The image at the top of the post is a basic block diagram for a control system. It’s a dynamic system that’s meant to represent differential equations, dynamic flows, and physical systems that move. An engineer typically starts with a system model, which is a model of something, a behavior, or an activity. In the controls world, that might be something simple like an elevator or complex like a spacecraft. And, there is a model for its behavior.
For an elevator, it describes how the motor works and how the gears function. When the motor turns on, it explains the response rate. The control system is something to make the system do what you want. Let’s say we want the elevator to go to the second floor. The desired input is “go to the second floor.” This tells the system model to head to the second floor. The output measures its position – heading to the second floor. In the case of an airplane, it might be a performance parameter or something like straight, level, climbing, or diving. Then, the system measures the difference between what the model is doing and what the desired output is. That difference goes into the control logic, which comes back and usually that changes the control system.
If the elevator is far from the second floor, the logic may turn the motor on all the way, 90-100%, but as the elevator approaches the second floor, the logic says to start slowing down. The elevator keeps moving until it precisely reaches the second floor, i.e., when the output is zero. Once this happens, the control system input is zero. This model is of the system feedback logic for turning motors on.
Process for Designing Control Systems
Determine the desired result
Observe the system
Hypothesize the model
Test the hypothetical model
Adjust the model until the results are able to be predicted
Design and build the control logic
Test the system
Adjust the control logic until the desired results are obtained
I’ve found that you can take this engineering theory of how control systems operate and extend the model. If you’ve read any of my other posts on behavior like Rock Theory of Management, you see that I follow these eight steps. First, I decided that I didn’t want to rewrite my pitches and plans continuously. After observing the system for a time, I proposed that the reason management made decisions was based on what time it was rather than actual performance. My hypothetical model was a big change that I had to test, which was scary, but it worked well. I tuned the control system, and soon, management liked the approach.
Robust Control Systems
To build a more robust system, it must be able to handle unknowable realities, such as external disturbances, modeling imperfections, and measurement imperfections. On an airplane, an external disturbance might be wind or turbulence. Sometimes, the model isn’t exactly right, leading to modeling imperfections. For example, when trying to model behavior in negotiations or what motivates people, you can’t predict the reactions precisely.
Measurements of performance can be imprecise as well. If you want to do something simple like reaching a monetary goal, then count the money. But if the goal is to get high performance out of an employee, one never knows if the highest performance was achieved. It’s hard to measure unless it’s perfectly objective, which rarely happens in the business world.
A control system must be able to handle these disturbances. Otherwise, it is an open loop control system. For an elevator with an open loop control system, the system might send the elevator to the first floor, turn the motor on for 33 seconds, and then turn it off. The elevator should be at the second floor. Now, this works great … unless the lubrication is worn down, the temperature changes, the motor starts to burn out, or the weight of the people in the elevator is different. There are too many differences to account for. To build a better elevator, the elevator should measure where it is currently and measure along the way to the second floor. The control system must take into account variables by receiving feedback. Control systems used in business situations require these robust systems.
Business Application
One definition of strategy is “plan of action designed to achieve a particular goal.” Strategies and tactics fit nicely into control systems. They have a plan with a feedback control system to go from a desired goal to what you want.
I have several models related to this, such as the pie model, Congressional staff, and study habits. Build a model for what you think motivates the situation, and hopefully, it’s resistant to disturbances and imperfections in your system model and measurements.
In this article, you’ll learn how to craft a compelling value proposition. But before you do that you need to understand what creates value and how the different elements can be used.
What Is A Value Proposition?
In simple terms, a value proposition answers the question of why a customer will buy your product compared to another. A value proposition succinctly expresses creates a strong first impression.
A value proposition is a clear statement of the tangible results a customer gets from using your products or services. It’s outcome focused and stresses the business value of your offering.
In this article, I’ll cover the value proposition from a number of different perspectives. A lot of people struggle with the value proposition so it’s worth taking time to understand what is value?
Smith and Wheeler (2002)[mfnSmith, S. and Wheeler, J. (2002) Managing the Customer Experience. FT-Prentice Hall. Harlow, UK.[/mfn] consider that designing what they refer to as a ‘branded customer experience’ is vital to delivering an effective value proposition. They also stress the importance of “developing a profound understanding of the customer’s experience”. The keyword is profound – they suggest that detailed research must determine the nature of value which will drive buying and loyalty behaviour.
JTBD Theory Of Value
People do not want a quarter-inch drill, they want a quarter-inch hole.
Theodore Levitt
Therefore, this theory focuses on the jobs-to-be-done by the potential customer. A jobs-to-be-done analysis allows switching the focus toward
The “job” the customer is trying to get done. This is the unit of the analysis.
Groups of people trying to get a job done define the market, rather than focusing on a product, or features of a product.
Customers become job executors.
This implies that you can group customers’ demographics and psychographics based on the struggles they experience in getting the job done.
A “job” is not a description of what the customer is doing, the solution they are using, or the steps they are taking to get a job done. Rather, the “job” statement embodies what the customer is ultimately trying to accomplish.
According to the jobs-to-be-done theory, which also informs the value proposition canvas, those jobs can be summarized as:
Functional jobs
Social jobs
Emotional jobs
Supporting jobs
Value Proposition: Tell Me Why I Should Buy From You
Kotler – in his book “Kotler on Marketing” – defines a value proposition as an answer to a key question that your potential customer has: “why should I buy from you?”
According to Kotler, a value proposition is critical to define the context in which the product needs to be positioned. More importantly to achieve a value proposition the business must go through four steps:
Brand positioning
Specific positioning
Value positioning
Total value positioning
In explaining brand positioning, Michael Porter highlights how a business should focus on achieving an advantage either as a product differentiator, a low-cost leader or a niche player.
According to Kotler, positioning opportunities can be classified as follows:
Attribute positioning
Benefit positioning
Use/application positioning
User positioning
Computer positioning
Category positioning
Quality/price positioning
In choosing a value proposition, Kotler argues that buyers think in terms of “value for money: or what they get for what they pay.”
Why Use A Value Proposition?
It can be hard coming up with ideas around value and matching those to your customer segments. In fact, a poor value proposition is one of the contributing factors as to why startups fail. If you look at startup failure rates they are unbelievably high:
97% of seed or crowdfunded companies eventually dying or becoming “zombies.”
Many of these reasons link back to how the business model was designed. In particular, the lack of customer understanding or a poor value proposition.
Top Reasons Startups Fail
Most start-ups fail because they place too much emphasis on the ‘idea’. They fall in love with their idea more than they fall in love with understanding the customer.
Another reason is that the business model and value proposition wasn’t tested thoroughly.
Why is the value proposition so important? If you have a new product then the first hurdle is for your target customer to understand why they should buy it. Moreover, simply understand it and in seconds is a good start.
People make decisions in milliseconds and your value proposition has to be clearly understood and strong enough to convert potential customers.
As a result, and because of the high failure rates, more businesses are focused on developing early-stage ways to test both the product/service and the value proposition.
The bottom line is that customers aren’t interested in you or your products – they don’t spend hours of each day day-dreaming about your product or thinking about your business
The harsh reality is customers are only interested in themselves and you only fit it to their life’s if you are useful.
what you can do for them that makes them feel better.
how you make their lives easier.
make them feel better about themselves.
If you’re going to communicate with customers, you need to first understand their preferences and requirements, then learn how to speak their language. This is the foundation of all marketing.
The Business Model Canvas Value Proposition
The Value Proposition section of the Business Model Canvas.
If you have several customers all seeking the same product for a different primary benefit, and you message all of them about the same benefit, you will not get traction, you will simply waste your time, energy and budget.
Value is contextual – what appeals to one set of customers might not appeal to another.
A person buying flowers for a wedding has a different set of needs and requirements compared to someone buying flowers for their partners to be romantic.
While taglines, slogans and positioning statements are important to your brand, they influence a customer’s decision to buy. A value proposition, however, is not a slogan, a tagline, or a positioning statement. This is a mistake that many people make.
What Is Value?
The Value Pyramid
Maslow Hierarchy of Needs
Maslow’s hierarchy of needs is a motivational theory in psychology comprising a five-tier model of human needs, often depicted as hierarchical levels within a pyramid.
I’ve included two visual diagrams that neatly summarize a hierarchy of value – one for B2C and one for B2B. If you are familiar with Maslow’s hierarchy of needs (image above) you will see many similarities of a value mapped to the different layers.
Broad Value Categories
Performance – improve a task, process or an overall result e.g. sales.
Risk reduction – reduce the level of uncertainty in making a decision or an investment e.g. money-back guarantee.
Accessibility – provide access to otherwise expensive assets or experiences.
Customization – provide a product or service that is tailored to an individual’s needs.
Convenience – make it easier to do – quicker to get done.
Connectivity – make it easy to connect buyers to sellers e.g. Musical talent to fans (Spotify).
Save money – compare the market and hence find the best price e.g. hotel comparison sites.
Social status – make me look good feel good – enhance how people see me.
Design – make something unique and aesthetically appealing.
Experiences – moments (either individual or shared) that enrich or enhance a person’s life.
While broad categories are useful I find that most people want specific examples to play as they design their business model. Using individual elements, and sensing how they fit in the hierarchy, makes the development of the value proposition much easier.
B2C value pyramid – Bain & Company Inc
B2C Value Elements
Functional Elements
Avoids Hassles
Connects
Informs
Integrates
Makes Money
Organizes
Quality
Reduces Cost
Reduces Effort
Reduces Risk
Saves Time
Sensory Appeal
Simplifies
Variety
Emotional Elements
Attractiveness
Badge Value
Design/Aesthetics
Fun/Entertainment
Nostalgia
Provides Access
Reduces Anxiety
Rewards Me
Therapeutic Value
Wellness
Life-Changing Elements
Affiliation and Belonging
Heirloom
Motivation
Provides Hope
Self-Actualization
Social Impact Elements
Self-Transcendence
B2B value pyramid – Bain
B2B Value Elements
Business to business buying is different in many ways to B2C. Often buying cycles are longer, products and services more complex, involve more people and are of a much higher value. For this reason, the principles and elements of value differ.
Table Stakes
Acceptance Price
Ethical Standards
Meeting Specifications
Regulatory Compliance
Functional Value
Cost Reduction
Improved Top Line
Innovation
Product Quality
Scalablity
Ease Of Doing Business Value
Strategic
Component Quality
Flexibility
Reach
Risk Reduction
Operational
Connection
Integration
Organization
Simplification
Access
Availability
Configuration
Variety
Productivity
Decreased Hassles
Information
Reduced Effort
Time Savings
Transparency
Relationship
Commitment
Cultural Fit
Expertise
Responsiveness
Stability
Individual Level
Design and Aesthetics
Fun and Perks
Growth and Development
Marketability
Network Expansion
Reduced Anxiety
Reputational Assurance
Inspirational Level
Hope
Social Responsibility
Vision
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.
Quantifiedvalue – 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.
Value Proposition Elements
Newness
Some value propositions are based on the newness or novelty factor they provide. This element usually comes into play for technology-intensive products and often fits early-adopters as a customer segment. As an example, the launches of new iPhones and the subsequent queues at stores have become an annual event.
Performance
Improving the performance of a product has led to many reinventions of products. Shampoos and facial treatments are a good example of how new ingredients give rise to new value propositions within the market. However, it is hard to compete on performance alone unless your product creates a substantial difference in the marketplace.
Customization
Consumers trends and technologies have converged to create a world where companies now are actively seeking new ways to personalization products and experiences.
In a report by Internet Retailing, 69% of consumers want to have a personalized experience, yet less than 50% of brands are actually delivering.
Nike lets its customers customize their shoes through NikeID on their website. A consumer can go online and create a completely original design with their preferred colour palette, placement, colour and size of the swoosh etc for their shoes. They can see what the end product will look like visually, play around with different permutations till they reach a result that suits their tastes and then order the final product when they are ready.
Getting The Job Done
When a product helps a consumer or business reach the end goal, its value proposition results from how it helped the customer to achieve their goal – or expressed differently get a job done.
Design
Most clothing labels rake in a higher price tag because of the superior design they have. Prada charges top dollar for something as simple as a T-shirt because of the strength of its designs.
Brand/ Status
Design and brand/status can be clustered together because their appeal is quite similar. Just as people will show loyalty to a brand because of its design, people will also show loyalty to a design because of the perceived status the brand name offers to the owner.
Price
Price alone is a dangerous proposition to rely on unless it is supported by other elements. As an example, there are many ‘no frills’ airlines like Southwest airlines. However, soon other airlines also replicated their offer and in fact, some companies created secondary brands in the market. Low price value propositions and strategies need to be supported by efficiency in operations and usually self-service customer relationships.
Cost Reduction
Products and services catered towards enhancing customer experience by reducing the cost a customer would ultimately incur cater to the cost reduction value proposition. Many price comparison sites open up transparency and easy access to pricing that otherwise would be hidden. In doing this they offer value by allowing customers to make savings on third party products or services.
However, if you are a third-party service this places a greater emphasis on using other variables to create a difference.
Risk Reduction
The less risk associated with purchasing a product or service, the more likely a customer is to buy it. Risk reduction is an important factor for both B2C and B2B customers and increases as a factor as the level of investment increases.
Accessibility
Another key ingredient for an effective and robust value proposition is making a previously inaccessible product or service available to a consumer segment. Innovative technologies and variations in business models have both led to offering accessibility to unserviced customers. NetJets is a wonderful example of providing accessibility.
How To Design Your Value Proposition
Identify all the benefits your product offers.
Describe what makes these benefits valuable.
Identify your customer’s main problem.
Connect this value to your buyer’s problem.
Differentiate yourself as the preferred provider of this value.
An Introduction To The Value Proposition Canvas
There is a better way to think about market segmentation and new product innovation. The structure of a market, seen from the customers’ point of view, is very simple: They just need to get things done, as Ted Levitt said. When people find themselves needing to get a job done, they essentially hire products to do that job for them.
Clayton Christensen
The Value Proposition Canvas by Alexander Osterwalder and Yves Pigneur
Having defined your customer segments and understood their goals you want to create a powerful and compelling value proposition.
The value proposition needs to ‘FIT’ with your customer segment and focus on your customer needs.
Use ‘Pains’ to identify ‘Pain Relievers’
Use ‘Gains’ to identify ‘Gain Creators’
How Do You Write A Value Positioning Statement?
Identify all the benefits your product offers.
Describe what makes these benefits valuable.
Identify your customer’s main problem.
Connect this value to your buyer’s problem.
Differentiate yourself as the preferred provider of this value.
A Value statement is what’s important to your company, what it prioritizes, and how it conducts itself.
A Value Proposition is a statement that paints a clear picture of what your brand has to offer. It tells your potential customers:
How your product or service solves/improves problems.
What benefits customers can expect.
Why customers should buy from you over your competitors.
Value Proposition Checklist
When you have created your value proposition check that you can answer these questions:
Did you order your value proposition?
Are you clear why your value proposition fits the hierarchy?
Can you clearly state how you value proposition fits customers pains/gains?
Does this proposition create a strong first impression?
Does the proposition match what we know about this customer segment?
As celebrated advertising guru David Ogilvy pointed out:
The trouble with (conventional) market research is that people don’t think how they feel, they don’t say what they think and they don’t do what they say.
David Ogilvy
The point is that despite how well you craft your value proposition you still need to test it.
Outcome
After completing this section you will have developed your value propositions for each customer segment. You should also buy now have a much more detailed understanding of your customers and what motivates them.
