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What is a unique value proposition?
There are probably thousands of eCommerce businesses that sell things online, millions of designers eager to design a digital product, and many web development companies that propose you develop a website. How to choose which one best fits customer needs? What makes those companies unique and differentiates them from the competition? You may represent a company and wonder how to make yourself special and different with your offer and service. The unique value proposition comes here with the help.
A unique value proposition (UVP) is a well-researched and tested statement that illustrates what makes your business and offers unique. It can guide your customers to compare different brands' offers to help them decide more easily. However, even if UVP is client-focused, it serves the whole company as a guidepost that always shows the direction to develop the message and everything related to company activities.
So many people can’t answer the “what” and “why” questions and then head off on the “how” path wasting corporate resources and customer calories…I won’t let people talk to me about the “how” until we are grounded with confidence on the “what and why”…
There is enormous power in the word 'value.' It brings positive connotations because we identify it with something that improves our lives. It's something that we need, and it can positively change the person's life and the environment to which it is brought. Value thinking concerns the promise of a better future - how with the "bought things," tomorrow can be better than today.
However, when we consider the value in the business field, we can find out that there can be more than one "value." It has different meanings to different people. Every department can have its own, and this way, we can distinguish: economic, perceived, relational, social, and experiential value.
Therefore it is crucial to understand that there is something above our personal assumptions, personal values, and even the values established inside the teams. It is a unique value proposition that can bring more objectivity to the company working on its strategy and can help focus more on the real need of the customers and what benefits they can expect when they meet with the company's offerings.
The term value proposition evolved from the term unique selling proposition (USP), rooted in the 1950s. For the first time, it was mentioned by Cindy Barnes, Helen Blake, and David Pinder in their book Creating & Delivering Your Value Proposition (2009). The idea of sales teams focusing more on the customers' benefits is linked to McKinsey consultants Bower and Garda (1985), who discussed in their paper the making of promises of satisfaction. A bit later, Lanning and Michaels (1988) built on this idea, developing consultancy tools that focused on creating value propositions. The whole idea of USP twisted the mindset of sales teams that stopped thinking about the benefit of product features and started to be more concerned about defining customer benefits. It was a revolutionary change the perspective, from which customers stopped to buy things but rather experiences:
If you are embarking on a customer value-led path then you take the view that customers do not buy ‘things’; they buy the experiences that the ‘things’ are able to deliver.
So what does the definition of a unique value proposition look like today? It is both a statement and a tool that helps to develop further business actions. Through it, customers will receive a clear, convincing, and credible description of how they will benefit from a supplier and how it will impact them in the future. By defining it, you can investigate your brand's uniqueness and offer. This value can later guide your approach in marketing, external brand communication, looking at and responding to your target audience, and every aspect that strengthens your brand identity and sets clear communication with your customers.
Unique value proposition vs. slogan
A unique value proposition is not a slogan. However, a shortened version can be used as an easy-to-remember and identify with your brand slogan. Slogans are used in promotional and advertising campaigns that help the market recognize the brand. Those memorable phrases can be easily caught up in some adverts, billboards, and even directly on the branded product. They can be, for instance:
- funny ("What happens here, stays here" from Las Vegas Convention and Visitors Authority),
- activating ("Just Do It" by Nike),
- inspiring ("Yes We Can" by the 2008 Obama presidential campaign),
- or building positive associations ("The happiest place in the world" by Disneyland).
But they mostly don't detail the value customers can receive by taking advantage of the organization's offer.
Look, for instance, for the example of the Apple company. Their famous slogan, "Think different," however inspirational, doesn't bring real value to their customers. That's why the company has listed on the website its core values - accessibility, education, environment, inclusion and diversity, privacy, and supplier responsibility. But its primary value proposition is mainly created around its mission statement:
The company is committed to bringing the best user experience to its customers through its innovative hardware, software, and services.
We can break this UVP down into several mentioned benefits for Apple users:
- They can suspect their constant commitment to improvement.
- They can get the best user experience.
- They can benefit by using their innovative hardware, software, and services.
- The company assures customers that it is more than just a money-making machine and seller of advanced technology gadgets.
As you can see, although slogans can motivate people to buy and use the company service, UVP, as a business strategy and action guide, can more clearly show what customers gain when they decide on the company's offer.
UVP can and should be short and memorable, as in the slogan. However, it highlights more customers' benefits and the experience they can get with the particular product or service.
How to create a unique value proposition?
Identifying your unique value proposition requires understanding what you do well, what your customers want or need, and how you stand out from the competition. Using the following four-step process, you will determine these things and translate them into drafts of your UVP. Before you start this process, create a space for joint teamwork unless you work individually from the beginning to the end on the product. With the team, take time to go through all the processes that will help you get as many different points of view as possible and establish a universal and objective unique value proposition of your offer.
Create a list of your product and service benefits.
Firstly, think about your actual company's products and services. List them all down. Then think about each of them - ask yourself and the team questions about the customer’s pains for which your offer can be solutions.
Then think about gains - outcomes, and benefits your customer demands. Those gains can include experiences, expectations, solutions, situations, and feelings, like functional utility, social profits, positive emotions, and cost savings. Consider both required, expected, desired, and unexpected customer gains. And every time, gather concrete improvements that can be measured by customers, not those you think might be usable in the future.
While working on this step, the "FAB concept" exercise can be helpful. FAB is an acronym for "features-advantages-benefits." To use it, list all the features your product or service offers, and then describe what the feature accomplishes (advantage) and why the customer would value that (benefits).
So, for example, the FAB concept for an electric bike can look like this:
FEATURE: This electric bike has a long-lasting battery
This means that…
ADVANTAGE: it is efficient
This means that…
BENEFITS: you can ride it longer and charge it less often.
2. Research your customers.
Before you start defining UVP, you should research your customers deeply. Think carefully about who is your target audience and potential customers. Look at those people's age, gender, location, lifestyle, and target income information. To analyze your customers, you can use the persona tool.
If you didn't specify your target audience or you have to get deeper into it, ask yourself questions such as:
- Is there a specific group of customers you are targeting?
- Do they have any particular needs?
- What are their pains and gains?
- What motivates them, and what frustrates them?
- What keeps them awake at night?
- What do they value?
- What risks can they perceive when choosing your offer?
- What are the benefits and costs experienced by them?
- What are the most significant factors when your customers are looking to purchase?
Then try to identify their actual needs. Investigate them deeply and search as well for the hidden intent of the customer. For instance, sometimes customers can say they want to buy something for a practical reason. For example, they can claim they want to buy an air purifier with a humidifier to breathe cleaner air. But, their hidden intention is much deeper than this because those potential customers can be worried about their family's health and recurring upper respiratory tract infections.
The more you understand your customers the clearer things become. The key to building a great customer experience is to understand how customer value creating value propositions improve their lives. I’ve witnessed this approach in action and seen it deliver powerful results. Highly recommended reading.
At this step, sometimes you have to get into the shoes of a kind of “psychoanalysts” and find out the hidden purpose of the target audience and clients that they are unaware of or don’t want to admit out loud. Choose the few target groups most important to your business. You can deeply research the intent and purpose of their needs using several qualitative and quantitative research methods.
In qualitative research, you can try out to organize in-depth interviews or focus groups to ask open-ended questions and get answers about the background of customer decisions. However, you can also try less deep quantitative research, like surveys and questionnaires, web and app analytics, eye tracking testing, and mouse heatmaps. They can help you understand what people search for and which information in your offer attracts them the most. Combining those two methods to obtain the best results is always worthwhile.
Suppose you decide to conduct the research using above mentioned methods. In that case, you can also ask customers about considerable alternative products or services, which can help to plan the next step with competition analysis.
3. Research your competitors.
While researching a unique value proposition, one of the critical elements can be analyzing your competitors. Finally, UVP aims to inform your company what makes you stand out from your competition. You can use the knowledge from previous customer research, where your clients can mention the most important alternatives to your company.
You should also research on your own. Dig into gathered insights by listing three of your company's and business's most important competitors. Check their websites, commercial campaigns, products, and services carefully, and consider what makes them special and unique.
While you research your main competitors, start by listing the features of their products or services and how they communicate them. Sometimes you can find their UVP written by them on their website on the About us page, strategy, or mission statement. If they are big players, you can investigate how their UVP changed over time (as in Apple's example). It is good to find at this step points both of differentiation and points of parity. The collected information can show you the competitors' focus on their businesses.
While you have them noted, try to look for gaps to fill by asking yourselves questions like:
- What is the market position of your organization? How do you feel about it? Is it a place you want to be? Where would you like to be if not here?
- What's happening in your market and around your competitors? What's hot? And what's not?
- How does the pricing of your competitors compare to yours?
- Is there any outside situation that can impact customers' behavior, like climate crisis, energy crisis, inflation, instability, or the vision of the next pandemic?
- How can you respond uniquely to the current situation, market, and customer needs?
If you are new to the market, you would have to put more effort into the research because you mostly think about new offerings and develop the whole process about them. For example, if you want to produce and sell new shampoo, you will need to find out what benefits it can give you to the customer. This way, you can discover that shiny and healthy hair isn’t enough compared to billions of similar alternatives. So how about focusing on environmental friendliness by being free of microplastic and having biodegradable and refilled boxes?
But most of the companies, while defining UVP, work on the offerings they already have, but they need to identify, categorize and understand it better by working on value propositions.
While researching your value proposition compared to your competitors, you should focus on unique benefits the customer can receive when deciding on your offer. You can demonstrate why you are a better choice. Highlight your strengths. However, looking at those “benefits” from a broader perspective of your brand feel is essential. It is a marketing masterpiece that creates a brand unique value proposition when your products make your customers feel special just because of your brand experience.
4. Define a unique value proposition and test it.
Once you have come through all those three steps, you should now understand what you do well, what your customers want, and how you can stand out from the competition. Now is the time to transform gathered knowledge into UVP statements.
There is no proper form to write unique value propositions. Sometimes it takes the form of one-page statements. In another case, it’s just a paragraph with the header. Marketers and business owners have different preferences. However, the best and the most effective is to keep it short and to the point and close your message in 2-3 UVP sentences.
The best UVP are:
Easy to read, underpinned by research, and highly pragmatic. This is a major step forward in filling the void in the domain of creating value for customers.
You must translate listed and chosen benefits into messages to define unique value propositions. Be prepared at the beginning with a few drafts and multiple formats. You can later validate and test them with the team and potential customers. However, in every case, keep an eye out that you are more focused on clarity over cleverness by writing it. And always make sure you answer these three critical questions with your UVP statement:
- why this,
- and why you.
Remember to avoid messing up UVP statements with slogans and copies you publish on your website. You should never use it as an elevator pitch or boilerplate or anything you share externally.
A value proposition is:
- about customers but for your organization;
- not addressed to customers but must drive these communications;
- articulates the essence of a business, defining exactly what the organization fully intends to make happen in the customer’s life.
Unique value proposition examples
As we mentioned above, there is no proper way to formulate a unique value proposition. The main aim is to set up a joint value proposition that will guide the whole company and organization and help to become client-focused, not client-run.
Creating a unique value proposition should finish with the question:
“Why should the customer buy from our company, instead of our competitors?”
To illustrate, we propose 5 best examples of unique value propositions for different industries:
- An app to order and deliver bread
We help busy tasty bread lovers get fresh food whenever they need it. We are above every store line and every working hour. We are the only bakery in Minnesota that allows, by setting up ordering and delivery online, to bring the healthy bread from the bakery directly to the customers' table, remembering their preferences and favorite tastes.
- Wireless headphones
No more cables will ever stop audiophiles. Our best technology provides a stable connection and the purest sound with the attenuation of ambient sounds. Headphone XYZ delivers the immense experience and joy of being surrounded by the music sphere. By purchasing our headphones, clients buy not only gadgets to listen to music - cause those are thousands on the market. They become collectors of great design and gain assurance of being the most sensitive audiophiles to sound quality.
- Manufacturer of fancy streetwear baseball caps
Our baseball caps aren't hiding a customer's face. They emphasize it and make it original through unusual designs created by well-known street artists that work only for our company. The best material quality and design make people feel that they wear an art piece.
- Car rental company
We provide the most extensive choice of cars to rent at the lowest price in the whole United States. Our customers can always count on the highest quality of service and the possibility of leaving a car in hundreds of car rental points across the United States.
- Catering service
Everywhere and every time - our customers can expect catering for different events, including other less traditional diets: vegetarian, vegan, gluten-free, keto, and so on. We are the only catering company in Florida whose cooked meals are made with the best-value natural ingredients and are always arranged by the best food designers. Because our customers are unique, they deserve special catering.
Methods to test a unique value proposition
To ensure your UVP resonates with your customers, test several versions before finalizing it. There are several methods for testing a unique value proposition:
- surveys and questionnaires,
- testing versions of the UVP on product pages,
- PPC campaigns with split testing (A/B or multivariate testing)
- focus groups (with customers),
- public surveys,
- guerrilla testing,
- interviews with experts in your industry/field, etc.
Testing various versions of UVP is crucial to validate and check which one works properly. Even if a finally created statement serves primarily for company purposes, it is necessary to test it through the methods mentioned above, both with guerrilla and scientific approaches.
When you talk with potential customers, test the clarity and comprehension of the statement by pitching your value proposition. Try to observe their reactions and listen to their questions and reflections. Ensure that they understand what you are saying by asking them to rephrase it back to you. Take note of the words they use - those are the words you can use in your next pitch and will help formulate a new value proposition.
Why is a unique value proposition important?
Why should you consider creating a value proposition for your business? There are several benefits of it:
It indicates why your business is unique.
As in the name of UVP, it focuses on the uniqueness of your offer. With so many options available to consumers, they are often overwhelmed with possible choices. UVP helps them to narrow it down. For instance, it indicates that in the diversity of the achievable on the market smartphones, somehow yours is different and more special than others by emphasizing its value. It is essential to show how you can deliver customer value in a way that customers recognize as valuable.
It can help you research deeply your target audience.
By researching, defining, and testing your UVP, you can find out more about your target audience and, this way, prepare and adjust the offer better to their needs.
It can increase your sales, establish customer loyalty and attract new customers.
UVP shows that you have a well-thought business at every stage of it. An aware team can impact the awareness of the customers. Through clear messages, they can understand what they get when buying a product and how it resonates with their problems and needs. To sum up, value propositions help the company increase profitable sales by closing about 2% to 10% more deals, reducing discounting by 20–30%, developing more effective marketing campaigns, and reducing the number of delayed or refusal decisions.
As a part of business strategy, UVP helps get the standard view and direction inside the company.
As mentioned above, every company representative can have different values when thinking about the company. People also have this weakness in confirmation biases while they search for confirmation of their assumptions, and they tend to pay attention to things that confirm one's worldview. That's why a joint unique value proposition that is above all personal, individual, or team values and focuses more on the actual customers can help you establish an objective statement and unify all business actions (marketing, financial, commercial, social, investment, and so on).
It helps differentiate your business from your competitors.
With UVP, you can better investigate your competitors' offerings, review what and how they show their benefits to their customers, and do something better and differently to make yourself exceptional in the market. This analysis can also help you to invent something new or innovative that doesn't exist yet.
It can guide all marketing and commercial actions.
Apart from internal goals and values, all different teams can finally find the point of meeting from which every action should start - from the customers and their need for benefits when using the company's offer. It can impact how the company will sell and promote products and services, where instead of highlighting the feature of the new pair of shoes and its price, they can focus more on the comfort of exploring the world while somebody wears it.
It simplifies communication with the customer and provides them with a quick answer.
A unique value proposition helps you communicate what sets your business apart in an easy-to-understand way so that people can quickly realize how they will benefit from getting across to you. It also helps them understand why they should choose your company over another one that has similar offerings but doesn't have this same focus on providing extraordinary value. If people don't know what they're getting, they won't know how to choose between different options or even if they should bother looking at all!
With UVP you will provide profitable customer value and increase your own wealth.
It is simply that by building a value proposition you will provide profitable and superior customer value, more profitable and more superior than if you hadn’t built one. The whole object is to generate wealth. By providing superior and profitable customer value you are increasing your own wealth.
Nowadays, it is not enough to declare that your business is "good" or "great" because there are probably dozens of other companies that also fall into those categories. Don't just say anything about your product or services because it sounds good or seems like it would work for everyone else's business. Today's competition is unbelievably vast, and it's almost impossible for you to invent a product that doesn't exist in the market yet. Therefore you need to consider what makes you exceptional — what makes you different from all other companies offering the same thing. And there this uniqueness comes with the help of the unique value proposition tool.
This simple statement, even if it is client-focused, serves mostly the whole of the team in the company. With a clear view of what exceptional values and benefits you provide to your customers, you can build a well-functioning, successful company with a shared development vision.
Kelly Simon, Johnston Paul, Danheiser Stacey, Value-ology. Aligning sales and marketing to shape and deliver profitable customer value propositions, Cham 2017
Barnes Cindy, Blake Helen, Pinder David, Creating & Delivering Your Value Proposition. Managing customer experience for profit,
London and Philadelphia 2009
Osterwalder Alex, Pigneur Yves, Bernarda Greg, Alan Smith, Value Proposition Design: How to Create Products And Services Customers Want, Hoboken, New Jersey 2014
Lanning, M., & Michaels, E. (1988, July). A business is a value delivery system. McKinsey Staff Paper No. 41.
Bower, M., & Garda, R. A. (1985). The role of marketing in management. The McKinsey Quarterly, 3, 34–46.
McDonald Malcolm & Grant Oliver, VALUE PROPOSITIONS, A white paper, 2016
Kosinski Jena, How a Unique Value Proposition Can Help Your Business,
Patriot, Jan 14 2022
Shopify.com, Oct 3, 2022
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