Join us this week at Entrepreneurship 101 and hear Mark Zimmerman, CIO and Senior Advisor, ICT at MaRS Discovery District discuss how to clearly define your business model. He will use case studies to test concepts against a specific business.
A value proposition is important. Let’s face it: it’s what sells your startup. In this week’s Entrepreneurship 101 lecture, Joe Wilson goes over the ins and outs of crafting a good value proposition, and here’s what he has to say:
“Your value proposition is one sentence (maybe two) of the unique benefits delivered by your offering to a target customer.”
Sounds simple right? And according to Joe it should, because the art of a good value proposition lies in both its simplicity and its clarity.
“Your head doesn’t write cheques—the market does,” Joe stresses in his talk. While the value of your product or service may be clear to you (maybe you’ve been living and breathing it for some time now), the value you offer the market is not always self-evident. To convey your message, you have to articulate it using clear and concise language, and let the strength of your product showcase itself.
Joe breaks a well-constructed value proposition into three parts:
These three points should fit together in such a way that it is clear what you are selling, why it’s unique and who it will appeal to.
And don’t worry if you don’t get it right the first time. After all, Joe stresses that a value proposition is a hypothesis. For a startup not yet in the market making money, you are hypothesizing that if you create your product fully, you will exchange value for money. But like any good hypothesis, this needs to be rigorously tested before you invest a lot of money into it. During this testing phase, you might need to adapt or modify your original assumptions as you collect feedback, and as a result, your value proposition might change.
When collecting feedback that challenges your assumptions, “a good entrepreneur isn’t defensive,” Joe says. “Don’t try to explain your product more. Instead, ask your customer more questions.”
Of course, central to every value proposition is being able to clearly define the core value of your product—and as Joe puts it, it’s not about features.
Values can range from saving time and money to providing convenience and quality, to offering status and aesthetics.
Joe points to the shoes he’s wearing, produced by a company that makes shoes in Ethiopia under audited, fair-trade conditions. He admits they’re not the cheapest pair of shoes you could buy, but what you’re paying for is an ethical product. This particular shoe company has used the value of ethics to define their position in the market.
As parting advice, Joe cautions against having too many value offerings. “Focus on the values that are most important to your target market and do those really well.” Because again, the art of a well-crafted value proposition lies in its simplicity and its clarity.
In the videos below, watch as Joe dissects good and bad value propositions and differentiates between B2B and B2C value offerings. You can also hear four different startups explain how their value propositions evolved over time.
And search “Entrepreneurship 101” on iTunes U.