Value Proposition dominated my mentoring conversations with entrepreneurs this week. Such a simple sounding term, but so significant that one has to get it right to be in business. Here are some stand-outs from my discussions and notes.
If you are already in business, your value proposition is simply what you deliver to your customer today. Yet, this very proposition might need re-examining, strengthening or altering on a continual basis. The trigger for that could be competitive threat or the opportunity to expand your market or take a higher share of the customer wallet. Some marketers call the exercise "examining the value stack".
If you noticed, even the good ole' milk delivery to our homes is a changed value proposition. A milk vendor today has multiple value levers to work with – home delivery @ 5 am, A2 milk, organic milk, choice of brands, free replacement of spoilage, now the use of apps for ordering(!), plus a variety of upsells (like curd, paneer and ghee, and even non-dairy cross-sells like greens and flowers!!!)
I also like to think of value stacking in the proposition like an ice-cream cone. Is there any ice-cream in it? How much? What flavors? What toppings? What about the cone itself?
Have you examined your value stack? How much value does your proposition pack?
Now, when a rank startup proposes a solution or an existing business owner thinks up a new idea, the value exists in their mind. They visualize it to such level of micro-details that customers and stakeholders begin to see it clearly as well. That is the reason why a powerful idea is often considered the founder’s vision!
I have to cite the example of a brand called BEARDO (heard of the name?), an Indian startup of 2015 with an insane sounding value prop – beard hair oil (no kidding!). But they were so sure of the value in their proposition - proven by rapid acceptance of their product in salons, that they quickly attracted angel investment, and then drew the attention of FMCG major Marico in 2017 who eventually bought out the company. Today that business - which began with oiling beards, is over Rs.100 Crores and has set its sights on men's grooming products – a big, growing space in the consumer market!
What value are you imagining creating? For whom?
While on the topic of founder vision, on more than one occasion I have met well-meaning, earnest people who conflate their deep domain knowledge with vision or value proposition for a startup. This is a flawed understanding of value proposition. If not contained, it can become a huge distraction and disastrous. Your knowledge – be it of the business or technology or challenges or unserved/underserved needs or customers, is not your value proposition. It can certainly be the basis to conceive of a value proposition. Yet it is never the knowing that is as important as the doing.
Customers don’t want a class, thank you! They want you to solve their most pressing or significant problem for which they are willing to pay you a fair consideration. And then you must leave!
Close to where I live, a couple of years ago a new, small supermarket had opened up. Their claimed USP was that they stocked only organic products. I went there once to buy bread and was told that they did not sell products that contained “gluten”. I was left wondering if a supermarket (the core value proposition) could risk knocking out bakery or wheat/flour products from their shelves. Not surprisingly they shut shop. Recently I saw a new greengrocer store-front there, which said "organic fruits and vegetables"! If they're the same folks, then they probably figured out the value in their proposition.
Enough said. Stack value in your proposition!