How to define your value proposition (and tie it to your financial strategy)
Your value proposition is more than simply defining your price structure. It is your brand’s narrative. To define your value proposition, begin with the obvious and work your way through to the nuanced.
Let’s begin with your price. Setting the right price can be a task all on its own but once you do, it will reveal your market position. Is your business white glove concierge or economy?
Next, start digging into your specialty. Ask the right questions. Why should a customer choose you over the competition?
- What do you do better?
- What sets you apart from your competitors?
- What can you do that is not being talked about by competitors already?
Ask for feedback. While it may not be a ground-breaking idea, if you analyze your data and ask the right questions, the feedback you get is invaluable. Begin by asking your most loyal customers some version of these basic questions:
- What brought you to us in the first place?
- What other products or services did you try first and in which ways did they fail to meet your needs?
- What gave you the confidence to try our product or service?
- What problem has been solved thanks to our product or service?
Use cohort analysis to narrow down your best customers and get their opinion.
- Did you meet their expectations?
- Would they recommend this product or service to their network?
2 Examples of effective value propositions.
The general structure of a value proposition often looks like a headline followed by a concise description that says who you are, what you do and how you do it– ideally how you do it better than your competitors. A few examples of some great value propositions from tools we use:
Asana: “Work on big ideas without the busywork. From the small stuff to the big picture, Asana organizes work so teams are clear what to do, why it matters, and how to get it done.”
How to tie your value proposition to your financial strategy.
Now that you’ve defined your value proposition, let’s map it back to your financial strategy. Going back to pricing structure: If you consider your business to be white glove concierge, for example, you’re going to offer more, at a higher price point, but for fewer customers. Or, in accounting terms, you generally will have higher margins with lower revenue.
On the other end of the spectrum, if you offer more standard or economical pricing, you will likely have lower margins: Your business offers a little bit for lots of people and with a lot of revenue.
Your customer value proposition and who you’re targeting differ greatly in each of the cases above and should tie into your entire financial strategy.
For example, value proposition becomes essential to financial strategy for SaaS companies that operate within a freemium model. How you upsell your product will depend on the kind of value you want to offer within your free subscription. We cover how using creative upselling can increase cash flow for ecommerce businesses in this post.
Figuring out the right amount to offer within your free version is a delicate balance: you want to offer just enough that your potential customers can experience the value you’re selling but not so much that may never convert or upgrade to paying customers.
How to put your value proposition to work.
Besides web copy and elevator pitches, there are a few other ways to put your value proposition to work now that you’ve tied it to your finances:
- Create a fact sheet for your sales team to draw on.
- Model an infographic around your value proposition to use it for all kinds of marketing and sales opportunities.
- Use it as a stepping stone to build a referral program using your existing customer base.
- Run it as a self-check. Structure feedback and surveys around your value proposition to make sure that you continue to offer the value that you promise.
Need some extra insight to tease apart how your value proposition is tied to your financial strategy? Get in touch to see how our CFO strategy sessions and dashboard analytics can provide you with the real-time insight that you’re looking for.