What is Your Value Proposition?
The term value proposition has been around since Michael Lanning coined it in 1984, while working for McKinsey and Co. So why do so few companies know what it is, or truly understand how they add value in the marketplace?
What is Value Proposition?
Value proposition is what a company does that will cause their customers to realize tangible benefits through the use of their product or service. Value proposition is more than just the product you sell; or how you sell, service, or distribute your product. It’s how your company strings all those components together, better than your competitors, to deliver real value to your customers. Value proposition can be both a description of how your company adds value today, and also a concrete statement of your vision for the future.
Without a clearly articulated, well understood, statement of value proposition, it’s impossible for you to describe a compelling vision and strategy for your company, or create effective segmentation, or distribution strategies. And, if you can’t tell your employees how your company adds value for clients, how can employees be expected to add value in everything they do?
Understanding value proposition is not just an exercise for small companies, or new companies. Large, well-established companies have the burden of history, and complex value chains that are more difficult to describe. It’s here that bigger companies struggle, because managers often perceive that anything they are doing now, falls squarely within their value proposition.
Value proposition is much more than an elevator pitch or a slogan, but it is important that you can boil your value proposition down to a concise and compelling statement. It’s often when companies try to articulate their statement of value proposition in a way that others can understand it, that the tough questions begin to surface.
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