I have some bad news and good news.
The bad news is that you probably don’t have a good value proposition. I mean that in the nicest way. But really, the more I learn about value propositions, the more I realize how many companies don’t know how to formulate them. In 2006 (before I was at MarketingExperiments), MarketingExperiments conducted an experiment offering a $100,000 reward for the person or company who could express the best value proposition on a 5×7 index card. The vast majority of the submissions (over 400 in 4 weeks) could not even formulate a really strong value proposition. The details for the experiment can be found here.
The good news is that your competition probably doesn’t have a good one either. In that case once you develop a good value proposition you will gain an instant competitive advantage for you and your company.
Now, to answer my first question,
Question 1: What is it exactly that I am supposed to communicate in my value proposition? Is there a guideline or formula of some sort for this?
The main response I am getting to this question from the top dogs here at MarketingExperiments is simple: A value proposition should communicate the main reason someone should buy from you.
To get more specific, a Value proposition should answer three questions:
– Why is your product different?
– Why is your product better?
– Why are you the best choice?
To have a good value proposition, your offer must satisfy a customer need that none of your competitors is satisfying. Even if you are on par with your competitors in every way, you must have at least one thing that sets you apart and above everyone else. This one uniquely valuable quality of your offer is the heart of you value proposition. So value propositions basically answer this question: Why is your offer uniquely better for your customer?
To really get a grasp on this, I felt as though I needed some examples of what could make a product uniquely superior to a competitor’s. I asked around and here are two examples I received:
Example #1
Your product or service has a quantifiable and independently verifiable superiority in a key decision element such as customer service, product quality, free shipping, or speed of delivery.
– You have the highest rated customer service by a recognized 3rd party authority.
– You are offering a warranty that no one else offers.
Example #2
You have exclusive ownership or rights to an important product characteristic or component.
– You have a patent on an exclusive and uniquely effective approach to optimizing Website landing pages.
Finally, as far as I know, MarketingExperiments has not yet unveiled any formulas for making clear and strong value propositions. But they do have really good resources on the topic in the MarketingExperiments Compendium, the MarketingExperiments journal archives, and its certification courses. They have many key points to follow when formulating and evaluating value propositions, some of which I will write about later.
I hope this helps. So far I feel as though I am getting a better grasp on what makes a good value proposition. I will continue answering the questions I originally posed. Feel free to submit any other questions you have about value propositions. Also, if you have a value proposition you would like me to get someone to look at and comment on here, feel free to send that to austin.m@marketingexperiments.com. I will see what I can do.