By Adam Lofquist, Founder and CEO of The Lofquist Group
There are a lot of different definitions of what a value proposition is but just think of it this way, your value proposition is a bridge. A bridge in the mind of your customer to show them how a need they have can be achieved, giving them a reason to buy from you. One term you will hear a lot is it gives your target market a reason to “hire” your company because in the end products or services are hired by customers to complete a job.
What makes a great value proposition?
The first thing is that it solves an actual problem, or creates a real opportunity, for your target market. To do this, you need to talk to your target market. The issue that so many founders run into is that they come up with an idea because they see a problem or opportunity and they just create something. This does not work 99% of the time because no one else wants it. So, you need to talk to your target market, but not about your idea. Your goal is to verify if they see the problem or opportunity and if they do, how greatly does it affect them?
Second your value proposition needs to be focused. The best value propositions are focused on one specific problem or opportunity because it creates clarity for your target market.
The third thing is it needs to be customer centric. It needs to be for a specific customer base, it cannot be for everyone. This allows you to gain relevance in the mind of your target market.
Four Steps to Create a Compelling Value Proposition
The first step is defining your target market. There are a bunch of terms like ideal client profile, segment, or niche, but just think of who are the people that you can help the most with your product, service, or idea. Your target market needs to be a specific group and you need to verify that they see the problem or opportunity.
The second part of a great value proposition is you need to have an actual problem or opportunity in the eyes of your customers. This sounds obvious, but way too many organizations get caught up in talking about themselves and how many years they've been in business and how many employees they have and the awards they've won. The truth is that not many people care about that. At least they don't care right away. They care about having their problem or opportunity met.
The third thing is having a specific circumstance that your target market is facing. Here’s an example if you own a restaurant. You could think that the problem that you're solving is feeding people. But it's not that simple. Let's take the example of two different target markets. There's an executive that's going to a business lunch and that same executive who's taking their family out to dinner. They're trying to accomplish two very different things and if you do not acknowledge that, you are not going to have a relevant value proposition.
The final part of having a great value proposition is showing the solution. You can't just talk about the problem or the opportunity and not address how hiring your company will solve the problem or create the opportunity. You also need to show the outcome. How will your customers’ lives be better by hiring your business?
An example that puts it all together!
Here is a value proposition for a client I work with. “We help startup founders validate their business ideas using research-backed and proven methods, so they waste less time and money and reach success faster.” Breaking it down, the target market in this case would be startup founders. The problem that is being solved is helping them validate their business idea with the circumstance of a founder who wants to get advice from experts on what they should be doing.
I want to spend a bit more time here because it is so critical to having a successful value proposition. You need to get specific; it is not enough to say something as vague as “we help founders achieve success” because it does not allow you to address a specific solution. The circumstance is critical because some founders want to just go and figure it out and they will not have the exact problems or opportunities as those that want to learn how to validate their business idea.
The final part is the solution. In this example it is so they waste less time and money and achieve success faster. Together this creates a compelling value proposition.
About the Author
Adam Lofquist is the founder and CEO of The Lofquist Group, a company which helps startups scale their business by identifying the value proposition that will win over customers. In this role he has helped organizations grow their revenue by more than 75%, increase their customer base by nearly 81%, and beat annual goals by 53%.
Prior to starting The Lofquist Group, Adam worked at a number of startups and small to medium sized businesses where he helped them identify growth opportunities and then developed and executed plans that reached those opportunities. He also has worked with a number of non-profit organizations helping them grow their programs and have a greater impact on their clients and community.
Adam is driven by his ability to help people and organizations grow. He earned his business degree from the University of Wisconsin-Milwaukee where he majored in Marketing and Finance. In his free time, he likes to run, bike, and travel.
The Lofquist Group helps startups with revenue, validate the value proposition that will help their business scale. We help you leverage the actions of your target market not just what they say to make more informed decisions on how to market your startup.