After writing a product definition and a product pitch, you’re ready to discover, identify, and write your product’s value proposition. These tasks’ difficulty comes from the term’s imprecision, which Christopher Locke lampoons in his book Gonzo Marketing:
Business in general, and marketing in particular, seem to assume we know what they mean when they sling around terms like value, brand and positioning, and equate the resulting blur of vague ideas to something we might actually care about.
Fortunately, most product people agree on what value means, and why it matters.
Understand the value proposition challenge
In Product Management for Dummies, Brian Lawley & Pamela Schure give a typical definition:
Value proposition. A statement of the value that your product brings to your customer. The main reason that a customer should buy from you.
This definition describes a relationship between customers, your product, and the value it gives them. In Crossing the Chasm, Geoffrey More makes this more explicit.
The value triad is made up of three components: the product itself, the target customer, and the target application. The three taken together make up a value proposition, something one can sell. That is, an eggbeater, a cook, and the baking of a cake combine to create a value proposition called ‘saving time and energy,’ which can be used to sell the eggbeater to the cake maker.
This model highlights the hard thing about discovering your product’s value proposition: identifying customers and understanding what they value. The challenge comes from the circularity of identifying the product’s value to a customer segment, at the same time as identifying a customer segment that will value your product.
You don’t create the value proposition; you discover it, starting with customers and prospects. With some luck, you will already have some customers, even if you haven’t yet identified the value proposition, so you can ask them.
Learn from customers
Existing customers may articulate your product’s value to them. In The Product Manager’s Survival Guide, Stephen Haines describes using customer visits for this discovery:
Use customer visits to learn ‘how your product is valued by different customer types’, and for ‘the discovery of possible problems where posed value propositions don’t align with customer expectations’.
It takes a lot of skill to make best use of customer visits, but the main thing is to get the customer talking, and to listen and make good notes that you can refer to later. It probably won’t take many of these discussions for patterns to emerge.
Iterate with prospects
Having discovered the value proposition, or at least some candidates, you can now write it down. Write a single sentence that identifies a customer segment and the value they will get from your product. Don’t expect to find this easy or to get it right the first time. Instead, plan to iterate.
To iterate a value proposition, try it out with prospects. You will recognise a strong and unique value proposition when prospects recognise the value, and insist that you sell your product to them. In practice, you will get mixed feedback that encourages you to explore alternative wording, consider other customer segments, and look for unique value that competing products don’t already offer. These are your next steps.