The 4 things a value proposition needs to do.
Why is the value proposition so misunderstood? Maybe it’s because it is often confused with the most current campaign slogan. Or because it’s seen as the latest “get-more-for less” promotion.
The problem is that the value proposition is often confused with the Unique Selling Proposition (USP).
The job of the USP is to promote features, price, selection, convenience, or other benefits that provide a market advantage for a given period of time. The USP essentially seeks to claim a competitive position to drive sales in a current market environment. Messaging is primarily delivered through advertising and other promotional channels.
Home Depot’s current advertising slogan, “How Doers Get More Done,” promotes convenience, selection, and knowledge. Its previous slogan of “More Savings, More Doing” placed more emphasis on value. Home Depot was adjusting its USP to position against Lowe’s and other DIY competitors. Brands continually update their USP to adapt to changes in market dynamics. A value proposition plays a different role.
Defining what is inherently unique about the brand for the long term is the primary objective of the value proposition. It should reflect how it will deliver on the mission through sustainable competitive distinction. An advertising slogan will often incorporate facets of the value proposition in a campaign but generally promotes those benefits most relevant at the time. The value proposition transcends USP-driven campaigns. It resides as a vital dimension of the brand platform in concert with vision, mission, and the brand promise.
The value proposition needs to define who is the “ideal target audience.” Targeting a specific customer category could be, in and of itself, a differentiator by engaging with a segment that is being underserved by industry competitors. Abercrombie & Kent targets customers seeking highly tailored travel experiences and adventures as distinct from the broader travel customer segment.
The value proposition also needs to define what business the organization is in by what’s being offered to its ideal target audience. Starbucks sells coffee, but one might argue that it also sells an experience. Amazon sells products, but it also about convenience? The offer is often more than simply the tangible products and services.
The target audience needs to understand the benefit of the offer. Benefit is an integral part of the value proposition. It needs to be meaningful and relevant. It can be a tangible feature or have intangible worth. Or could be the benefit of working with a company that you have more confidence in or share values with. Some customers see the benefit of the Paul Newman brand with profits that go to support charities. A benefit of Fairmont Hotels and Resorts is the distinctive experience of each of their landmark properties.
The essential component of the value proposition is what the organization provides that is genuinely different from its competitors. Something that no one else could replicate. And this must be sustainable for the long term. But it is the most difficult to define. Companies often copy and improve on other company ideas. But some things cannot be replicated. The design style of George Jensen, the heritage of Rolex, or the personality of Virgin are all sustainable advantages that would be impossible to reproduce.
Most importantly, the Value Proposition needs to be honest.
The value proposition is a promise that the company claims is unique to them only. It is a combination of what it offers, the benefit it provides, and why it is a better choice. But it must be true to who and what the brand is. That’s what will lead to customer loyalty and influential brand advocates. Claiming something untrue will only erode trust, confidence and impact financial performance.
Firms fail to realize that propositions presented in the boardroom are too rarely delivered to customers. The promises you keep, not the ones you make, determine growth.”¹
A genuine value proposition that is unique and distinctive has real tangible value. A study conducted by Millward Brown on the most valuable brands showed that those brands that had a brand proposition that consumers felt were unique and distinctive showed a combined value of growth of 168% over 10 years¹.
The marketing of a brand through advertising or other means may promote a particular USP at any given time. Still, it must ensure that it does not contradict the value proposition. The Millward Brown study showed that consumers felt that brands with excellent advertising but a weaker brand proposition underperformed strong value propositions and only grew by 27%. Marketing initiatives are no better than the underlying meaning and value of the brand.
The Big Idea around the Brand is more important than the Big Idea around your marketing campaign”²
This does not mean that the advertising campaign is unimportant, but it does mean that great advertising is only as good as the brand it promotes. The value proposition is the foundation for amplifying the brand through marketing, advertising, slogans, social media, retailing, and other channels. It is crucial to how the brand is positioned in the marketplace and essential for those responsible for delivering on what the brand promises.
Every company and every product wants to be “the brand of choice.” They seek to be in a position of universal preference. A position that customers will shift their loyalties to and be an advocate for. A position that is distinctive, meaningful, beneficial, and clearly sustainable. That is the role of the value proposition, and that’s how great brands work.
1”Identifying the Delivery Gap”. Bain and Company.
2“Meaningful Difference”. BrandZ Top 100 Most Valuable Brands 2017. Kantar Millward Brown