What is Your Value Proposition?

“Why your customers choose you” summarized down into one sentence and one picture.

Russell McGuire
Sep 4 · 5 min read

This week we’ve sought to answer the question “why do customers choose you?”. We started by deeply understanding your customers and your competitors. Next we sought the right category for your product, and the right competitive strategy for your business. Today, I want to bring all that together into a single sentence and a single diagram.

Image for post
Image for post
Customer Value Map

Above is what I’m calling the Customer Value Map (CVM). Those familiar with the Value Proposition Canvas (VPC) first introduced by Alex Osterwalder and team in Value Proposition Design¹ will recognize many common elements. I’ve been a big fan of the VPC, but as I’ve used it with various teams over the past few years, I’ve struggled with a few aspects of the tool:

  • Every time I use the VPC I start with the customer. You can’t begin describing your value proposition without first understanding customer jobs, pains, and gains. However, the customer is on the right half of the VPC and English speakers naturally “read” a diagram left-to-right, so many new to the tool start in the wrong place.
  • The Customer Profile aspect of the VPC does a great job of capturing the essential elements of the jobs the customer is trying to do, the benefits they hope to gain from doing those jobs, and the roadblocks and obstacles that can make trying to accomplish those gains hard and painful. But it really doesn’t describe who the customers are.
  • Similarly the Value Map aspect of the VPC does a great job of describing the core elements of the company’s offer and how your specific way of providing that offer helps customers achieve their gains and overcome their pains. But what is missing is a sense of direction, or long term focus to ensure that the offer will continue to successfully provide value to customers.
  • Finally, what is most obviously missing from the VPC is a clear value proposition statement. The VPC was obviously designed to address the two parts of the authors’ earlier Business Model Canvas (BMC) that I believe must be developed first — the customer/market and value proposition. However, the BMC expects a statement of the value proposition in a form that the VPC simply doesn’t deliver.

So, the Customer Value Map puts the customer first and adds three important elements:

  • A Persona space for succinctly (probably in bullet list form) describing the target customers.
  • A Market Discipline space for describing the long term focus required to maintain competitive differentiation.
  • A Product Positioning statement to capture, in sentence form, the core reason that the target customers will value the offer and choose it over other options.

Based on our previous discussions on understanding who buys from you, I think you can imagine the kinds of demographic, geographic, psychographic, and behavioral factors you can list under the new persona space to capture the essence of who you are selling to. Similarly, our previous discussion about competitive strategy you should have a sense for what goes in the market discipline space.

The Product Positioning Statement, however, is something new.

In The Strategy Focused Organization², Kaplan and Norton expect the value proposition to carry a lot of weight: “The core of any business strategy — connecting a company’s internal processes to improved outcomes with customers — is the ‘value proposition’ delivered to the customer. The value proposition describes the unique mix of product, price, service, relationship, and image that the provider offers its customers. The value proposition determines the market segments to which the strategy is targeted and how the organization will differentiate itself, in the targeted segments, relative to competition.”

In The Startup Owner’s Manual³, Blank and Dorf similarly expect much of this positioning statement, but they further demand that it be concise, clear and compelling: “From your customer’s perspective, what does your company stand for, what does your product do, and why should they care? You probably had an idea when you started the company, but now you have som real experience in interacting with customers. It’s time to revisit the product vision, features and competitive information in light of what you’ve learned in customer discovery… In technology startups, one of the biggest challenges for engineers is to realize the need for a simple message that grabs customers’ hearts and wallets, not their heads and calculators. it’s not about the product features. Seek a simple sentence that condenses the entire value proposition into a few pithy, catchy words that say it all.”

In the 1940s, advertising executive Rosser Reeves introduced the concept of a Universal Selling Proposition (USP), the unique benefit exhibited by a company or product that enables it to stand out from competitors. Reeves said that the USP must clearly communicate “buy this product, for this specific benefit” in a compelling way that can’t be matched by rival options.

In Crossing the Chasm⁴, Geoffrey Moore provided a simple template for starting the development of a product positioning statement:

For [target customer] who [statement of need], the [product name] is a [product category] that [statement of key benefit]. Unlike [primary competitive alternative], our product [statement of primary differentiation].

Starting from this generic form, you can tighten and focus the language into something concise and compelling for customers.

Examples of powerful product positioning statements include:

  • “Melts in your mouth, not in your hand.” M&Ms
  • “When it absolutely, positively has to be there overnight.” FedEx
  • “The ultimate driving machine.” BMW
  • “Save money. Live better.” Walmart

These are so concise and catchy that they work as taglines, but they also clearly communicate the unique value to customers and why they should buy from these companies.

Now, what is your answer to the question “why do customers choose you?”

¹Osterwalder, Alexander, Yves Pigneur, Gregory Bernarda, and Alan Smith. Value Proposition Design. Hoboken, NJ: Wiley, 2014.

²Kaplan, Robert S., and David P. Norton. The Strategy-focused Organization: How Balanced Scorecard Companies Thrive in the New Business Environment. Boston, MA: Harvard Business School Press, 2001.

³Blank, Steven Gary., and Bob Dorf. The Startup Owners Manual: The Step-by-step Guide for Building a Great Company. Pescadero, CA: K & S Ranch, 2012.

⁴Moore, Geoffrey A. Crossing the Chasm : Marketing and Selling High-Tech Products to Mainstream Customers. New York, NY: Harper Business, 1991.

ClearPurpose

Tales and Tools for Sound Strategies

Russell McGuire

Written by

Strategist, Entrepreneur, Executive, Advisor, Mentor, Inventor, Innovator, Visionary, Author, Writer, Blogger, Husband, Father, Brother, Son, Christian

ClearPurpose

Through ClearPurpose, we share our experience, tools, and methodologies to approach strategy development with discipline and structure, making it easier to achieve clarity, gain consensus, and communicate coherently. Note: As an Amazon Associate we earn from qualifying purchases.

Russell McGuire

Written by

Strategist, Entrepreneur, Executive, Advisor, Mentor, Inventor, Innovator, Visionary, Author, Writer, Blogger, Husband, Father, Brother, Son, Christian

ClearPurpose

Through ClearPurpose, we share our experience, tools, and methodologies to approach strategy development with discipline and structure, making it easier to achieve clarity, gain consensus, and communicate coherently. Note: As an Amazon Associate we earn from qualifying purchases.

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