When considering your unique value proposition, I find it helpful to consider a list of common value propositions to help guide me and my client’s thinking. To that end, here are eleven common value propositions that businesses might offer to their selected customer segment.
Review the following value proposition types and determine which one is most appropriate for your offering:
1. New – You have a new product or service unlike any other. Generally, your innovation is protected by a patent or something proprietary. When Invisible Fencing came out, they were the only product designed to contain a customer’s dog based on the use of a radio transmitter, a perimeter wire, and a receiver collar worn by the dog.
2. Performance – PC manufactures generally deploy a new model that is faster and more powerful every 6 months to make the last version obsolete, encouraging the customer to upgrade. Car manufactures also produce new version each year that are a little more powerful and get better gas mileage.
3. Customization – 3D scanners, CAD programs, and 3D printers allow consumers to customize their final products. Many products (from software to cell phones) allow the user to customize the final product to capture their unique personality or usage through customization.
4. Get the Job Done – When a person buys a condo, it often includes dues that cover all landscaping and exterior maintenance, relieving the consumer from this responsibility. If you offer a product or service that relieves the customer of some task they typically have to perform, you are providing a value proposition of getting the job done.
5. Design – The Dyson vacuum’s value proposition uses a revolutionary ba-less design as a point of differentiation. While the vacuum cleaner itself was not a new product, it used a different design to capture market share. A design value proposition might also involve better ergonomics or just look cooler.
6. Brand/Status – The first generation of Cadillac Escalade was essentially a Chevy Tahoe rebadged to capture the status of Cadillac and thereby a higher margin associated with the prestige of Cadillac ownership. Name brands by virtue of their name often capture higher margins. For instance, Advil costs more than the generic equivalent, Ibuprofen.
7. Price – Southwest Airlines and Walmart have a low price value proposition. All activities are optimized to provide a low-cost product.
8. Cost Reduction – Applications that operate in the Cloud, such as SalesForce, relieve the customer of the cost of buying, installing, and maintaining the application in exchange for a small subscription fee as a way to reduce the customer’s cost. Equipment rental/leasing companies are examples of businesses that offer a cost reduction value proposition. This type of company is especially valued by small, low duty cycle users to avoid the overhead and cost associated with physical ownership.
9. Risk Reduction – Offering an extended service guarantee is an example of risk reduction. When most car companies were offering a two year, twenty-four thousand mile warranty, Chrysler offered a seven-year, seventy thousand mile powertrain warranty, which was unheard of at the time. By extending the warranty, Chrysler reduced the customer’s risk of owning a Chrysler product.
10. Accessibility – Most people can’t afford a vacation home. However, with the advent of timeshares that offer the consumer a fractional ownership in a vacation property, ordinary people were provided access to vacation properties previously not available to them. Fractional ownership provides access to everything from airplanes to sailboats. Even the creation of mutual funds allowed the common person to have a diversified portfolio at a lower price point.
11. Convenience/Usability – When the iPod was introduced along with iTunes, it allowed busy users to search for music from a huge online library, download it, and listen to it all in a few minutes without ever leaving the comfort of their living room. By offering this service, Apple provided unprecedented convenience and usability to their customers.
What value proposition do you offer to your customers?
