3 questions every value proposition must answer

3 questions every value proposition must answer

The key to crafting a successful value proposition for your company is a dinner party. Well, maybe not technically, but a party can help.


A value proposition is a statement of the unique benefits your product or service delivers to the target customer. It must answer three questions.

  1. What is your product or service?
  2. Who is the target customer?
  3. What value does your product or service provide?

So, if you tell 50 people at a dinner party what your company does and they say, “That sounds cool,” then odds are you have a good value proposition.

Joe Wilson, senior education strategist at MaRS, says the challenge for most entrepreneurs is that while they have expert knowledge of their field, they are not typically experts in business.

At last week’s Entrepreneurship 101 lecture, Wilson explored the fundamentals of a value proposition, one of the cornerstones of a startup’s strategy. Your value proposition is how you articulate the value of your product or service in solving customer problems (or meeting customer needs).  It describes ‘what’s in it for me?’ to a potential customer. To develop a good value proposition, think deeply about the value that your product offers to potential customers (especially the values they care most about) and how your product or service meets the needs of potential customers in a way that they would find valuable.

This is even more crucial for new businesses. While companies like Google can rely on brand loyalty when they pitch a new product, budding entrepreneurs have to make it explicitly clear what their value is to their potential customer to help drive home the message about why their product is better, different and worth someone’s money.

Writing and speaking in plain language is surprisingly hard if you know your product very well, says Wilson. Entrepreneurs can get caught up in jargon or telling people why their product is important on a granular level.

Sure, you may have spent the last nine years developing a new chemical isomer, but if no one can understand how it is relevant to his or her life, no one will buy it. The video below shows a typical example of a bad value proposition:


Simply ask yourself: How does this product or service make people’s lives better? What value does it have in the mind of the customer?

A good value proposition is the keystone for developing other marketing tools, such as an elevator pitch or a presentation to investors. Watch the lecture video below to learn more about crafting a value proposition.



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