The Importance of Value Props for the End-user


Before the anti- marketing folks throw out value propositions as something just taught at the hallowed halls of institutions like Harvard Business and the Warton School, please hear me out. File this topic and article under “necessity is the mother of invention” and not just an academic exercise. Before I kick this into high gear, thanks to Michelle Montazeri of Legrand fame and DSF board member for urging me on to cover this topic. I will begin by tackling the “necessity” part of the story, keeping in mind that this is important from both a manufacturers and buyers/end users’ perspectives.

It is a fact that we live in a world fraught with parity and commoditization. A display is a display. A mount is a mount. A media player is a media player, and a CMS is… well, you get the point! We once had various levels of products under the umbrella of good, better, best, or more (remember Chevrolet, Pontiac, Oldsmobile, Buick, and Cadillac). There were choices and “value benefits” at each level of upgrade. The value may have been in quality, features, or status. For example, a Cadillac was considered higher quality, more features, and higher status than a Chevy.

Today we rarely see levels of “value benefits”. For example, a 55” 4K LCD display is just what it appears to be, whether it comes from one of the “biggies” or some lesser-known brands. Yes, I know brand does matter to some, and some do have brightness levels and extended duty cycles as options, but this does not negate the broader point. Fungibility reigns supreme and rears its ugly head when all models of a category or type are perceived by buyers/end users as equal value on par with one another. The real differentiation most often boils down to price. This is not good for the manufacturers… nor in reality for the buyers/end users.

What has exacerbated this phenomenon is the unfettered availability of information and buying online. Gartner research tells us that 70% to 90% of a buying decision takes place online before (or increasingly without) a salesperson being involved. A buyer does a Google search and comes up with an array of products to consider. They tend not to examine in depth. Part of this is a time issue and part is a desensitizing of critical thinking because they think they know (enough) about whatever it is they are looking for. The unseen danger in this approach is that cursory information online is often insufficient, inaccurate, or in some cases downright misleading. Many times, this approach does not tell the full story of a product from which to make a buying decision, let alone provide a proper gauge of differentiation among those appearing equal. Everything they see simply “looks” the same. In fact, what they need is a simple XYZ explanation of the basics, plus “alpha” (aka. a compelling and differentiating value proposition). File this under manufacturers educating buyers/end users.

If we take the issue of parity, commoditization, and fungibility and add to that the tangible and definable caveats (aka. risks and dangers) of buying online, this certainly establishes a necessity for clarification and differentiation for both manufacturers and buyers/end users. This is where carefully calculated and created value propositions come into play. For those who want a deeper dive into value propositions and how they are constructed, consider the following:

Need to Know!
A properly crafted value proposition distinguishes one company from another. Think differentiation! This is not the overall marketing strategy that speaks to a company’s profile at a high level, rather a specific subset of tangible and sellable benefits a buyer/end user will (not may) receive by doing business with you. The most common error in the creation of a value proposition is what experts call the “we are better” syndrome. The problem with this “quasi attempt” at a value proposition is that everyone says the same thing, meaning the message falls on deaf ears. Finely crafted value propositions are not formulaic and should articulate specific things to fill in the blanks of buyer/end user needs. Each market niche, depending upon their unique pain points, will require some fine tuning of the message. This is about the buyer/end user, not the manufacturer!
Technically speaking value propositions pose two questions: why you should buy from a company and not the competition, and just as importantly, why do anything at all. It refers to the value a company promises to deliver to customers should they choose to buy their product. The key here is creating value propositions that resonate with buyers/end users.

The task begins with a company’s overall marketing strategy that introduces a company’s brand by telling potential buyers what the company stands for and how it operates. Value propositions then become a critical part of the big picture of marketing and create a sales tool that tells the story of why it deserves their business. This statement (if worded compellingly) convinces a potential buyer that one or more particular products or services the company offers will add more value, or more effectively solve a problem for them than other apparently similar offerings.

In short, a company’s value proposition should not only provide a (succinct) list of reasons why a company, product, or service is best suited for that particular customer, but also educates them. This provides additional (differentiating and educating) information and lowers the risk of potential purchasing decision errors by focusing on a buyer’s/end user’s specific needs. A value proposition should be communicated to buyers directly, via the company’s website or other marketing materials or better yet in person. As noted, earlier one size does not fit all, and value propositions are not “fill in the blanks”. They can follow different formats, if they are “on brand,” unique, and company specific. A successful value proposition should be persuasive and help turn a prospect into a customer.

Creating a Value Proposition
At its core a value proposition is a promise from the company to the buyer. It needs to be simple yet persuasive in an easy-to-understand list of reasons why a customer should buy a product or service from that particular company. If the list is too long the buyers will not read it, and if it is too short then it lacks impact. Think Goldilocks, and the idea of “just right”. A value proposition should clearly explain how a product solves a problem and fills a need. It defines and communicates the specifics of its added benefits/value and states the reason why it’s better than offerings from similar companies on the market. To be effective a company needs to know their competitors and what they specifically do, and not just a general sense “knowing of” them.

Warren Buffett of Berkshire Hathaway fame tells us about what he called an “economic moat”. An economic moat is a competitive advantage. He states that the wider the moat, the bigger and more resilient the firm is to competition. Companies use this statement to target customers who will benefit most from using the company’s products, and this helps maintain a company’s “economic moat”. Ideally great value propositions demonstrate what a brand has to offer a buyer that no other competitor can match and show how a service or product fulfills a need that no other company can do as effectively.

Structuring a Value Proposition

Value propositions communicate a list of reasons why a product or service is best suited for a customer segment or vertical. The creation and careful editing down to a “short list” is critical, since it is the most effective tool we have to initially resonate and capture the attention of the buyers. It must be intuitive, so that a buyer/end user can easily read or hear the value proposition and understand the specifics of the delivered value without needing much further explanation.

Experts tell us that “Value propositions that stand out tend to make use of a particular structure. It begins with a strong, clear headline that communicates the delivered benefit to the company. The headline should be a single memorable sentence, phrase, or even a tagline. It frequently incorporates catchy slogans that become part of successful advertising campaigns. Often a sub-headline will be provided underneath the main headline, expanding on the explanation of delivered value and giving a specific example of why the product or service is superior to others the consumer has in mind. The subheading can be a short paragraph and is typically between two and three sentences long. The subheading is a way to highlight the key features or benefits of the products and often benefits from the inclusion of bullet points or another means of highlighting standout details.”

Keep your creative options open. Value propositions can follow different formats if they are unique to the company and target the buyers/end users of the company products and services. Effective value propositions are easy to understand and demonstrate specific results for a buyer/end user that selects a company, products, and/or services. To differentiate your company (products and services) from the competition, avoid overused marketing buzzwords, and communicate value succinctly to be read or viewed in a short amount of time. For a value proposition to effectively turn a prospect into a customer, it should clearly identify and understand who the customers are (think ideal customer profile or ICP), what their main problems are, and how the company’s product or service is the best available solution to help them solve their particular problem. A carefully crafted structure allows buyers to scan the value proposition quickly and pick up on your company strengths and differentiation. To craft strong value propositions, companies should conduct vertical market research to determine which messages resonate most effectively with their prospects and customers.

Words to the Wise in Writing a Value Proposition:
Gartner provides us guidance and tips on writing a value proposition. They answer the question as to what makes a good value proposition:

  • Clarity – Make it easy to understand.
  • Communicates specific results a customer will get.
  • Explains how a product or service is different and better.
  • Can be read quickly in under 5 seconds.

In writing cover the following:

  • 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.

Hopefully the case has been made (with support from recognized experts) for the necessity of creating and employing strong value propositions for both manufacturers and buyers/end users. It is informational, educational, and differentiates one from the others. The “distance” between wanting to create a great value proposition and doing it can be a true journey. The variables are significant. Today we have very few truly disruptive technologies, so it boils down to a company’s strengths, conducting market research to see where a company resides in the market, proactive marketing outreach, and the sales team carrying forth the message with value propositions that resonate. Be honest in your approach and think of tangible benefits that really solve customers’ problems and ways that make a company “special” in the minds of the buyers/end users. We are not in the solutions business but rather the problem-solving business. If your value proposition speaks to risk avoidance and problem solving for the customer in a convincing way you are ready to address and conquer the new reality of commoditization and parity and stand out from the competition.