3 Rules of a Compelling Value Proposition

Posted by Inc. in Advertising, Sales and Marketingon Nov 16, 2012 2:04:36 PM

To create a compelling value proposition, you have to know your three C’s: competencies, customers, and competitors.

by Karl Stark and Bill Stewart

A new school year has arrived. As teachers and students wipe away the cobwebs that formed over the summer, so too should we return to the basics of business: creating a compelling value proposition. This is the first topic on the first day of Business 101, yet the news is consistently filled with the stories of companies that have fallen out of favor because they have lost sight of how they provide value.

A gripping value proposition is important to a business at any stage, but never more so than at the start. In any new business venture, you are trying to motivate the most apathetic type of person: the consumer. You are either convincing them to move from a competitor or to buy something they did not know they needed. In either case, you have to provide them a reason to buy.

To create a compelling value proposition, you have to know your three C’s: competencies, customers, and competitors.

Know Your Competencies

The first step in creating a value proposition is knowing what you are good at (and what you are not). These core competencies serve as the building blocks for determining how your business creates value. What will you provide customers that they cannot get today, and how can you provide it in a way that uniquely differentiates your business?

These competencies are the foundation of your value proposition, and you should consistently work to further develop and improve them to maintain a compelling offering.

Know Your Customers

Having competencies that differentiate your firm from competitors is not enough. You also have to have a market, which means you have to understand your customers, their needs, and how best to serve them.

We recommend an activity from the Business 101 playbook: describe your first customer. To really know your customer, you have to have a deep understanding of their life, what drives them, and what keeps them up at night.  Take time to describe who your first customer is and how you can couple your competencies to better meet their needs. Designing a value proposition around your customers’ needs will better prepare you to move the apathetic consumer.

Know Your Competition

The final piece of a truly effective value proposition is knowing your competition. Markets and competitors tend to gravitate to the areas with the most distinguished and developed customer needs. However, these strategies limit differentiation and often do not represent the future direction of the market. Know your competition, their strengths and weaknesses, and develop a value proposition that meets the needs they are unable or choose not to address.

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