PO Box 1500, Princeton, NJ 08542

The 6 Steps to a Winning Value Proposition

Value PropositonWhat is a Value Proposition?

Whether you are trying to market a new product, an old product, a service or just about anything that requires an exchange of value (typically money), then you will be well served by building a strong Value Proposition (VP). We hear the term often, although it is often used interchangeably with unique selling proposition, customer value proposition, benefits statement, benefit proposition, unique selling advantage or any number of other terms. In its initial conception, it is all of those but not quite any of those alone.  So what exactly is this elusive concept, and why does everyone think it is so important?

If you look up the term in your typical online business dictionary you will often find a very terse statement along the lines of “The statement of goods and services offered by a company to its customers in exchange for payment.” Not good. In fact, if you stop there, you are limiting the full power of the Value Proposition and what a good one can do for your business.

The term has its roots in a 1980’s movement in business, largely pioneered by Ray Kordupleski, president ofCVM, Inc., a well known business consultant and veteran of the telecommunication industry’s most tumultuous era  leading up to and following the break-up of AT&T. The idea was further refined and developed into a 6 step system by Cindy Barnes, Helen Blake and David Pinder in their excellent book “Creating and Delivering Your Value Proposition: Managing Customer Experience for Profit.” The six step process I discuss here is their handiwork, and I strongly recommend their book for more in-depth exploration.

Through the work of the above authors and others, the VP has evolved into a much more powerful tool and it is far more than just a short statement or any kind of concise customer message. Ideally, it is a guide for developing an effective marketing plan. By looking carefully at the following six steps, starting with the market – the customers themselves – a company can develop a document that serves as both an internal guide to marketing your product or service and a blueprint for external messaging and marketing tactics. It is a type of playbook and a company can reach for the VP to make sure it is using the right tactic for a particular campaign or market. It can provide suggestions for ad copy or other messaging that is relevant and expressed in terms that the customer understands, and it can even serve as a framework for the development of new products or services.


The Market is the specific group of customers you are targeting. The more specific the better, and if you think your product or service will be targeted to “everybody” then you should stop right where you are and immediately call your friendly neighborhood marketing advisor for help. Almost no products or services, at least when introduced, can or should be marketed to everybody. You have to focus, limit your scope get as many details about your chosen market as possible. Factors like age groups, income levels, geographic location, online habits, buying behavior and preferences, communication channels, and more all help to create segments and sub-segments to better fine tune your marketing initiatives and messages.

Value Experience

The Value Experience is broadly defined as benefits minus cost as perceived by the customer. But that can be a little confusing as it seems like you are trying to subtract a number (cost) from a quality (benefits). But “as perceived by the customer” is the key term here. A customer may not only consider cost in financial terms, but also in time spent to acquire the product, or the cost (dollars, inconvenience, time etc) of switching from one product to another. Surveys, customer interviews and a little bit of research can go a long way to determine how customers experience the value of your offering in their own terms. It may not be what you expect.


Consideration of the Offerings should entail more than just the product or service itself. Are there any extras available? Are there elements of your offering that are paid, free or to be added on later? Again, try to view this from a customer perspective. Let’s say you have a “buy 4 and get the fifth one free” type of offering. Maybe you have worked it out so that there is no real cost to you for making this offer, but the customer is certainly going to factor that 5th item into their calculations and decision to purchase.


Benefits describe how your offering delivers clear customer value. Don’t’ be tempted to lump Benefits into the previous categories like Offerings or Value Experience. While certainly there can (and should) be overlap among these categories, it helps your focus and clarity of both internal thinking and external, customer directed messaging to consider these 6 categories separately at first before trying to combine concepts or language. It’s helpful to consider that there are really 4 types of benefits:

  1. Core – these are the main functional benefits of your product/service, for example, the core benefit of a Ferrari (or any car) is that it provides a way to get from one place to another.
  2. Expected – these benefits are often unstated but expected. Using the Ferrari example, it is expected that the car is fast m stylish and expensive.
  3. Augmented – these are benefits beyond the expected and may offer added value , surprise or excitement. For example, a Ferrari is safer and holds its value better than any other luxury sports car.
  4. Potential – these benefits are often more implied or imagined and create emotional reactions in the customer. For example, a customer imagines him/herself gaining status with their new Ferrari, getting the girl/boy, impressing the CEO and getting that promotion, etc.

Alternatives and Differentiation

Again consider the Alternatives and Differentiation from the customers mind. Are there easy alternatives, like generics or used goods or a viable substitute? A customer may need a cell phone for example, but why do they need the one that you are selling? Also, have a good look at your competitors to find out what are they doing and how can you differentiate yourself from them. Differentiation can occur by price, features, benefits, perception, warranty, return policy, free trials…any number of ways. But if it is not apparent to the customer than you are just gambling that they will choose your offering over your competitors.


As soon as you can get Proof of how good your offering is, get it and use it. Get permission from someone who has successfully used your offering and communicate that out to your market. This can be in the form of testimonials, endorsements, reviews and customer opinions expressed in blogs or social media. If your product is suited to citing case studies, like health products or learning services for example, then try to create one. Customers want to see that your claims are backed up, and if social media has proved one thing, it’s that endorsements and recommendations from peers works quite well.

Putting It All Together

So we’ve covered a lot of ground in the above six points, and much more can be written and discussed about each one. I strongly recommend that companies develop two value propositions; one that is detailed and covers as much of the above as possible, and one that is short and somehow distills as much of the above as possible into a single sentence or two that is expressed in the language of the customer. Again, as mentioned in the introduction, the Value Proposition is often confused with the Unique Selling Proposition (USP) in that many consider it to be a short sentence that you use in your advertising to communicate the value of your offering to customers. And yes, I do recommend that you have a concise statement like that.

However, if you go through the above exercise and write down what you would like to communicate under each of the six topics, and then distill the result into a short blurb, then you will find that you have both an internal guide and an external message. While many marketers can recite their company’s one sentence blurb when asked, it is surprising how many do not have the deeper knowledge discussed above about the full range of value of their product and the customer perceptions of each of these six areas.

It is not necessary to express all six in the short version. In fact, that would most likely be too wordy and awkward. But if you have these six items understood and expressed to your team, then the shorter communications that they use in marketing communications will be that much more impactful and backed up with depth and detail, should the need arise. WE can use a good analogy from the arts. A skilled writer or musician knows their vocabulary or their scales, but they don’t use them all in one essay or one song. But the knowledge is there in reserve and infuses what you do choose to say with authenticity and authority. And that’s good marketing.

Leave a comment