Business, Career, Education

Knowhow: what are value propositions and how do you develop one?

what are value propositions

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Do you want more customers to choose you over your competition? Smart marketers use a compelling value proposition to show potential customers why their business is better than the competition. What are value propositions? This guide explains what they are, examples, how to develop them and use them to boost your business.

Before we begin, here’s a quick menu of what we’re going to cover in this guide (use the links below to jump to a specific section).

What are value propositions: overview

Regardless of your product or service, you will almost certainly have competition. What makes a customer choose you over another company? The answer lies in a great value proposition.

It is important not to confuse the value proposition with product features or benefits. The A8 model from Audi, for example, has an aluminum body with the advantage that it does not rust. The value proposition, however, is to save money and hassle (for repairing rust spots).

The value proposition plays a central role in defining a business model and is therefore included in almost all templates. In business model innovation, it is – together with the target group and their needs – the first thing that is determined. Accordingly, the evaluation of value propositions is an important first step in the overall evaluation of the business model.

The success of a new product depends crucially on its value proposition. For a startup, this can mean the entire existence of the company. It is therefore extremely important in an innovation project to evaluate and optimize the value proposition with the right criteria.

What are value propositions: definition

It’s a term you’ve heard, but do you know what it means and do you have one? Dozens of descriptions circulate around the internet, but one of the best definitions of what is a value proposition and what is not comes from businessman Michael Skok:

In its simplest terms, a Value Proposition It is a positioning statement that explains what benefits it provides to whom and how it works exceptionally well. It describes your target buyer, the problem spot they are solving, and why it is clearly better than the alternatives.

The key phrase in this definition is “only”. A compelling value proposition is one that aims to convey how the brand is different from the competition and why their target audience should choose it over the others.

You should also make sure that this is expressed in a single sentence or phrase. If you can’t get it very clear, there is a fundamental flaw in your positioning.

What makes a good value proposition?

A value proposition is more than an advertising slogan. It does not necessarily have to refer to specific properties of the product. Rather, it is about showing on a global level to what extent your product, your brand or your services enrich the life of your target group. Therefore, you should assign the value proposition to a central position on your website, for example in the header or on the front page, and communicate it on all other channels as well.

The value proposition should be formulated and placed in such a way that it is understood as an overarching core message. With a value proposition that is immediately evident to your target group, you can increase your conversions and in the long term ensure greater brand awareness, a high recognition value of your marketing strategies and a stronger brand relationship.

Which problem or need of the user is solved by this product or service?

These needs are often not purely functional, but emotional or social:

  • Functional needs : “We need packaging that is safe for shipping and the contents are not damaged.”
  • The needs of an organization can also be behind the individual-functional needs, for example economic needs : “We have to reduce the rate of returns due to transport damage to 3%.”
  • Emotional needs : “We have put so much work into developing our product and we are proud of it: That is why we want the packaging to make a high-quality impression.”
  • Social needs : “My supervisor should see that I was systematic in my search for a provider and that I made the best choice.”

A convincing value proposition should definitely have the following characteristics: It should

  • be absolutely clear, unambiguous and comprehensible,
  • meet the tonality of your target group,
  • be formulated succinctly and memorably,
  • authentic as well
  • be unique.

What are value propositions: How do you develop one?

When formulating a value proposition, it is by no means about praising the positive aspects of your brand or your product with numerous superlatives. Instead, in line with the customer centricity approach, you should ask from the customer’s perspective which problem in your target group is solved by your product. In order to develop a convincing value proposition, you should therefore ask yourself the following questions:

Which product or which service do you offer?

Why is your product attractive to your customers? Which problem of your target group is solved by your product or your services? How is your customers’ situation being improved?

What is the unique selling point of your product or your brand?

An example can make it clear what exactly is meant. Let’s say you plan to open a hair salon. What could your value proposition look like then? At first glance, all hairdressing salons offer the same thing: cut hair, blow-dry and dye. This will of course also be your core business and you must not allow yourself any weaknesses here. But your craftsmanship only accounts for part of the customer benefit and thus the benefit promise.

The decision for a particular hair salon is influenced by what the customers expect from their hairdresser visit overall. It can be very different: some look forward to a break from everyday life, others want to have their hair cut as quickly and cheaply as possible. Some enjoy listening to the latest gossip over a cup of coffee, others prefer to miss an undercut while listening to loud music. Some want to feel beautiful and attractive, others are happy if they can bring their offspring with them without anyone feeling disturbed. Different value propositions can be derived from all of these needs.

Writing a value proposition

Ideally, you’ll be able to get your value proposition down to a single, concise sentence. In any case, it shouldn’t be longer than two or three sentences. Depending on the product, unique selling proposition, etc., however, in some cases it may be advisable to add a more detailed description of the special features of your portfolio to the pointed value proposition.

The development of a good value proposition not only requires a precise analysis of your range of services and the added value for your target group, but also requires a lot of creativity. It is advisable to formulate many different variants and thus gradually approach the core of your message. Experience has shown that brainstorming together brings the best results.

Here are some tips for writing your value proposition.

The first thing you need to start writing your value proposition is a value proposition canvas. A value proposition canvas is very similar to a business plan canvas – it’s a simple visual framework for generating ideas about your value proposition.

As you finalize your value proposition, there are a few questions you need to answer about your product and your customer. Some questions you might want to ask yourself are:

  • What does your product do?
  • How does it feel to use your product?
  • How does your product work?
  • What properties does it have it?
  • What are the emotional drivers of the purchase?
  • What are the hidden needs?
  • What are the rational drivers of the purchase?
  • What are the risks of switching to Your product?
  • What are people doing in this place right now?

What are value propositions: The checklist

This handy checklist for evaluating value propositions has nine criteria, the first letters of which form the helpful acronym VALUEPROP. (Valueprop is a common abbreviation for Value Proposition).

V: Valuable
A: Advantageous (beneficial)
L: Lucid (clear)
U: Underserved (not adequately served)
E: Exclusive
P: Precise
R: Rare (rare)
O: Outperforming (superior)
P: Prioritized

Valuable: The value proposition should address a valuable market: it should either be very large or very solvent (or both!). If this is not the case, the chances of growth and profit are limited.

Advantageous: The value proposition should give the potential customer a clear advantage over the alternatives that are otherwise available to him.

Lucid: The value proposition must be clearly understandable (for the target group!). Apple provided a good example of this with its 2001 promotion of the iPod .

Underserved: The less competition there is, the better. This can mean the number of competing offers, but rather the degree to which their value proposition matches the needs of the target group.

Exclusive: The more difficult it is for competitors to come up with a similar value proposition, the better.

Precise: The value proposition should be tailored to the needs of the target group.

Rare: The value proposition should rarely, or best of all, be unique of its kind.

Outperforming: The value proposition should offer a performance that significantly outperforms the competition.

Prioritized: After all, the value proposition should meet a need that is a high priority for the customer. The more important it is, the more receptive the customer will be to it. This feature is often called urgency referred (urgency).

Templates to create your own

Use these value proposition templates to create your own. You probably won’t be using these ideas word for word, but they will give you a good starting point.

  1. Geoff Moore’s Value Positioning Statement
    In Geoff Moore’s seminal book Crossing the Chasm, he suggests the following template for writing your value proposition.

For (target customer) the (declaration of need or opportunity) our (name of the product / service) (product category) is the (declaration of performance).

For example: “For non-tech marketers struggling to generate ROI on social media, our product is web-based analytics software that translates engagement metrics into actionable sales metrics.”

  1. XYZ by Steve Blank
    This is perhaps Steve Blank’s simplest value proposition template.

We help (X) to (Y) with (Z).

For example: “We help parents spend more time with their children by providing parent-friendly play areas.”

  1. Start of High Concept Venture Hacks
    This Venture Hacks Value Proposition template leverages companies that already exist in your industry to create your unique value proposition.

(Industry-proven example) for / from (new domain).

Example: “Flickr for Video”.

  1. Peter Sandeen’s Value Proposition
    Peter Sandeen says the idea is “to hit people over the head with what makes you different”.

What makes you valuable (Gather the most compelling reasons why people should notice you and take the action you have requested.)
Can you prove it? (Use studies, testimonials, social evidence, etc. to verify your claim).

  1. Customer problem solving
    Vlaskovits and Cooper use a so-called customer problem solution value proposition template.

Customer: (who is your target group)
Problem: (what problem do you solve for the customer)
Solution: (what is your solution to the problem)

Example: “Customer: I think my best customers are the small and medium-sized enterprise (SME) markets. Problem: Anyone who cannot easily measure the campaign ROI because existing solutions are too expensive and complicated to implement shows a dizzying series of unworkable diagrams. Solution: Low-cost, easy-to-implement analytics system for non-technical marketers who need actionable metrics. “

  1. Dave McClure’s elevator ride
    Dave McClure suggests a three step checklist to help you write your unique value proposition.

Short, simple, unforgettable; what, how, why
3 keywords or phrases
KISS (no technical jargon)

Examples of memorable value propositions

The tighter and more precise the value proposition is, the more tangible and memorable it will be for your target group. These best cases show that there is no need for extravagant descriptions, but that the flavor lies in brevity:


The email marketing service only needs three words to sum up its value proposition: “Send Better Email”. The short sentence not only expresses the range of services offered by MailChimp in a concentrated manner, but also communicates from the customer’s point of view.

eBay classifieds

The eBay subsidiary “eBay Classifieds”, can also use just a few words to express its value proposition: with the value proposition “Free of charge. Easy. Local. ”


The goal of Slack is to bring teams together and improve communication within workgroups. The value proposition of the instant messaging service proves that this approach can be summed up briefly and simply. It reads: “Where work happens”.

Image by Arek Socha from Pixabay