What is a Value Proposition for a Business?


A value proposition is a promise by a company stating what value they will deliver to the customer and why customers should buy the company’s products and services in preference to it’s competitors.

A value proposition is also a declaration of intent or a statement that introduces the company’s brand to the customer, by telling them what the company stands for, how it operates, and why it deserves their business.

It is important that the wording of this statement is sufficiently compelling.  It must convince potential consumers of the number one captivating reason why a product or service that the company is offering, will add more value or better solve a problem for them than other similar offerings.  The ideal value proposition is to-the-point, goes deep into the problems that you want to solve for people, and appeals to a customer’s strongest decision-making drives.  If done properly, a great value proposition will demonstrate to the customer what value your brand can offer that no other competitor can, and how your products and services fulfil a need that no other company is able to.

Value propositions should stand out, be intuitive, simple to read, so that customers can understand the delivered value without needing further explanation.  It should always be displayed prominently on a company’s website and in other consumer promotional material.

Value propositions that stand out tend to use similar formats. A successful value proposition typically has a strong, clear headline that communicates the delivered benefit to the consumer. The headline should be a single memorable sentence, phrase, or even a tagline.

A subheading is frequently displayed beneath the main headline, further expanding on the delivered value, and giving an example of why the product or service is superior to it’s competitors. The subheading needs to be a short paragraph and is typically two to three sentences long. The subheading is an opportunity to highlight the key features or benefits of the product or service, and these are often listed as bullet-points or other methods of highlighting important details.

Quantifying the benefits to the consumer using the product or service (i.e. adding numbers), will further add credibility to the subheading and value proposition.

This type of format allows customers to scan the value proposition quickly and pick up on standout product features. Added visuals can also increase the ease of communication between the company and the consumer.

Irrespective of the format used, value propositions must be unique to the company and it’s customers. All effective value propositions are easy to understand, and demonstrate specific benefits of the company’s product or service to potential customers. They differentiate a product or service from any competition, avoid marketing jargon, and communicate value within a short amount of time.

The main features of an effective value proposition are:

  • States what the customer gets.
  • Explains how the product or service fulfils the customer’s need.
  • States the number one reason why the product or service is best suited to that customer.
  • States why buy from me, in preference to the competition.
  • Adds quantified value to the proposal.
  • Written in a language that the customer can easily understand.
  • Brief and to the point.

Although customers provide profits and a customer value proposition (CVP) will help you attract customers, you also need to attract staff that can help you deliver on your value proposition. This is where employee value propositions (EVP) come into play.

These two types of value propositions will be worded differently; they are targeted at different audiences and are attempting to achieve different aims.  Here is a list of the key differences:

  • CVPs describe a solution to a customer’s problem. EVPs describe a reward for an employee’s talents.
  • CVPs explain why someone should buy from you. EVPs explain why someone should work with you.
  • CVPs are about you serving the customer. EVPs are about you and the employee serving each other.

The simplest way to write an EVP is to understand the benefits that the company is trying to provide for it’s customers.   There are only four types of consumer benefits that matter and by extension only four categories of value propositions that work.

  1. Best Quality. Richard Branson once said that being the best at something is a pretty good business model.
  2. Best Value for Money. Recessionary worries always entice some consumers to buy according to price.
  3. Luxury and Aspiration. While such companies tend to hurt during recessionary downturns, as the economy rebounds, their chances of recovery improve as customers return to buying luxury goods and their discretionary spending increases.
  4. Must-Have. There are basic items that we must all have. These items include certain foods, cleaning products, and clothes.  You will still have competition, but you will be sharing a strong ‘must-have’ category to service your customers.

If your company’s value proposition does not fit into one or more of these categories, it is time to adjust.  Work out how to reposition yourself and aim for a new standard.

  1. Identify all the benefits your product offers.
  2. Describe what makes these benefits valuable.
  3. Identify your customer’s main problem.
  4. Connect this value to your buyer’s problem.
  5. Differentiate yourself as the preferred provider of this value.

A value proposition is not simply about the product or service that you agree to deliver to the customer: it is the ingredient of your business that solves a problem your competitors cannot.  Your value proposition is your unique identifier. Without it, people don’t have a reason to work with you over somebody else.

While your value proposition should help differentiate you from the rest of the industry, it is not a slogan, tagline, nor even a strategy to position yourself within the market. Those types of copy are important accessories to your brand, but your potential customers and employees don’t choose one business over the other based on a high-level mission statement.

Now you have written your value proposition you need to test and tweak it to find out if it actually resonates with your audience.  It is established that 54% of companies are not testing their value propositions. Whilst they are using unoptimized value propositions, you can use this to your advantage to get ahead of the competition by optimising yours.

A value proposition is an integral part of your business strategy.  Companies that use a value proposition to target customers who will most benefit from using the company’s products and services, are using this statement to maintain an economic moat.  An economic moat is a competitive advantage. This term, first coined by the multibillionaire Warren Buffett of Berkshire Hathaway, states that the wider the moat, the bigger and more resilient the firm will be to competition.

Your value proposition is the core of your competitive advantage. It clearly articulates why someone would want to buy from your company instead of a competitor.

Satisfying your customers is the source of sustainable growth and value creation.  A value proposition can be presented as a business or marketing statement and can apply to an entire organization, parts thereof, customer accounts, or products and services.

Hope you enjoyed this read and have a wonderful day,

From the FYR team.