Customers buy your product or service because they see the value in it. As simple as that statement is, defining value can be a challenge since each customer will perceive a different value for your product or service based on their own personal criteria. The value you deliver to customers is your value proposition and is the core focus of your business.
Defining a value proposition requires a great understanding of what your customers needs are, how they spend their money, how they make decisions, and what their perceptions of their own needs are. In short, your must grok your customers in order to develop a great value proposition. Luckily there are a few ways to create a value proposition but all of them should be checked by getting out of the building and talking with potential customers.
Steve Blank’s lecture slides on Value Proposition covers some great points and has a fantastic example of a business idea going through starting with a business model canvas and going out and talking with customers to refine the business idea. Over the course of a few weeks, the team substantially refined their initial concept, pivoting from their original idea to address a large pain they discovered in the market. They defined the pain in the market by talking with dozens of potential customers and users, and built a picture of how buying decisions were made in the market so they knew both who to market to and how to market to them.
Google can be used to rapidly test value propositions to see if they resonate with potential customers and drive traffic, and more importantly, signups or pre-orders. Other free services such as survey monkey work great as well. As with any survey, the shorter it is, the more likely people are to respond, so try to keep it to 5 questions total for the best response rate and always have at least one open ended question. Putting up a splash or landing page is another great way to test your value proposition, test a minimum viable product, and the potential market demand. All of these methods can be done without learning to program and for very low amounts of money or free and you can have results in days.
There are lots of great resources and videos on creating value propositions and how they fit in with your business. In the Harvard Startup Secrets Part 1 video, Mike Skok, a former entrepreneur and venture capitalist, talks about defining your competitive advantage with a value proposition. Chris Hanks, an entrepreneur and director of the Entrepreneurial program at the University of Georgia, also talks about how to create a great value proposition for your business.
Remember at the end of the day, your potential customers must immediately see the value in what you are offering and be willing to pay for it!