Cambridge Dictionary (and, in my experience, most marketing professionals) defines value proposition as “a reason given by a seller for buying their particular product or service, based on the value it offers customers.”
But I believe this is really an outdated definition because, thanks to technology and the internet, we’re in the age of the winner-take-all economy. What does the winner-take-all economy mean? In a nutshell, why buy the best locally when, thanks to the internet, you can buy the best in the world for the same price?
Sounds scary for small businesses, right? But don’t be afraid — understanding how to compete in the winner-take-all economy is actually quite simple, but like the game of Go, it can take a second to explain and a lifetime to master.
Competition is the cornerstone of American capitalism, and even though big brands and corporations do everything they can to corner their markets, as whole industries learned the hard way when the internet popped up, there’s always someone lurking in the shadows to take you down.
So, to succeed in the winner-take-all economy, first aim to understand your competition and learn what they do well and what they do poorly, and then look for opportunity. When somebody does anything poorly, there’s always opportunity. The good news is that everyone does something poorly — even Amazon.
Best Buy, like countless other big-box superstores, has faced stiff competition from Amazon. But the company saw an opportunity. You could buy just about anything on Amazon, but there was nobody to show you how to use it or put it together. And thus, the company’s in-home consultation program was born. The way they did it was through price-matching, speedy delivery and its Geek Squad. One and two put Best Buy on an even playing field with Amazon, putting the focus on what it does differently and better. With customers actually in the store, they can get expert advice from the Geek Squad to help with decisions. And since customers are in the store already, they get their purchases faster but also have an expert on hand to set them up.
Here’s the secret to crafting a value proposition for the winner-take-all economy: Once you understand your competition, you need only to identify what it is that your organization does differently and, more importantly, better than your competition, and then explain how you do it.
When I ask new clients what they do differently and better than their competition, 90% of them answer “great customer service.” And I ask, “If 90% of businesses are saying that, then is your customer service really different or better?” Maybe. This is why the how is important. It may be that your customer service is better. After all, there is always someone at the top of the mountain. And if you’re the one at the top, “great customer service” is probably not your value proposition. Rather, it’s how your customer service is different and better.
The scary part of this is, when we ask clients how they’re different or better, they often don’t have an answer. And if you’re not different or better, then all you can do is lower your prices. But who wants to do that?
Now, this is where it gets really interesting. According to the U.S. Small Business Administration, only about 50% of businesses survive for five years or longer. I believe it’s usually because there’s nothing different or better about what they offer. But understanding the importance of knowing these things early on gives you the opportunity to figure them out. So do your homework: Identify what your competition does well and what they do poorly, look for opportunity and craft a real value proposition. Sometimes when branding an organization, especially a startup, we end up reimagining their entire business model. And that’s pretty exciting.
The way I like to articulate this is if you have a great value proposition, then when someone asks you what you do for a living at a party, you can tell them and walk away with business. The challenge is you not only need to have something that’s different and better than your competition, but you also need to articulate it in a simple, brief and clear manner. So where do you start?
First, make a list of all the things you do very well. Leave nothing out. Like Best Buy, little things can make a big difference. Then compare this list with what your competitors do very well — be completely honest. You must be at least as good with these as your competitor. Next, compare your list with what your competitors do poorly. This is where opportunity lives. See what stands out with what you do well and your competitor does poorly. This is your value proposition.
If you can do that, marketing is easy because all you need to do is shout out your value proposition to the world, and your lead funnel will overflow. Our measure of success is not when our clients increase their AdWords spend, but when they have to stop because they have too much business.
