How To Create An Effective Value Proposition In 3 Steps

Posted by Michael Lindberg on Nov 24, 2016 12:19:18 PM

create a value proposition

Satisfying Your Customers

The art of running a successful business is a customer-satisfying process, not a goods-producing process. That is why you need to constantly find ways to delight your customers and never forget: with so much competition, markets are driven by choice; customers have so many choices! Companies that do not stand out and delight their customers will get lost in the crowd.

The first thing you must do is to find out which needs to cater to: Nobody needs a washing machine, they want clean clothes. So, you need to rise above the product and what it does and instead focus on what benefits it brings to your customers. This is an important part of an effective value proposition that must describe 1) how you deliver value, and 2) how your customers benefit from that value.

3 key criteria for an effective value proposition

When constructing your value proposition, it is useful to think of a three-legged stool. It is in itself wobbly, but what happens if you remove one leg? The stool tips over. It is the same with value propositions. They have to meet the following three criteria:

  1. Resonance: Customers must have a real need for the product
  2. Differentiation: Customers should find it difficult to substitute the product
  3. Substance: Customers must believe that the product lives up to its promises

No resonance: If the product is not perceived to solve a real need, then there are no customers. 

No differentiation: If the product is perceived as a “me too” product, you will end up competing on price. 

No substance: If the customers are unsure whether the product lives up to what it has promised, they will choose another supplier.

How do you keep the customers that you've attracted?

Let’s assume you have a strong value proposition and are successful in attracting customers. What do you do to keep them? Many businesses believe that in order to increase loyalty, they must exceed their customers´ expectations. However, it is often both very difficult and expensive to accomplish this. In fact, research has shown that the impact on loyalty is very small. Instead, the best way to keep your customers coming back is to simply live up to their expectations in terms of what you deliver (your products and services) and to make doing business with you easy and uncomplicated. That is a true loyalty driver, so making it easy to do business with you must be a fundamental part of your business plan, as this will delight your customers. 

Download Whitepaper

The creation of effective value propsitions is a key part of Lindberg International's 8-step Mission to Mars growth concept. For further insight please download our free Mission to Mars whitepaper.


Topics: Marketing, Sales