What is Value Proposition?

What is Value Proposition?


9 min read


Over the past 4+ years, I've been working closely with Start-ups as an engineering manager and often would wear the hat of a product manager. One thing that was a common theme across every Start-up is the emphasis on the value they add to their customers.

There have been many instances when I ask founders of a start-up to describe their value proposition and they end up describing their business model. But, the interesting thing is that the end customers do not care about the business model. They simply want to know “What’s in it for me?” if I buy your product. If the product already exists in the market, they also ask the question “Why should I buy it from you”? Those questions essentially become the Value Proposition.

In this article, let us look at what value proposition is, and how to build a compelling value proposition statement. We will also take a look at a few examples of good value proposition statements.

What is Value Proposition?

A value proposition is a statement that answers ‘why’ someone should do business with you. It should be able to convince a potential customer why your service or product will be of more value to them than similar offerings from your competition.


A value proposition must be able to convey these values in a short, clear, and concise manner to potential customers without the need for further explanation. Each proposition must be unique, as it is a method to communicate the differentiation points of a company to the target customers.

Why is Value Proposition Important?

A value proposition is an important part of your company’s business strategy. It is also a powerful tool to drive sales and customer base.

Since it provides a way to influence the decision-making of customers, it is often displayed on a company’s marketing material such as the company website. A compelling value proposition significantly impacts the effectiveness of your company’s marketing strategies.

How to create a Value Proposition?

There are many ways to create a really compelling value proposition. Let us look at three popular ones varying from complex mapping to simple formula.

Value Proposition Canvas

Value proposition canvas is one of the most popular methodologies available to create a value proposition statement. It is highly recommended to use the canvas, especially if you are creating a value proposition for the first time. The reason primarily is that it represents a visual medium to capture our thoughts and it can help you focus on one section at once.


Source: Peter Thompson

On the customer’s side, you’ll explore the wants (emotional drivers), needs (rational motivators), and fears (undesired outcomes). In general, the objective here is to try and understand the buyer’s perceived likelihood of failure, anxiety, or reputation at work.

An example of a value proposition canvas for Evernote is shown below:


Source: Peter Thompson

Harvard Business School’s Essential Questions

Harvard Business School’s Institute for Strategy & Competitiveness simplifies the process of defining the value proposition by establishing a connection between the company and its customers.

While the value chain focuses internally on operations, the value proposition is the element of strategy that looks outward at customers, at the demand side of the business. The strategy is fundamentally integrative, bringing the demand and supply sides together.


Source: Harvard Institute for Strategy & Competitiveness

You start the process by brainstorming as a small group (no more than 3) around the following questions:

  1. Which customers are you going to serve?
  2. What needs are you going to meet?
  3. What relative price will provide acceptable value to your customers and acceptable profitability for the company?

Depending on your offering (product/service), it may make sense for you to start with the first or second question in the list. Together, all three questions create a triangle as shown in the illustration above, to create a succinct value proposition.

You will come to realize which one is the “primary” leg of the triangle as you move through the exercise. For example, is the greatest value that you offer is cost savings? Or, is it that you’re offering a better product or experience at a premium cost?

Harvard’s experts use the iPad as a great example. Apple created a new demand that did not exist in the market. Customers did not realize they wanted a tablet until the iPad came along.

Steve Blank Formula

Steve Blank, a former Google employee, realized that many startup founders struggle when coming up with a concise value proposition and often emphasize the product features rather than the benefits they offer to the customers.

Steve came up with a simple formula to transform the brainstorming process into a simple sentence.

"We help (X) do (Y) by doing (Z)"

The formula is based on the principle that the first thing that comes to the mind may be the best. Your gut instinct could be spot on and that’s what makes this simple solution valuable.

For example, your local ice cream shop may have a value proposition similar to this one:

“We help our local customers satisfy their sweet tooth by providing them premium natural ice-cream in a community-focused space.”

Although you may have brainstormed as a group, you should ask participants to come up with the value proposition individually. It is often the case that each participant perceives the value they offer to their potential customers differently and this can yield helpful insights in coming up with a compelling value proposition.

Lastly, as you draft your value proposition, remember to use the voice of the customer. When you use the customer’s voice, you will address the gap between what you say and what you hear.

Examples of Compelling Value Proposition

Novo Watch

To summarize, the value proposition is all about understanding what needs of the customer you are able to meet, and how your product or service offering stands out amongst the competition that compels the customer to always favor your product or service in the market. It is important to continue to listen to your customer, evaluate how to adjust your value proposition to the ever-changing needs of the customer and markets.


The Value Proposition

Timepieces handmade in Alberta from repurposed pieces of history

What is so compelling?

It cannot get any more transparent than the message it conveys on the landing page of their website. It tells us why their product is valuable.

  1. It is handmade, which means it’s quality.
  2. Repurposed pieces of history. Even if the layman doesn’t understand those terminologies, the word history certainly signifies that there’s a unique story behind their creation.

Once you scroll down their website, you’ll see words such as “handcrafted” and “reflect history” are repeated. Not only did they do a fantastic job of presenting value upfront, but they also reinforced their core values of craftsmanship and recycled materials throughout their website.

Less Accounting


The Value Proposition

“Simple accounting software for entrepreneurs who dislike accounting.”

What is so compelling?

Less accounting’s value proposition addresses the following:

  1. It immediately addresses the target audience: entrepreneurs.
  2. The word ‘dislike’ is highlighted and underlined to convey the strong message that customers need not know accounting concepts to operate the software.

On their website, as you scroll down, they highlight the simplicity of the software through words such as accessible, convenient, and manageable. There’s a specific use-case highlighted in the sentence ‘Be ready for tax time’.



The Value Proposition

“Build, Publish, and A/B Test Landing pages without I.T.”

What is so compelling?

Their landing page is very interesting. They have made a dynamic landing page which animates, showcasing their value proposition in three simple phrases:

  1. Convert More Leads
  2. Convert More Sales
  3. Convert More Customers

The brand lays out its offerings without coming off as too sales-y. It clearly talks to the target audience i.e., the marketers, and talks to their core pain point of deferring the work of creating landing pages to I.T.

Value Proposition Evolves Over Time

It is important to note that value proposition evolves over time especially with changing customers, markets, or even other factors such as the global pandemic that we are currently caught up in.


Photo by CDC on Unsplash

A very relevant example of the same would be how food delivery companies such as Swiggy, Zomato or e-commerce companies such as Amazon, Flipkart now had to go back to their value proposition and ensure that the topmost concern for their customer today is safety and not just timely delivery or ensuring there’s adequate tracking for your delivery.

They will have to emphasize and ensure how their service or product offering has adapted to the COVID-19 situation and how they continue to offer their promise ensuring ‘safety’ is of paramount importance. There’s a dedicated COVID-19 web page added to their site and sections highlighting how customers can contact their specialized team to know more about what they do to ensure they have the highest safety standards implemented. All of these steps, directly work towards ensuring that they address what the customer considers to be the utmost value, i.e., safety against COVID-19.


To summarize, the value proposition is all about understanding what needs of the customer you are able to meet, and how your product or service offering stands out amongst the competition that compels the customer to always favor your product or service in the market.

It is important to continue to listen to your customer, evaluate how to adjust your value proposition to the ever-changing needs of the customer and markets.

This is my first article on Product Management. Do let me know your thoughts, comment on whether you would like to see me publish articles on Product or just stick to technology related ones. Thank you for reading so far and you can connect me on Twitter ->

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