By Samantha McKay, RIC Centre’s Communications Intern
As an entrepreneur, you already know that building a value proposition is a critical step in your startup’s success.
Without a fully articulated and compelling value proposition, it is difficult for customers to understand why they should buy your product or service rather than your competitor’s.
What is a Value Proposition?
A value proposition is a statement that a company uses to explain why a customer should buy their product or service. A good value proposition is clear, concise, specific, and explains how the product is different and better than its competitors. The best value propositions can be read and understood in 5 seconds or less.
When building a value proposition, you should consider the following:
- How your product solves a problem or improves a situation
- What specific benefits customers can expect from using your product
- Why customers should buy from you rather than your competitors
There are many value proposition templates you can use to write your value proposition, but possibly the most popular is Geoff Moore’s Value Positioning Statement, which looks like this:
For ________ (target customer)
who ________ (statement of the need or opportunity)
our ________ (product/service name) is ________ (product category)
that ________ (statement of benefit).
If you want to see how RIC Centre guides our clients to create value propositions, check out this value proposition template here.
It is important to remember when building a value proposition that it does not overwhelm the reader (this could be your customer, investor, or potential partner) with a long list of features. It should be a punchy sentence or two that helps the intended reader understand the product or service you’re offering and generate interest and desire.
How Do I Start Building a Value Proposition?
When you are ready to create your value proposition, answer these three questions to brainstorm and write your statement:
1. What are the benefits?
Make a list of all the benefits your product or service offers to your customers. By listing all the good things you have to offer your customers, you are identifying the reasons why customers should buy your product.
2. How are the benefits linked to your value offering?
Identify what value your product will bring to your customer by making links between the benefits you have already identified and your company’s value offering, or why people should buy your product.
3. How do you differentiate and position your product or service?
Who is your target customer? What are you offering them? How are you different from your competitors? Answer these questions to complete your value proposition.
Why Do I Need to Start Building a Value Proposition Again?
A value proposition explains why your company has a competitive advantage over your competitors – with a great value proposition comes a great company.
Here are some examples of stellar value propositions to inspire you!
“Shopify is everything you need to sell everything.” – Shopify
“Shorten. Share. Measure.” – Bitly
“Hear the world’s sounds. Explore trending music & audio.” – SoundCloud
What is a lean startup? How do you talk to customers without sounding like a robot? How can I build the best team possible? What are the best ways to pitch to investors?
Here at RIC Centre, we know that building a startup can be difficult. Over the next 3 months, we will be sharing a 12-part series on our blog called #HelpMeStartup designed to clear up some common confusions among first-time startup entrepreneurs.
Are you in the process of building your value proposition? See how RIC Centre can help by checking out our services for pre-revenue startups. If you’re interested, don’t forget to register as a RIC Centre client to get access to all our tech-startup focused programming and resources!
Check out the first post here on Building a Lean Startup in 3 Steps.