Entrepreneurs must carefully craft their value proposition, a clear statement about why a buyer in the selected target market should purchase their innovation.  (As noted in one of my previous blog posts about the strategy sweet spot, the value proposition is integrally related to a company’s choice of target market.)

The best value propositions focus on the key benefits –not features or attributes – that matter most to buyers in the target market.  Moreover, the best value propositions specifically document the worth/superiority of the seller’s offering, relative both to competitors and to customer needs.  Known as a resonating value proposition, a company must ask:  How does the purchase of my new innovation dramatically improve my customer’s productivity on a well-understood, critical success factor?

Before crafting a compelling value proposition, you must do your homework to evaluate your competitors’ market position (benefits, pricing, etc.) as well as to understand your customers’ buying motivations.  Remember, the majority of technology customers are not eager to embrace new innovations, nor are they willing to tackle (what appears to them to be) high risk – albeit potentially high reward – technology implementation projects.  Therefore, the majority of your customers will not share your enthusiasm or optimism about your new technology.  Indeed, many customers either actively or subconsciously resist such change.

Value propositions must be written from the customer’s perspective.  For marketing to business customers, the entrepreneur’s job in crafting the value proposition is to explicitly link the new technology to the customer’s ability either to increase its revenues or decrease its costs.

For marketing to the consumer market, the value proposition must offer compelling benefits in areas such as:

• functionality – say, improved mobility, resolution quality, etc.
• what marketers call psycho-social benefits – i.e., appearing cool or cutting edge to their friends;
• compelling cost savings – remember, these cost savings must be greater than the purchase price of the new technology as well as any switching costs or efforts to learn to use the new product.

Try to avoid positioning in terms of vague adjectives such as “stylish” or “innovative” as these are adjectives whose meaning varies widely between customers.  Similarly, try to avoid positioning in terms of adjectives that all competitors would use and that don’t differentiate your offerings.  For example, banks positioned on high-quality, friendly customer service are not thinking of key differentiators.

Here are some examples of great positioning statements.

Note that some of these value propositions document the value in the positioning statement itself.  In other cases, the company must refer the customer to a Website or additional information to provide the documentation to support the claim.

A note about competition. Customers’ purchase decisions are always made relative to their competitive options.  These competitive options can include both direct and indirect competitors.

Many entrepreneurs say their innovation is so revolutionary, that it has no competitors!   While this statement may be true from a technical perspective, it is never true from a customer perspective.  Legacy products (read:  older technologies) that a customer uses can create inertia.  These products are known, comfortable, and familiar—and represent a sunk cost to the customer.  The new innovation must offer benefits compelling enough to overcome this inertia.

Moreover, a customer’s existing business practices are often the hardest type of “competition” to unseat.  Technology marketers should not be myopic or naïve by saying they have no competitors!

Only after the target market has been clearly defined and the value proposition clearly articulated, can the entrepreneur create a sales and marketing communications plan.  This plan must be focused on the right customer segment (beachhead) and it must communicate the right message strategy (value proposition).