And Optimise The Biggest Conversion Lever In Your Sales Funnel.
Competition is fierce if you’re doing business online these days.
And it’s about to get a whole lot tougher.
- The global SaaS market is expected to grow at 21.4% over the next 5 years.
- E-commerce continues showing healthy market growth at 21.5%.
- Subscription-based models are becoming the norm in industries from fitness to professional services.
Adcosts are skyrocketing to reflect rising demand. Cost of sales are going down as businesses outsource overseas. And where previously, you’d be pitted against 5-10 competitors, the average is now closer to 25.
With only eight seconds to attract attention online, you should be able to explain why you’re better than the rest. Fast.
Your value proposition doesn’t just do this; it’s the rocket fuel in your marketing funnel, driving conversions at each and every stage. Despite this, only 69% of B2B businesses have one. Get yours nailed and you’re one step ahead of the rest.
I’ve helped start-ups craft shiny new value props, advised SMEs whose markets had evolved, and developed value props for products and services for global brands.
In this guide, I’ll explain how you can go about creating a value proposition that sets you apart from the competition and attracts your tribe. By the end, you’ll have a handful for testing across your website, sales pages etc. Plus a system for keeping them fresh and relevant as you keep growing.
- What A Value Proposition Is And Why It’s Critical To Your Organisation.
- The Anatomy & 4 Key Elements Of A Value Proposition.
- How To Gather Your Vital Intel in 4 Easy Steps.
- 10 Nifty Ways To Differentiate Your Business.
- 4 Critical Questions Your Value Proposition Should Answer.
- Tips on ‘Baking In’ Value Prop Testing And Analysis Into Your Marketing.
Your Value Proposition And Why It’s Critical To Your Organisation.
We’re the Netflix of this; the Airbn’b of that; the Uber of whatever. These lazy value propositions may have brought investors onboard. But you can’t ride on the coat-tails of these behemoths forever. And ask yourself – do they have ‘that’ much in common with your business.
Start-ups / SMEs
A good value proposition should be baked into your strategy – because it will drive how you expand and grow. And because it’s critical to your marketing, it should be monitored and tested regularly.
You’re likely to start out with one value proposition. But if you speak to distinctly different customers – B2B and B2C for example – it will be more effective if you create different value propositions that resonate with each.
In e-commerce or larger organisations, chances are you’ll have a series of different value propositions for business units, products and/or services.
At Hewlett-Packard, for example, every consumer product we launched had a value proposition – sometimes several – so it would appeal to tech enthusiasts, early adopters and microbusinesses.
The Anatomy Of A Value Proposition.
You’ll instantly recognise the key elements of a value proposition – chances are, they’ll take price of place on your website home page. That’s why most website themes incorporate them as a matter of course.
Despite this, businesses often fill the boxes with copy for copy’s sake – or worse, only ‘fill in’ the headline – rather than working out how best to use this valuable ‘real estate’.
- Bullet points
- Visual element
The bullets and subheader are often used interchangeably. But because it’s easy to process this information visually, I prefer to use both. I’ll explain how later.
Vital Information You’ll Need To Get Started.
Your organisation sits in a dynamic ecosystem – subject to powerful forces and crammed with skilled competitors.
To navigate these high seas, you’ll need a detailed snapshot of your environment. So you can steer your business, roadmap and messaging to establish and maintain market position.
As you go, you’ll need to keep taking your bearings: checking your value proposition against competitors, and optimising it across your marketing.
But once you’ve completed the following steps, you’ll be able to plot and track your route. Responding to any obstacles that get in the way.
- Examine your industry
- Get intimate with your customer avatars
- Spy on the competition
- Work out how you’re different
Examine your industry
In an exploding market of disruptors and complex technology, a rookie error is to take copy inspiration from market leaders and try to emulate them.
If I had £1 for the number of times I’ve been asked to ‘write like Apple’…
Sure, Apple are admired the world over for their simple clear messaging. But the thing is, they’ve been around a long time. They’ve built a following that understands their brand and products. And with highly aware customers, you don’t need to waste precious words selling what you do.
Introducing the Stages of Awareness – a timeworn theory introduced by advertising genius Eugene Schwartz.
According to Schwartz, you first need to understand where your prospect is at. Then you write copy that moves them towards the desired action.
Leading copywriter Ryan Schwartz (unrelated) explains this as whether you need to have a quick espresso to get someone interested in your product or service. Or whether it will take a leisurely afternoon with several Pisco sours and the tasting menu at your favourite eatery. The latter takes a whole lot more time and, of course, copy.
So examine your industry to find out how aware customers are of you and your solution. Then work out how much copy you’ll need to persuade them.
It’s worth pointing out that this is critical if you’re entering new territories. A common mistake for international businesses is to go straight for the sale in new countries. Well-known in their own countries, they assume the same level of market awareness. But instead, they need to warm up new markets with sufficient preamble to make the decision.
Q: How does this affect my value proposition?
A: Amount of copy needed.
Get intimate with your customer personas
To provide a product or service that truly serves your dream customer, it’s always best to start off by understanding what their challenges are.
So stop hiding behind your analytics and social media accounts: get into the trenches and TALK to them. Get in touch with a handful of your most valuable customers (MVCs) and then find out how you’re helping them.
By getting into their heads: understanding their problems, goals and needs – you’ll learn which parts of your product or services are of most value.
Now I’m hoping you’ve already defined who your dream customers are. If you haven’t, SmartBug has a handy ‘‘Ultimate Guide To Inbound Marketing Personas’.
How Sophisticated Are They?
Nothing to do with whether your dream customers can rock an LBD.
This is about understanding how they respond to new ideas and innovations. So you can pull the right levers to bring them onboard.
Way way back, when I studied business at university, we studied the Product (aka Technology) Adoption Curve.
Based on the less snappily titled ‘Diffusion of Innovations’ concept this is still widely used, helping businesses to work out which group they are targeting, and then adapt their marketing as needed.
See that hefty gap between the Visionaries and the Pragmatists? Given the difference in sales percentages, it’s like a yawning abyss on the doorstep of Willy Wonka’s Chocolate Factory.
A huge challenge for organisations, this gap was scrutinised back in 1991 in Geoffrey Moore’s Crossing the Chasm. And more recently, his theories have informed useful guides for SaaS businesses looking to scale.
Once you’ve worked out which of these groups you’re targeting, check out the following characteristics, so you can bear them in mind when developing your value prop.
To see this in practice, let’s look at how Slack have adapted their value proposition to appeal to these different audiences over the last six years.
Tech enthusiasts (2013)
- Exclusive – ‘limited preview release’
- Appeals to ego/need to be ahead of the curve – ‘for modern teams’
- Features-driven – ‘real-time messaging, archiving and search’
- Inspiring statements – ‘change the way they communicate’
- Benefits-led – ‘everything in one-place, instantly searchable, available wherever you go’
- Commitment-free – ‘free to use for as long as you want’
- Leverages social proof – ‘one of tens of thousands of teams’
- Emphasises low risk – ‘Slack is free to use..’
- Influencer endorsement – ‘A messaging app for teams who put robots on Mars’
- Taps into need to keep up – ‘Where Work Happens’
- Positions as part of everyday office life – ‘When your team…and more.’
Interestingly, Slack don’t say it’s free in 2019. Conservatives are the hardest to keep happy, so maybe they’re sorting the wheat from the chaff!
Q: How does this affect my value proposition?
A: Underlying message / lever.
What Do They Want From Your Product?
A common mistake for organisations – particularly in tech – is to describe features or tech specs, rather than the benefits they provide. This means that marketing messages often fall short.
“..because products don’t match people; they match problems.” Des Traynor, Intercom
Heard of Jobs to Be Done (JTBD)? Introduced by Bob Moesta and Clayton Christensen of Harvard Business School in the mid ’90s, this breaks jobs down into functional and emotional goals.
A good way to get your head around this is to use the following framework to consider how your product helps people solve everyday problems. And how this might affect them emotionally.
Refer back to the trending problems from your customer research and then prioritise your JTBD according to these. This will help you work out what key features you should be highlighting.
Q: How does this affect my value proposition?
A: Prioritises features / differentiators
Spy on your competition
It’s incredible how few organisations monitor their competition. Industries are evolving at lightning speed: if you don’t keep up, you’re likely to get left behind.
I’ve worked with many businesses and social enterprises who believed they were one of a kind, until a cursory Google showed a handful of competitors.
At the time, they were (almost) unique. But they hadn’t considered indirect competitors: organisations in different sectors that were competing for the same pot of money.
So how do you track the competition? Do your research. The interweb has many tools that make light work of this.
If you haven’t got started, the gang from HubSpot have made the process easier, with this extensive list of questions (and kit) for competitive analysis.
10 Nifty Ways To Differentiate Your Business
Once you’ve mapped out your competitors and what they offer, it’s time to start working out how you’re different.
You’ll need one point of differentiation at the very least. Two is preferable. And if you find three, you’re in the clear. In rapidly evolving markets, these are likely to change as competitors copy you and steal your fire. So it’s good to have back up. And as you keep on tracking your market and testing value propositions, new ones are likely to bubble up.
This is where most businesses start and end when it comes to differentiation.
When we talk about product in this context, it means any goods that can be sold online. So it could be any of the following:
- Tangible products – clothes, consumables, technology.
- Digital products – SaaS, e-learning, content.
- Services – agencies, consultants, coaching.
Let’s break this down into features, innovation and design.
These are usually the go-to differentiators. You often see towering lists, checking off all the cool things a product offers. This might be a new feature, it could be an improved one, but there’s a host of other examples such as:
- Comfortably old – brand new
- Super-reliable – the most enjoyable
- Exceedingly large – incredibly small
- Lightning fast – reassuringly slow
To help people to remember your product, bear in mind the rule of three when listing features.
Few of us can juggle more than three balls. Throw in more and we drop the lot.
Similarly, with more than three messages, your reader is likely get confused and drop their (metaphorical) ball.
- Easiest way to differentiate yourself from the competition.
- Usually easy to copy by competitors, leaving you without a unique value proposition.
- Better to do a handful of jobs super-efficiently, rather than a ton poorly. Careful not to lay it on too thick, whatever you’re selling. Piling on features can also make SaaS or products clunky and difficult to use.
Perhaps this is the technology in your product. It could be how your product is created and brought to market. Maybe it’s a new and creative way that you deliver your services. Dyson uses this differentiator to good effect and has become a byline for innovation.
- If your innovation is new to market, you’ll have first-mover’s advantage. Grab market share while you can, and protect IP with patents where possible.
- You’ll have a finite amount of time to use this differentiator – copycats will come in to grab market share as soon as possible.
- You’ll need to invest heavily in R&D if you want to maintain this point of difference.
People instantly know whether they like those trainers, that sofa, or pair of sunglasses. And they expect the website where they bought them to be stylish and easy to use.
As well as looking fabulous, products should be a pleasure to use: simple, intuitive and enjoyable. SaaS websites like FreeAgent and ConvertKit use great UX to simplify dull tasks, making it (almost) a pleasure to work. And we expect websites for services to be slick and professional, reflecting their ethos.
Good design has become an expectation. But if you can push the envelope in this field, you’ll win loyal followers.
Don’t forget packaging for physical goods – think about those ‘unboxing videos’ on YouTube, or the anticipation ripping tissue paper off a luxurious cashmere sweater. For professional services, this could be a trendy office environment, welcome pack or customised Slack workspace.
- People can instantly see whether your design resonates with them.
- UX and packaging significantly improve customer experience, boosting loyalty.
- Mouthwatering design and streamlined UX don’t come cheap: it demands ongoing investment and testing
- Subjective and liable to change with trends.
- Focus on simplifying a few tasks and risk losing market share to multi-tasking SaaS.
- Oversimplify your UX and features can get lost.
This is a powerful way to differentiate your business. But if you choose this route, you’ll have to substantiate it – through staff training, customer satisfaction metrics and content etc.
Differentiating by people in professional services is common. After all, these are critical to business success. Consultancies promote thought leadership by developing blogs and content. And key personnel build profile at events and conferences.
In other sectors, this is becoming less popular as AI, chatbots and email are automating communications. While highly effective at reducing costs and managing customers if done properly, never underestimate the value of an empathetic, knowledgeable customer support rep.
A few differentiators to consider:
- More knowledgeable – I’m looking at you PC World!
- Always available – 24/7 support.
- Set up by a group of people ie, a co-operative – Essential Trading.
- Established by a celebrity – The Body Coach.
M&S has built a loyal brand around customer focus – largely because of their ‘no quibble refunds’. Despite being in retail where competition is high and prices are driven down, they still pledge to put their customers at the heart of everything.
Avis have been using the phrase, ‘We Try Harder’ for years.
A controversial approach in the early years, they’ve developed a strong business on the back of this differentiator. Making car rentals about more than just the car.
- In an increasingly isolated (and automated) world, this can create powerful customer loyalty.
- Valuing your workforce is good for staff morale.
- Difficult to guarantee as your employees are responsible. That’s why stores employ mystery shoppers, and record sales or customer service calls.
- Expensive and risky, particularly if your competitors are driving down costs with automation.
- Pinning a business to a celebrity can go painfully wrong – think about poor Livestrong after Lance Armstrong’s defamation.
- Lead players can move on from consultancies. Taking their profile (and your clients) with them.
In the words of Coca-Cola’s historic president Robert Woodruff, this is about your product being ‘Within Arm’s Reach Of Desire’. Also known to marketing aficionados as ‘Distribution’.
This is all about convenience, and because of the proliferation of channels, this differentiator has taken off. For online businesses, this is driven by integration and partnerships. And pioneers like AirBnB and Uber have turned the concept on its head when it comes to logistics, travel and tourism.
- E-commerce brands now offer shopping online, in-app and even at virtual stores in metro stations in South Korea.
- We can access digital content anywhere using apps on our phone or tablet.
- SaaS provide apps for ‘on the move’ tasks, like FreeAgent’s receipt scanner.
- Education and training are now available via e-learning, improving access to education and driving down costs.
- With wearables, we can get real-time feedback on location, biomarkers, blood sugar levels etc.
- It’s cheaper than ever to distribute products and services using a dizzying array of channels.
- As channels diversify, there are fascinating new ways to reach customers.
- Choose too many channels and the result will be an expensive, badly executed business. Best go for the most relevant to your market and then execute well with these.
“People don’t buy what you do; they buy why you do it.” Simon Sinek told us in his 2009 TED speech. Attracting 44 million views, no wonder a glut of purpose-driven businesses has sprung up since then.
Keen to emulate the values and success of Innocent Smoothies, Toms Shoes and Patagonia, we’ve seen a steady stream of organisations supporting causes like the environment, fairtrade, society, wellbeing and more.
And as the public has become more savvy about online data processing, we’ve seen principles like anonymity rise in importance. Leading to the success of cryptocurrencies and blockchain applications.
- Appeals to your customer’s values – creating a deeper connection and loyalty.
- Good business sense and motivational for staff.
- Markets are becoming cynical about corporations purporting to be purpose-driven so they can market products.
- The more successful your business, the keener people are to knock you off your moral platform (Facebook for example). Be ready for your operations to be scrutinised and any minor misdemeanours revealed for all to see!
- Seeking anonymity can be misinterpreted as having something to hide – usually by less data savvy consumers.
Maybe your products are handcrafted, made with all-natural ingredients, or delivered by local suppliers. Perhaps your overseas staff or factories receive an above-average wage. Or you go to extreme lengths to reduce your carbon footprint.
This differentiator often sits alongside Principles as they are likely to drive your business processes. But equally it could appeal to a customer’s need for security if you sell impenetrable cloud computing packages.
- Appeals to customer values – creating stronger connection and brand loyalty.
- It’s more expensive – not taking advantage of manufacturing technologies and cheap overseas labour, materials etc. So your customers will have to be willing to bear the extra costs.
According to veteran marketing guru Michael Porter, either you differentiate to add value to your products, or you reduce your cost structure. Research since has shown that businesses that both differentiate and reduce costs are more successful in competitive environments.
In most cases…
Upmarket department store, John Lewis, is known for being, ‘Never Knowingly Undersold’. Introduced in the days before the internet, this must be a nightmare to enforce now. Despite this ,they’ve stuck to these principles and have a loyal customer base as a result.
Price differentiators are more frequently used in e-commerce, where products are generic, sold by numerous retailers and subject to fluctuating prices. By offering price-match guarantees, retailers like GoOutdoors can secure customer trust and build loyalty.
- Builds customer trust – leading to repeat sales and loyalty.
- Needs continuous monitoring so it’s difficult to enforce in highly competitive markets.
- It can devalue your brand – particularly if you work in the service industry. It’s best to offset it with a quality point of difference.
Popularity and influence are strong differentiators, particularly with ‘me too’ Pragmatists and Conservatives! Usually used by market leaders, this approach requires reliable market data and/or investment in influencer relations.
If you have the data to substantiate it, you can say your goods are:
- Most popular
- Most trusted
- The original
- Most frequently used
- As used by <insert celeb>
Though I’ve heard A LOT of rookie businesses casually throwing these value props around.
In B2B, an alternative approach is to look to influential sector groups:
- Used by experts
- Preferred by authorities
- Accredited by
You can get in trouble if you can’t substantiate this.
A well-known slogan for cat food Whiskas was “eight out of ten owners said their cat prefers it”. Later the Advertising Standards Authority, made them change this to the snappier “eight out of ten owners who expressed a preference said their cat prefers it”. Downer.
But despite this, the brand’s 8 out of 10 phrase has become so well known, it’s spurned a UK comedy show and a string of mock ads.
- Influencer endorsement is extremely valuable – as long as the integrity of your endorser isn’t called to account (remember Lance Armstrong?).
- Difficult to substantiate and needs continual monitoring. Otherwise they’ll come after you!
Market, Audience or Niche
Jo Wiebe adds these worthy contenders to her list of differentiators. This is a great way to keep your customer’s needs at the heart of your business.
And these days, longtail rules. So when it comes to PPC, hyper-targeting and messaging, going after a niche will make life easier for you. As long as it’s big enough and has specific needs you could be serving better.
Niching: There are hundreds of yoga websites. But few promote themselves as leaders in a specific style. Yoga Vastu has done this with Iyengar so they can say they’re ‘The most advanced Iyengar yoga resource available’. And they can focus on serving this niche – for teachers and practitioners alike.
Audience: Cosmic Kids targets a specific demographic, providing yoga and meditation for children. By focusing on these, the creator can expand what they offer within that market, like teacher training alongside classes.
- Marketing is more cost-effective so you can get a foothold before diversifying.
- If your niche is related to an existing business – like Postach.io for Evernote users, your success is dependent on theirs.
- Can be risky if you don’t pick a large enough niche. Or if the people within it are happy with what they’ve already got.
So there you go. It’s a hefty list. Once you’ve worked out which ones you could use, think about what commitment you’ll need to pursue these.
The journalists or bloggers who wrote about you: the investors or analysts you introduced your new tech to: what did they have to say?
They’re not just a promotional channel, they’re industry commentators, and their knowledge is often gold dust. So ask them about the competitive landscape. Where they see the industry going. And how they see you against the competition.
4 Critical Questions Your Value Proposition Should Answer.
By now you should have a comprehensive snapshot of your organisation’s environment:
- Industry awareness – how much to say
- Industry sophistication – what ‘levers’ to pull
- Your customers’ challenges – the problems you’re solving
- How you meet customer needs – how you’re different
Work your way through the following questions to fill out your value proposition canvas. I recommend writing at least three so you can test to find out which works best.
1. Does it speak to a pain your potential customer is experiencing?
You’ve researched the key problems your customers face. Lead with their biggest problem in your headline – preferable a state free from its pain.
2. Does it explain why should they choose you over the competition?
You’ve worked out your differentiator/s. Introduce these in your subheading/paragraph. If you can get at least one into your headline, even better.
3. Does it have a clear promise about the benefits you offer?
This is how you solve your customers’ problem. You’ve worked out your JTBD – now select the three most important ones. Then prioritise and re-write them as your bullet points.
4. Does it speak clearly to all of your customer personas?
This is where the visual element works well. Find an image or a video that shows your customer’s ideal ‘after’. Video is perfect if you have diverse audiences, letting you pan across different customers, so you can appeal to all of these.
Your VOC data will drive the tone and phrases in your value proposition. But when drafting copy, try and avoid the following common mistakes.
- Copying your competitors.
- Trying to be too witty or intelligent.
- Being boring.
- Failing to explain what you do.
- Aiming for as few words as possible.
Tips on Baking Value Prop Testing Into Your Marketing.
Your value proposition is the crown jewel in your marketing. Ignore it, and you’re leaving money on the table.
In rapid-moving markets, carry on testing and optimising as part of your conversion rate optimisation strategy.
Once you’ve got your market intel, a quarterly to annual review will keep you on track – dependent on how fast your market is moving.
If a similar competitor enters the market, it’s worth reviewing your market position against these.
And if you change your business strategy or approach, it goes without saying that you should make sure it’s relevant and accurate.
Value proposition taking up valuable headspace?
Get in touch and we’ll sort it out for you.