More often than not when I've asked first time entrepreneurs about their value proposition they often fumbled and launched themselves into a 15 minutes rant on how they do xyz, but could also do abc and pretty much anything else because well, their app is so awesome.
If you ever did that with a prospective customers or an investor you're guaranteed to be shown the door almost immediately (they'll be polite and nod for a few minutes first).
But most important that kind of confusion is going to make it impossible to form clear hypothesis and test anything, leading to an equally confused product, weak outreach and messaging.
So how do you fix that?
Your customers, your investors and you
A well written value proposition, like anything else that needs to communicate something, has a recipient and should change depending on who that is.
There's often the tendency to think of 3 distinct buckets:
- customers
- investors
- you
in my experience the most effective value proposition template is actually equally suitable for you and your investors so I tend to look at 2 buckets rather than 3.
The main difference between the two is that for you and your investors you want something that expresses the entirety of the business, not just what you offer, while the customers only care about the benefits they'll get from your product.
Like X for abc
It's very common for people to make comparisons and so it's no surprise that one of the most popular value proposition statements takes the form of X for abc.
For example you could be working on Uber for food delivery, Twitter for stock markets, Facebook for the elderly, Airbnb for cats and dogs.
With this format you're calling upon the recipient's understanding of the term of comparison and then reframe it to your market. It can be very powerful as you unconsciously borrow some of the trustworthiness from the known brand and transfer it to your own.
However this can play against you if the public isn't that familiar with the term of reference (years ago I worked on an edu startup and we used to say "Like Soundcloud for education" which turns out worked in the Valley, but not in Europe).
This format is good to kick off a conversation as it's very quick and expressive, but it's at the same time too vague.
Benefits not features
Whatever you write if you intend to use it with customers the most important thing is that your value proposition speaks to the benefits, not the features. With a large chunk of entrepreneurs with a technical background this is surprisingly hard.
And since I mentioned the techies I should actually add the cavia: some segments do like feature lists a lot, just be acutely aware of who you're talking to (see the how to on developing a customer persona if you need to get clear about that).
With that in mind most people are buying outcomes, not the how's or why's. Like that quote says:
People don't want to buy a quarter-inch drill. They want a quarter-inch hole
The most effective template
So far we talked about recipients and we talked about both your own clarity to shape product development and effective communication with customers and investors.
Isn't there a way to do it all at once and do it right? For once I think there is.
Enter the for-who-our-that template, Geoff Moore’s value positioning statement from his seminal book Crossing the Chasm.
I've used it for years and I have not been able to find something more expressive and yet concise that not only captures the value to the customer, but also captures who the customer is, the problem and the solution, all at once. This is perfect to hang above your desk so that you always know where you're headed and it gives the full picture to an investor in under 30 seconds.
Here it is:
For short desc of who the customer is who short desc of the problem our short desc of the solution so that short desc of the value created
Let's look at an example using my edu startup I mentioned above and see if it doesn't tell you a lot in less than 30 seconds:
For college students taking online classes through video who struggle to discuss the lesson in a separate forum our web app integrates discussions directly on the video so that the student can easily get his questions answered
what do you think? And yes there was more to it, but our core value proposition was that one and it's expressed along with the problem, persona and solution in less than 30 words.
Or is there something better?
Some people find Moore's template too cumbersome and appreciate the shorter version "Like X for Y", but as we said that's not sufficiently expressive.
If you are in that camp you will probably love Steve Blank's XYZ template:
We help X do Y doing Z
Using this with my previous example we could write
We help college students studying online to get their questions answered integrating the discussion with the video lesson
We help X do Y doing Z is pretty good as it carries a good amount of information about customers/problem/solution while being still short and simple that you can casually drop it at a dinner party.
Personally I find that it's still a bit too dry and discursive to be the one I hung over my desk, but the choice is purely personal.
Want help crafting or reviewing your value prop?
If you'd like to discuss your value proposition, maybe for an upcoming pitch (you never know when the opportunity will knock), just book a call below.
It's as easy as picking a time that works for your and it won't cost you anything.
