What is the Value Proposition of a product? The DNA of Successful Innovation
What is the value proposition of a product?
The Value Proposition of a product is a formal statement describing the competitive advantage of a new product for a given market segment. Though many examples exist, the jobs-to-be-done methodology provides a precise template upon which to build a clear, concise, unambiguous statement. It tells WHAT we’re about to help a customer to get done better. It tells HOW we’re going to help get the job done better. And finally, it spells out WHO this customer is.
Why do we need a value proposition of a product?
Products are developed by people. Teams of people. Unfortunately, without a defined plan, the designers, engineers, marketers, and executives will operate within the parameters of their own personal version of what the product strategy should be, as they imagine it. And when they operate as individuals, rather than as a team, failure is certain.
Of course, there are different levels of “failure.” It could be a failure in the traditional sense, in which the product performs poorly, with bad reviews, and lives a short life. On one hand, these mishaps are obvious. However, there’s an even more insidious failure. One that hides so well that nobody will even know that it happened.
Hidden failures
It looks like this. The new product performs as well as its predecessor. Market share stays about the same. Maybe a few points better, maybe a few points worse. However, this “failure” is invisible because it just looks like normal business. So, why exactly is this a failure? Because with a great value proposition, you could have dominated the market. You could have grabbed the top market share spot and with better margins than ever. The long-term and massive benefits of that coup will never be recognized.
Therefore, it’s critical to create the value proposition of a product to focus development resources. By creating a target, we increase the odds of achieving something worthwhile.
How do we create a value proposition?
Jobs-to-be-done provides the terminology and structure to create a value proposition for a product. Even better, a JTBD approach provides two critical attributes for a good value proposition, precision and clarity.
These two attributes go hand in hand. By being precise, the value proposition for a product will be unambiguous as to who it’s creating value for, what problems it’s solving, and how it’s solving them. Further, JTBD language should be clear by definition, and so a value proposition built upon this foundation will be as well.
Let’s look at a JTBD-based template for the value proposition for a product.
Template for the Value Proposition of a Product
From the jobs-to-be-done source The Statue in the Stone, here’s a Value Proposition template and example:
Template:
When executing a Job-to-be-Done, this Product Attribute(s) helps these Job Executors to address this Outcome(s) as compared to this Reference.
“Let’s look at an example. Imagine that you’ve created a grocery delivery service called FoodQuix. For this product, customers place their orders on a smartphone. The groceries show up within 2-4 hours. To build the value proposition, we begin with the five components:
- JTBD: Stock the home with groceries
- Job Executors (customers): Grocery shoppers
- Outcome(s): 1) Minimize the time to shop for groceries, 2) Minimize the time to receive groceries
- Product Attributes: Delivery service, Phone app
- Reference: Driving to the store
Here’s our Value Proposition:
When stocking the home with groceries, FoodQuix’s home delivery service and app minimize the time for shopping and receiving groceries as compared to driving to the local grocery store. ”
Source: WS Burleson, The Statue in the Stone: Decoding Customer Motivation with the 48 Laws of Jobs-to-be-Done Philosophy (2020).
The Value Proposition of a product answers key questions
If you work for FoodQuix, and begin with this value proposition, you’re well on your way to a great product strategy. You know what you’re to help customers to do better (Stock the home with groceries). You know who your customers are (Grocery shoppers). We know what outcomes that our product must excel against. Further, we have a reference to beat, “the process of driving to the store.” And finally, we have our main product attributes and features that will make it happen, a delivery service and phone app.
How does the Value Proposition help ensure success?
Consider the value of an agreed-upon destination. The Lewis and Clark Expedition departed the east coast of the newborn United States in 1803. Their mission was clear: to travel overland to the Pacific coast, with the hope of finding a navigable water route across the American landmass. Over 40 members of this “Corps of Discovery” were led by two officers, Meriwether Lewis and William Clark. They successfully reached the Pacific and returned in 1806. How successful could they have been if some wanted to travel to Mexico instead? And perhaps others preferred to stop halfway? They were aligned around a common destination.
Similarly, the value proposition for a product keeps five major stakeholder groups aligned: Product Management, Development, Marketing Communications, Sales, and Leadership. Let’s consider the “value”, if you will, of the value proposition for each one.
How does Product Management use the Value Proposition of a product?
For starters, the product manager owns the process to create the value proposition in the first place. They should have begun with the voice of the customer. This provides the inputs of the process as they seek to understand every element of the value proposition template. These include the JTBD, the customers (job executors), the desired outcomes to be addressed, and the competition (reference products).
As such, product managers will then work with Development to determine “HOW are we going to address these desired outcomes?’ And together, they’ll generate feature ideas to best address those outcomes. (Click here for best practices for idea generation. )
How does Development use the Value Proposition of a product?
To begin with, the value proposition unambiguously states the key features of the new product. The team must execute on those features as well as possible to ensure they address the unmet customer needs (in the form of desired outcomes) as listed in the value proposition. As to “how well” it meets those outcomes…, the value proposition provides the competitive reference. It must exceed that performance level at a minimum.
What’s the best way to do market segmentation? Click here to learn more.
Beyond that minimum, Development should work with Product Management to understand other major competitive performance levels. For more details, please read Create a Product Spec in Four Steps.
The value proposition will not answer every question that might arise during development. But at least, it provides the larger strategic direction to guide many decisions, both big and small.
How does Marketing Communications use the Value Proposition of a product?
The value proposition of a product tells what to communicate. From there, it’s MarCom’s job to determine how to communicate it. Let’s return to our previous value proposition example:
“When stocking the home with groceries, FoodQuix’s home delivery service and app minimizes the time for shopping and receiving groceries as compared to driving to the local grocery store. “
This statement tells WHAT to communicate. But MarCom has great autonomy in the HOW to communicate. Perhaps they could show a commercial. A split-screen of a tired mother, holding several kids in tow, as she tries to navigate the store. On the other screen, a well-rested mom places her order on the smartphone while the kids are reading in the background. Because the core benefit is about “minimizing the time,” maybe there’s a stopwatch in the corner of the screen. And surprise, surprise, the at-home mom using FoodQuix is home with her groceries much faster.
Is this commercial good idea? Maybe/maybe not but that’s not the point. The point is this: it’s the job of MarCom to use its creative abilities to tell the story. However, they must use creativity within the boundaries defined by the value proposition of the product. They do not get to make up their own customer benefits at this point, nor their own customer target. MarCom must be accountable for sticking to the value proposition.
How does Sales use the Value Proposition of a product?
Product management should craft the value proposition of a product so that it makes just as much sense to Sales as it does to Development and Marketing Communications.
Should Sales execute VoC interviews? Click here to learn more.
When selling the product, Sales should focus their attention on the key product attributes, as listed in the value proposition. And when doing so, they should always mention how they help the customer to perform the JTBD better, and against which outcomes. All of this is in the value proposition of the product.
How does Leadership use the Value Proposition of a product?
Leaders and executives have many responsibilities. They cannot be expected to know the details of every product and initiative. Therefore, the value proposition of a product provides a quick template. In other words, they need something they can interpret quickly. And then later, when speaking with Boards of Directors, shareholders, or even giving a speech at the company picnic, they can speak with eloquence about the new products. This builds confidence for all.
But on another level, leaders of a business with great value propositions will stay engaged with the real work of the business. With the activities that will ultimately drive more organic future growth. It will help to better challenge the organization to fulfill the value proposition’s promise.
For what reasons do companies have poor value propositions?
The value proposition template is simple enough. So, what’s the problem? Why do companies struggle with value propositions? Look no further than the template components themselves:
- JTBD: Most companies think in terms of their products. Few really understand the concept of jobs-to-be-done, let alone what their customers’ jobs are.
- Job Executors (customers): Without knowing JTBD, they are going to have a hard time understanding customers.
- Outcome(s): The leading cause of new product failure is inadequate customer insight. And so, by and large, companies will not know what customer problems to solve.
- Product Attributes: Of course, all new products will have some product attributes. But, when not beginning with meaningful customer problems, these attributes are solutions to problems that customers may not care about.
- Reference: Even this is hard for companies. Too often, they think of their competition narrowly as “that other firm they fight against,” instead of understanding that their real competition: a customer’s next best alternative.
The Value Proposition is the DNA for a successful new product
Think of the Value Proposition as the DNA of your successful new product. It ensures your victory in two major stages: creation and use. First, to create it, you must do your homework to even have a decent value proposition. That is, you must deeply study your customers, consider what they’re trying to accomplish, and understand their unmet needs. And eventually, you must develop features (product attributes) that solve those problems.
Once created, your entire organization will put this document to use. The value proposition of a product will provide common objectives for all the functions within the organization.
What is the value proposition of a product, really? It’s the DNA of a successful new product. And many great value propositions collectively make the DNA of a growing, thriving, profitable company with many happy customers.
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