In the simplest of terms, a value proposition is a positioning statement that explains what benefits you provide to whom and how you do it in a unique way. It describes your target buyer, the problem you are solving, and why you are better than the alternatives.
For easier understanding, let’s consider the famous scene from the movie The Matrix. Let’s take a look at Morpheus’ proposal to Neo and what he said to him:
Unfortunately, you can’t tell someone what the Matrix is,
You have to see it with your own eyes.
This is your last chance. No response after that
If you take the blue pill, the story ends here, you wake up in your bed and believe what you want to believe. If you take the red pill, you stay in wonderland and I’ll show you how deep the rabbit hole goes.
DON’T FORGET ! THE ONLY THING I OFFER YOU THE FACTS, NO MORE
Neo is in pain. Morpheus promises reality as the solution to his spiritual and existential pains. He says that Neo lives in the virtual world, he can show him the real world if he wants to. Since he knows Neo’s problem very well, he offers him a value proposition.
A Good Value Proposition = A Good Solution Proposition
In order for an enterprise to be successful, it must have found a way to create value for its customers, must have developed a solution proposal that can solve their problems. I think this is the point that the entrepreneur should think about the most.
Girişimcinin ilk sorması gereken soru: Ben hangi soruna nasıl bir çözüm getiriyorum?
If there is no solution proposal, a result that will create economic value cannot be obtained from that initiative. In order for the entrepreneur to maintain the product, service or service he has made, he must be able to sell it and be able to make a profit from it.
Entrepreneur all his energy; If he spends his money to improve his own product, service or service, to put forward something different from his competitors, and if he constantly focuses on his own solution, the probability of making mistakes is very high.
Value Proposition Canvas
What the entrepreneur needs to focus on is understanding who has a problem and what kind of solution he/she proposes.
This golden rule is the biggest key to success. This is again the point where most entrepreneurs jump and come after bitter experiences.
The success story of Apple is a very good example of this. Products developed in this area were already on the market before the iPod was released. People were getting their music listening needs from devices such as cd players and cassette players. Portable music devices were produced and presented to the people. Apple focused on understanding the expectations and problems of customers (music-loving audiences) in order to offer a new value proposition that will radically change people’s music listening habits.
One of the problems was that the music players were big. When the iPod design was finished, it managed to become the smallest portable music player. With its 5gb memory, it allowed us to store thousands of songs. Apple launched the iTunes service with the iPod. Thousands of songs could be downloaded to iPods online with low profit margins. It was a revolution in the music industry, and with this success story, Apple managed to break the sales record with the iPod price of $ 399.
People pay for solutions, not products.
By understanding the problems and expectations of the audience, Apple has provided them with a unique value proposition. This success story is a big step forward from the computer brand to the most powerful brand in consumer electronics.
I think it is necessary to understand and assimilate a subject that is so important. The most valuable part of an entrepreneur’s business plan is the value proposition, and a value proposition canvas has been created to work on it.
1- DEĞER ÖNERİSİ KANVASI NEDİR?
The Value Proposition Canvas is one of the most important parts of the business model canvas that will help idea owners think about their ideas, understand customers’ problems and expectations, test and plan them. Using this canvas, we can test our ideas, make inferences that can accurately understand our customer base, and develop methods to improve our value proposition.
The value proposition canvas consists of 3 main parts.
- Customer Segment
- Value Proposition
- Value Proposition Alignment
In this section, we try to understand what our client is trying to achieve. Let’s take a graphic designer as an example. The graphic designer may not be satisfied with the design programs in the workplace. He can force the company he works for to different software that he thinks will be useful. The same graphic designer may not be satisfied with the video card of the computer he uses for gaming at home and may want to change it.
Is the person we are trying to deliver our product or service to, an employee who cares about his position and social status in the company, or a gamer who is prone to spending money for his personal pleasures? We need to define our customer well and understand what business he is trying to solve, social or emotional aspects.
- What are the tasks the customer is trying to get done? Is it a specific job or trying to solve any problem?
- What are the social activities that the customer is trying to perform?
- What emotional activities was the client trying to perform?
In this section, we should focus on what problems our customer is struggling with. We should try to understand what obstacles negatively affect his performance, social or emotional state. What are the errors and risks that will reduce our client’s effectiveness? These are the main issues to consider in this chapter.
- What are the things that reduce the customer’s performance?
- What are the most common mistakes?
- What actions evoke negative emotions?
- What do they find excessive? (It can be money-time-effort etc.)
- What risks do you face
- What negative social consequences might it face?
In this section, we need to understand what are the situations that satisfy our customers and that they like while benefiting from the existing solution proposals. What kind of gain can we provide to our customers with our solution proposal? We may have ensured that he does not pay shipping fees, we may have stored his documents securely in the cloud-based system with free storage, and we may have cooperated with different institutions to enable our customers to purchase discounted products or services.
- What are the things that can make the customer’s life easier?
- What are the customer’s expectations? What exceeds your expectation?
- How do existing solutions satisfy customers?
- What will please the customer? Money, time or minimal effort?
-Products, Services and Services
In this section, we should determine the priorities of our products, services or services. Let’s think of a toy company, let’s think that it has dozens of products for boys. The most demanded product by boys in general is toy cars. Then soccer balls, doctor toy sets, etc. it could be. With this understanding, we can shape our product priorities.
- Let’s determine our main product, service or service
- Which products are solutions to customers?
- Let’s prioritize our products and services according to customer types
- Let’s determine the priority order of our products, services or services
Which problem of our customers does our value proposition offer in this section? The strongest value propositions are not those that try to solve all pains, but those that try to offer powerful solutions to one or two specific pains.
- What pains do our products, services and services provide for our customers?
- What risks do they reduce?
- What mistakes do they prevent?
- What performance barriers do they remove?
- Does it save money, time and energy?
In this section we should focus on our benefits. How will our solution offer benefit our customers, and will they make their life and work easier? Are we able to offer a solution as good as the ones already used? We can try to increase customer revenue by focusing on whether we have a better and improved solution.
- Does it make the customer’s life easier?
- Does it relieve your fears and anxieties?
- What exactly does it benefit customers?
- Does it meet/exceed the features it currently uses?
- Is there any specific gain? Like design, warranty, new features.
We’ve refined our idea to solve our customers’ problems and now we’re ready to test it. We need to understand whether the value proposition we create has resonance with our customers and measure whether it is compatible with our business plan. For this, we can follow these 3 approaches
- Problem – Solution Matching
- Product – Market Harmony
- Business Model Alignment
In this process, we do not have any product, we try to present value propositions thought on paper to our potential customers. We have no conclusive evidence that the recommendations we offer are considered important by customers. We try to create different value propositions and try to present them to our customers.
This is the process by which we prototype our product or service and measure our value proposition with customers. In this process, we test whether our product is suitable for the market. If we have created a low competitive value proposition in the market, we optimize it and maintain it until we achieve the product-market fit.
-Business Model Alignment
After all these optimization processes, we now need to integrate our valuable product, service or service into a good business plan. If we don’t have an accurate, profitable and scalable business model, our value proposition will not lead us to success. If we do not have a business plan to cover the costs that will create that value (product, service or service), the process will end in frustration.
For example, we want to launch a stylish and smart watch that measures body values and alerts us in case of emergency. We tested our product’s value proposition on people who use watches and got positive feedback. We built a prototype of our product and wanted to test market fit. We measured what customers could buy at the prices we determined and moved our idea to the production stage.
The problem is that this value proposition won’t make us money if our business plan costs to create the product, our marketing costs, our product distribution costs are too high and we don’t have enough capital to bring this product to market. For our value proposition to make us money, our business plan must align with our value proposition. Suppose we integrate the same value proposition into a watch company’s business plan. This value proposition would be a money-making value proposition for the watch company, as production and distribution costs are likely to be below the figures we calculated.
2- HOW TO CREATE A SUCCESSFUL VALUE PROPOSAL?
In the light of the information I have shared above, you can create a successful value proposition. Here, I’ll cover the points you need to consider when creating a unique value proposition.
A successful value proposition comes from simply, clearly and effectively articulating the benefits and offers you offer to your customers. You need to be able to convince your potential customers why your service or product will be more valuable than your competitors’ offers. Considerations for writing a good value proposition;
- Focus on the main problem of your customers
- Relate your value to your customers’ problem
- Tell us how you solved the problem
- Be short and clear
- describe what you are doing
- Be unique
- Reveal your strengths and strengths
Value Proposition Is Not a Slogan. Show that you are unique in the minds of your customers.
Boosters for Value Proposition
Sometimes your value proposition may be similar to your competitors. More than one brand may offer the same product or service in the market. In this case, you can offer offers that your competitors have not offered in order to differentiate from your competitors and create value for your customers.
Customers always want to take advantage of offers and opportunities that can be more beneficial. These boosters will make your products or services more preferable. What could these be?
- Free shipping
- Free Installation
- Discounted products
- Customizable products or services
- No long-term contracts, option to cancel anytime
- Bonus Money
- same day delivery
With these small but effective boosters, you can acquire new customers and retain existing customers. Remember to consider these boosters as you create your value proposition.
3- EXAMPLES OF SUCCESSFUL VALUE PROPOSAL
Let’s take a look at the world’s biggest brands and their value propositions. Let’s try to understand how they differ from their competitors with unique offers and suggestions. It will be better understood that this is one of the points that an entrepreneur should focus on the most.
NETFLIX – Watch Anywhere. Cancel Anytime
Netflix has very effectively defined its value proposition in 2 sentences. Watch wherever you want, cancel whenever you want. No matter how much a company does not want to cancel, it is a successful description that offers users the chance to cancel whenever they want as a value proposition.
SPOTIFY – Music for Everyone
Spotify stated that it serves all music lovers with the definition of music for everyone. It is a successful venture where you can find music suitable for all age groups and music genres.
MAILCHIMP – Send Better Email
Mailchimp with an attractive message; Choose me if you want to send better emails. An e-mail sending platform that I use, which offers a good experience to its users.
DUOLINGO – Learn a Language for Free. Forever
Duolingo defines its value proposition with the message You can learn languages for free as long as we exist. It is one of the fastest growing and most used language learning apps worldwide, and its message is also very successful.
UBER – Tap your phone. Get where you’re headed
The message of Uber, one of the biggest startups in the world, is very clear, touch your phone and reach where you want to go. With its fast, economical and safe passenger transportation, Uber is one of the players that changed the sector, and its message strongly appeals to users.
EVERNOTE – Remember Everything
Remember everything. It is never lost, you can find it quickly and you can easily access it from all devices. Evernote application that conveyed its message very well in one word.
I think the value proposition is one of the points that an entrepreneur with an idea should think about the most before creating their product or service. The steps to be taken without creating a value proposition, without testing the idea by potential customers, without understanding whether it is compatible with the business plan will create serious losses for entrepreneurs. You can find the video and presentation file below, which I think will be useful in this regard.