How to Develop a Great Customer Value Proposition

Why Customer Value Propositions are Important

Product Managers must know the importance of a great customer value proposition. As we know, one of the most significant determinants of the potential success of a product is whether it brings benefits that customers value and appreciate. The true test is whether they will actually purchase the product. Such an assessment is not contingent on whether or not the customer considers the product worth buying.  Questions such as, “Would you buy this product?” often yield misleading answers. Customers may give an affirmative response if asked in a survey or presented with an explicit question. What they may not do, though, is actually part with their money when faced with the decision.

One reason could be that they have other purchasing decisions to make; the need the product meets is just not “urgent enough.” Another could be that the idea seemed appealing when presented, but the actual product doesn’t meet the customer’s needs. This is why it is vitally important that the product manager, marketers, and entire team strive to identify and verify the target customer for the product and grasp what that customer needs and values most at the moment the need arises. Information about several things is necessary to derive an effective value proposition. Equipped with the proper amount of needs-based segmentation data, four questions must be answered:


  1. Who is the target customer?
  2. What is the validated problem or need of that customer?
  3. What would solve the problem or meet the need of that customer?
  4. How can the solution’s benefit be proven, either quantitatively or qualitatively?


If these questions cannot be answered substantially, it’s not an effective value proposition. Perspective may help you avoid shallow, check-box answers. Try putting yourself in the customer’s shoes, and ask yourself the following questions:


  1. Who am I?
  2. What is happening in my (personal or work) life that tells me I have some sort of problem or need? What exactly is that problem or need? Do I care enough to go further for answers?
  3. What would help me solve my problem, and how would I benefit?
  4. If I were going to purchase something, how would I justify that purchase given my budget, my dissatisfaction with the present state of affairs, and my overall situation? Is it worth it to me within the context of other problems I have to solve and my limited budget?

Value propositions for businesses should always focus on the values that businesses generally seek. All businesses just want to make money, reduce costs, and be efficient. Anything that can be proven to achieve these purposes may get your product onto their product evaluation list. But even then, it must always be connected to an unequivocal and explicit need of that customer who is in the position to strongly influence the purchase decision or who actually makes the decision.

Value propositions for consumers differ from those of businesses. Consumer preferences differ widely, and their purchasing decisions are based on an assortment of variables.

They buy diverse products for differing needs and desires. They buy staple goods regularly (e.g., eggs, milk, rice, soap); they buy to replace old with new (e.g., clothing, tablets); they buy the next new gadget; they buy emergency products when needed (e.g., plywood before a hurricane); they buy impulse products at their whim (e.g., ice cream, music or luxury watches); and they buy durables to fulfill longer-term needs (e.g., cars, washing machines).

Each customer, regardless of type, goes through a varying number of motivational states, some persistent and some transient. The product manager and the team have to be experts on each market segment and understand the underlying needs that ultimately drive the customer’s value proposition. This can then be portrayed in the value proposition


Here’s another way to test your proof: ask. Find a friendly salesperson or a colleague who is less familiar with your product, and read her your value proposition to. If she has difficulty understanding your point, or simply doesn’t get it, Then, you may have to go back and work on it some more until it is clear to people who are not involved.


Always remember, the best value proposition speaks directly to the customer and no one else. To continue learning, purchase our Value Proposition & Positioning mini-class. This online, self-paced learning opportunity will provide you with a bite-sized, easy-to-follow video and a downloadable template. Gain access to this value and more for just $9.95!


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