Entrepreneurs bandy a plethora of official-sounding buzz-terms like “blue ocean strategy” and “ROIC.” If you want to monetize any goods or services, value proposition is the buzz phrase you want to get to know.
I’m a monetization nerd. When I drive home from work, I wonder if I can I find a way to make money during my daily commute? When I’m standing in line at the DMV, can I make money during my waiting time? At the grocery store, how to make money shopping each week gets as much focus as my grocery list. When I’m doing my bills, I think about how to make money on credit card debt by cashing in on reward miles.
When I’m exercising my monetization muscles, I’m not thinking up hare-brained business schemes. I try to build solid value propositions.
What is a Value Proposition
A value proposition is no different than a marriage proposal made to a complete stranger. The only real difference is that the proposal is pitched to a customer instead of a future spouse.
Think about how you’d go about proposing marriage to a stranger. You might focus your efforts by expressing your uncanny love and devotion, the security that your bank account has to offer or your smoking hot body. What you are really doing is propositioning your value to the one you hope to betroth.
To be successful, your marriage proposal would need to resonate with the stranger. You have to connect to (or create) some need that you can fill. Despite all other alternatives, your value proposition makes you the perfect person to fulfill that need. Most importantly, the stranger needs to believe you have the ability to follow through with your promise of value.
A Solid Value Proposition versus a Poorly Constructed Value Proposition
By now, you have a very good understanding of “proposition” part of the term “value proposition.” In the business world, the proposition part is the raw business idea. For our example above, the raw business idea would be getting married to a stranger. Figuring out the “value” part is far more difficult to master and is the key to whether or not you are developing a solid or weak value proposition.
What are the odds that walking up to any given stranger and proposing marriage will work? It isn’t likely to succeed. That’s why there are key elements that a solid business proposition addresses.
- It should identify the people who are likely to respond favorably (market),
- The need that you are fulfilling (product or service),
- How is what you are selling different than the alternatives (product differentiation),
- And how will you deliver on your promise of value (business model).
The better your answers to these key elements, the stronger your value proposition will be and the more likely it will be successful.
Value Proposition of Selling Marriage to a Stranger
So, you want to get married to a stranger, now how do you build a value proposition so that you are highly likely to succeed?
Let’s assume you are a guy looking for a woman as a bride. If you simply walked up to every woman walking down main street and proposed marriage, odds are that you will spend all your time proposing and none of the time getting married. What you need to do is identify the people who would be interested in marrying a stranger. For example, let’s say the type of woman most likely to marry a stranger is former contestants from The Bachelor who are desperate to marry. If you can identify and have a good idea where masses of your target group congregate, like formerbachelorcontestantsdesperatetomarry.com, you are off to a good start.
Once you’ve identified your market above, you need to find a solution to their remarriage problem. Is love and devotion going to be a good value to sell? These are desperate people, so it’s probably not a big selling point. I think a reasonable issue for these women would be that tons of men are taking advantage of their desperation and proposing, but the former contestants are having trouble picking because they know that many of the men are convicted murderers who don’t have any money to afford a wedding. The more in-touch you are with the need, the more you can craft a winning value proposition.
Yes, your market is desperate, but that doesn’t mean that they don’t have alternatives. You need to differentiate yourself from all of the other guys. Since you know the needs of your market, you go to bat to fulfill your future bride’s needs. You save up $20,000 to get married and hire a high powered attorney to fight and win that pending murder trial so that your murder conviction totals remain at an attractive, marriage-friendly zero. Together, these selling points are sure to put you in a pool of select few prospective fiancés.
The only problem is that all the guys are lying in their profiles on formerbachelorcontestantsdesperatetomarry.com and are professing to have $20,000 in the bank and no murder convictions. You need to prove your abilities to your future spouse. That is why your profile contains a notarized copy of your bank statement and a certified copy of your criminal record showing no murder convictions and only one acquittal. You can hear the wedding bells already!
While I believe the value proposition we’ve constructed above probably increases the chances that proposing to a stranger will be a successful than any given person on the street, it isn’t a guarantee. You have to make assumptions when you build a value proposition and sometimes, those assumptions are proved wrong. Perhaps, former contestants from The Bachelor who are desperate to marry are more interested in avenging themselves on the male gender than following through on a marriage proposal. In this case, you’ve found the wrong market.
What a value proposition does is help you to brainstorm and weed out good potential business ideas from the bad ones. If you can’t figure out who has needs, what needs they are, why alternative answers to those needs are not preferable and how to deliver those needs, the odds are against your business plans succeeding. Learn how to build value propositions and you’ll know how to monetize anything.