In a world filled with countless products and services, it often seems as though there are no new ideas left. However, if a market has no competitors, you might need to worry that there is no demand. So, what should you do if competitors already exist and offer similar products or services? The answer lies in the ‘Value Proposition’.
1. Start with the Problem
Think about why you are creating this product/service and what the purpose of your company is. This relates to solving an urgent problem faced by future customers. For instance, Airbnb began to solve the problem of expensive hotels and the lack of unique, culturally immersive lodging options. Too many companies start with “Our product/service is…”, but that’s not the right value proposition. Remember, people don’t want more products; they want solutions to their problems and are willing to pay for that.
2. Ask Yourself About the Risks Associated with the Problem
Answer the question, “What happens if this problem isn’t solved?” You’ve identified a critical problem, but you need to understand its impact. Some problems have more significant consequences than others. For example, Dropbox addressed the issue of file sharing and storage. Without their solution, people would lose important files, struggle with project collaboration, and waste time sharing large files. This step is about making the pain point clear. When customers see the real cost or risk of not solving the problem, they will better understand the value of your solution.
3. View Your Product/Service from the Problem-Solving Perspective
Start by listing the features and benefits of your product/service, but don’t stop there. The key is to connect them to the problems identified in steps 1 and 2. Potential customers or investors won’t get excited about a list of features. They will grow to appreciate those features as they use your product/service, but initially, it’s crucial to show how these features solve their problem. For example, Slack offers channels, DMs, and file sharing, but what matters is how these features solve communication issues in the workplace. The more thoroughly you solve the problem, the more interest you’ll generate.
4. Finally, Provide Proof
The last step is to provide evidence that your solution (product/service) delivers on its promise to solve the problem after acquiring customers. This is crucial when expanding your business. Customer stories that emphasize the problem and solution help illustrate the benefits of using your business. Therefore, make sure that some of your first customers help spread the word about your solution. Highlighting what your solution has done for them will make future potential customers even more eager to try it.
5. Concisely Summarize
After completing steps 1-4, you should deliver a summary that imprints your product/service in the minds of others. This means distilling your value proposition into a brief sentence that can be recited in under 30 seconds. For example, Slack could be summarized as “Make work life simpler, more pleasant, and more productive.” It’s important to deliver your core message simply and clearly.
Conclusion
Now you can capture the hearts of customers and investors through your value proposition. This will open the door to success, allowing you to rise from a latecomer to No.1. Wishing you the best in your success.
Reference: The Venture Crew, “How to Create a Value Proposition”