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How to develop an effective value proposition for your startup

Tuesday, June 30th, 2009
 
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I’ve been meeting a lot of amazing pre-launch entrepreneurs at various Silicon Valley tech parties. Some of the  apps they describe are truly fantastic technology applications solving major customer pain points.

Many times however its only after several questions that a key value proposition for their app becomes obvious. Unfortunately for them, customers probably won’t spend as much time as I do to try and figure this out. Previously I have written on how providing a clear value proposition on the landing page can help prevent loosing users due to their lack of understanding about your offering. Even before you can do this though as an entrepreneur you need to:

  1. become clear on what value proposition may actually appeal to users
  2. make sure you can state it in a way that is believable and emotionally involves customers

To do the above two things you need to do extensive user testing and customer research.

Focus group

Using social network or search ads to test product messaging

I have often heard some highly respected advisors advise entrepreneurs to test messaging with search engine or social network ads. According to them, ads with higher click throughs indicate more popular messages.

Take ad messaging tests with a grain of salt

But you should the results of your ad messaging tests with a grain of salt because with these ads what you are really testing is the most popular among the possible messages you have come up with.  The results are only as good as the initial messages you picked for testing. The ad based message testing does not tell you who

  • your major customer groups are
  • what message resonates to individual customer groups
  • what improvements if any specific customer groups require in the explanation of your product offering or product design for them to want to use your product
  • a true measure of how you stack up against the competition, instead just how you stack up with other competition in search and Facebook ads

Relying on ad based message testing can thus lead to oversight on your part. For example you may have a complex technological product but the most popular customer segment for your product may not care about this complexity and just want to see the product give them a result that works.

How you should test your messaging?

So how do you test these things? Here are some tried and true qualitative methods:

Message testing with other entrepreneurs

This is where that network you have been building should help out. If you don’t have one yet build one,  either via social networking or in-person networking events. You need an ecosystem where you can learn from other’s experiences as well as their reactions to your messaging.

Competitive analysis

It is important to do your competitive analysis from a customer centered perspective. This means that while it may be easy to see features lacking in competitive offerings you should not assume that the customers will automatically switch to your product if you provide these. May be customers are satisfied with the lower end no frills product.

You cannot afford to go out to market and launch a business with highly erroneous assumptions. Therefore once you find gaps in competitive offering check to see if customers have been asking for features that fill these gaps. This is part of the next step.

Customer research

Not every entrepreneur has the budget to do hire a market research firm to do extensive customer research in a controlled and unbiased manner. But there is some basic customer research that everyone can do. The key is being creative in how you approach it. May be your main market is college students think about what would sweeten the deal for them enough to want to answer a few questions for you. Think about where they hang out online. Can you listen in on their conversations about competitive products in your space and/or their product wishlist. This is where a good social media listening strategy comes into play. More on that in a future post.

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3 Comments

  • You made an important point about tech startups. Value proposition is central to creating a compelling, sustainable product. Often times, tech startups follow what they think is cool or uber cutting edge. Those cutting edge products with a weak value proposition are more likely to fail–as they do not offer something new, interesting and valuable from the get-go. Without a central deliverable, tech can be fickle and difficult to launch.

    -Ethan Sparxoo

  • Thanks Ethan. What kind of business are you in?

  • Thank you for your comment Sana. Sparxoo is a digital marketing, branding and business development firm. You can visit our about page to learn more.

    -Ethan Sparxoo

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