A Winning Value Proposition Has to Be More Than Just a Slogan

Image © C. Herscovici/Artists Rights Society (ARS), New York

Not long ago, we had a client that sold hospital equipment.  A recent acquisition had broadened their product line and they asked us for some help with the strategy for the new portfolio.  We started with an overview of our process, and when we got to the concept of value proposition, they stopped us. “Oh, we have a value proposition – we’ve already tested it with our customers.”

“How can you have a value proposition without knowing your strategy or target segment?” we thought to ourselves.  Needless to say, our skepticism was justified when the client explained that their ‘tested value proposition’ was the result of three different slogans that they had asked current customers to rate as part of a broader satisfaction survey.

The problems with this approach are so numerous they could fill an entire article by themselves. Yet sadly, it is not atypical.  We see the term ‘value proposition’ applied to all sorts of benefit statements and slogans. But the avid reader will recognize that this is NOT what we mean by value proposition.  A value proposition is a segment specific statement of the added value a customer receives from what we can do uniquely for them relative to their alternatives.  It is far more than just marketing ‘spin.’

The concept of a value proposition is not new. The phrase value proposition was coined by McKinsey & Co. partners Lanning and Edwards in 1988. Why then is the term so routinely misused? We are constantly amazed at how most “value propositions” that we read are totally focused on the product, not the customer,  and, worse yet, lack any reference to value. Which is funny but sad given that ‘value’ is in the name.

The good news is that while developing a good value proposition takes some hard work, it is not that hard to know when you are finished. There are five questions that a value proposition must answer in order to constitute a potentially winning strategy. The questions are:

  • Who is the Customer and What Problems are You Solving for Them?
  • What is Your Offering and How is it Unique?
  • What is the Customer’s Next Best Alternative?
  • How is Your Value Quantified (aka Currency)?
  • How Can You Demonstrate that it is Real?

Let’s explore each of these questions.

Who is the Customer and What Problems are You Solving for Them?

The first thing that is often missing from value propositions is the actual concept of the customer. Many are written so generically that you can’t tell who it actually applies to. As we have talked about before in our blogs on segmentation, not all customers are the same. And, your value proposition needs to speak to a target segment.

What does that mean? If you have a good needs-based segmentation, then the needs of each segment are unique, and different from the needs of other segments. That means that your value proposition should address the unique needs of a specific segment, not generically apply to all customers.

Can you answer the fundamental question of who each of your value propositions is targeting and what are their unique needs?

What is Your Offering and How is it Unique?

This is an area that most value propositions at least try to address, but often not adequately. This is not about the specs, features, or functions of your offering, but how they are unique and specifically what they allow the customer to do relative to the customer’s alternatives.

This is where you need to avoid what we like to call the “ity” words: quality, reliability, durability, flexibility, etc. The problem with the “ity” words is they mean different things to different customers (a topic for another blog post). The goal here is to answer, as clearly and specifically as possible, the question of how your unique capabilities address this target segment’s specific needs and so create value for them.

Have you articulated how your offering is different than the customer’s alternatives? Have you done so in enough detail that the customer can draw a direct line between this difference and quantifiable economic value?

What is the Customer’s Next Best Alternative?

if we don’t understand what the customer will be comparing us against, how can we tell them how and when we are better? And, back to segmentation, different customer segments may have a different next best alternative based on their needs. The next best alternative may be a direct competitor, a not-in-kind competitor or it may also be to continue doing what they are already doing.

Although it can be difficult for those who have spent their careers trying to convince the customer that we are the best choice, we need to acknowledge the possibility that there may be segments of customers whose needs really are best met by the competitor – if this is the case, we may be able to refocus a lot of wasted sales effort.

In the end, the customer’s next best alternative is not information that you necessarily publish or promote. It is not your job to tell a customer what they should be comparing you against. But, it IS your job to objectively evaluate alternatives from the customers’ perspective – this is an important part of your value proposition even if it is mostly used internally.

Do you understand the other alternatives relative to your offering from the customer’s perspective, including in-kind competition, not-in-kind competition and possibly, doing nothing?

How is Your Value Quantified (aka Money)?

This is a fundamental miss with most ‘value propositions.’ If you have read any of our material or our Grassroots Strategy book, you know that we believe that value is always measured in currency, especially in B2B. Think of it this way, in B2B markets, what you are really selling is the ability for your customer to make more money.

A statement of value in currency allows the customer to compare your offering with other alternatives, helps explain the potential pricing of your offering and justifies (in financial terms) the selection of your offering over their other alternatives. Some may argue that it is up to the customer to calculate this value for themselves. We believe that providing a strong value framework and hypothesis captures the customers’ attention and gives them a starting point for their own value assessment which they may do for themselves.

If you can’t tell a potential customer how much value (money) you can deliver to them, how is it really a value proposition?

How Can You Demonstrate that it is Real?

The final element that a value proposition should contain is evidence that you can actually do what you say that you can do. This can often be difficult, especially early in an offering’s life. This can take many forms. Ideally it is customer testimonials, test results or case studies, but that is not always possible.

It is important early on to develop an understanding of what customers will want to see in order to believe the value proposition. This will guide you in your market development and product launch process and help you decide whether you need to develop and administer specific testing protocols, invest in application labs, develop relationships with industry experts (certification bodies, academics, etc.) and/or focus on charter customers. The last thing you want to do is get to product launch and figure out that it will require another year or two to assemble the evidence the market requires to purchase your offering.

Do you understand the proof points that your target segment will require in order to believe your value proposition? Have you assembled these proof points or have a plan to assemble them in order to be incorporated into your value proposition?


Although it seems like a value proposition is a simple concept, it is the centerpiece of a thoughtful market-back strategy, and getting it right takes some work. It is the one place in our approach where we encourage the use of a template, because the template provides a critical checklist.  If you can answer a handful of key questions objectively and from the customers’ perspective, then your work is done.

A winning value proposition needs to be more than just a slogan that you hope is true. Done well, it is the roadmap for how your business can and should win within your target segment(s).

Image © C. Herscovici/Artists Rights Society (ARS), New York

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