Editor’s Note: This post was updated on January 5, 2017!
Your value proposition is the reason people buy from you.
It is all of the tangible and intangible aspects of your offering.
There’s a reason we placed it at the center of the LIFT Model®. The stronger you can make your value proposition, the greater your potential conversion rate.
In this article, I’m going to show you how to create your kick-ass, knock-em-dead, no-holds-barred, kill-the-competition value proposition.
What is a value proposition?
Here’s how I think about it:
Your value proposition is a cost vs. benefits formula that is evaluated subconsciously and automatically in your prospect’s mind when they encounter your marketing touchpoint.
Think of it as an equation, balancing the perceived benefits and perceived cost of transacting with your brand.
If your perceived benefits outweigh the perceived costs, your prospects will be motivated to act.
Notice the word “perceived.” It’s very important to understand customer segmentation. Your benefits hold different weight for different people. You need to find out which of your benefits are perceived to be most important to your unique prospects.
For example, to some of WiderFunnel’s clients, it’s very important that we offer full service design and technical implementation for the tests we plan. For other companies with lots of talented employees and resources, our growth strategy, database of previous tests and insights, and experiment plans are more important.
One of the biggest benefits [of our partnership] has been WiderFunnel’s ability to take the debate out of a testing decision. They’re able to evaluate testing ideas with a points structure, saying, ‘We think this would be the most valuable for you, for your industry, for what we’ve seen with your competitors, this is the site you should run it on, we think it would be best on mobile or desktop, etc.’ And we can rely on WiderFunnel’s expertise and say, ‘Let’s do it.– Sarah Breen, Global Ecommerce Product Lead, ASICS
For the companies that value all of it, well, they perceive the most value in what we do.
You need to discover your best value proposition to have the best chance to close the most sales. Emphasizing the most important parts of your value proposition will maximize your conversion rate.
How do you find your best value proposition?
At a simplistic level, think about the WIIFM (What’s In It For Me?).
Every marketer understands the WIIFM concept. You have an idea of how to address your customers, understand their needs, and speak in their language. That’s the entry price to understanding marketing.
The WIIFM are all the features and benefits your prospects could get from your products and services. But you can’t communicate them all at once. If you try to emphasize everything, you’ll say nothing.
So, how do you know which features are most important to your customers?
You Should Test That!
There’s a reason that’s the title of my first book, published by Wiley.
Traditionally, marketers have relied on their own thinking to come up with the right features to emphasize. Sure, they may get input from customers with surveys and focus groups, but there are many reasons those focus groups aren’t as great as they seem. (Note: you can learn about the seven risks of qualitative marketing studies here.)
There’s a better way: By testing different value proposition approaches, you can find out what works best with statistical certainty before committing to one assumed positioning.
The following case study gives an example of how.
Electronic Arts (EA) needed to increase game registrations through their game launcher tool within the desktop The Sims game. Registrations for their game community are a critical revenue driver, enabling further marketing, upsells, and cross-sells.
WiderFunnel designed an optimization program that would reveal their gamers’ motivational triggers. Some experiments isolated the types of incentives that would maximize signups, investigating, in particular, the types of game upgrades gamers wanted.
In addition to more than doubling EA’s community signups (128% lift!), the experiments led to a total redesign of their user interface, and revealed the most powerful offers that drive their players’ actions.
They learned that tangibility is more powerful than choice. Specific game add-ons were much more motivating than awarding users free “Sims Points” that they could use to ‘buy’ any add-on.
The offer insights were so powerful, EA’s management changed their organizational structure to create more of the right types of game assets. The growth optimization program had delivered massive customer growth, valuable customer insights, and improved interface designs!
But your combination of prospects, products, and competitive environments is unique. How do you decide what could be valuable to test for your customers?
To find out what works best, you need to create great value proposition hypotheses to test and validate.
You need advanced Value Proposition optimization
The “POPs, PODs and POIs” framework is useful for identifying new positioning ideas to test.
Kevin Keller discussed a similar concept of points of parity versus points of difference in his article for Harvard Business Review, “Three Questions You Need to Ask About Your Brand.” He used it with respect to brand positioning, product development, and brand extensions. For existing products and brands, I believe it is also a useful tool for thinking about the features to emphasize and validate with A/B testing.
Because I’m a visual thinker and find diagrams helpful for learning, I created this Venn diagram to show how to think about your Points of Parity (POPs), Points of Difference (PODs), and Points of Irrelevance (POIs):
- Points of Parity (POPs): These are the features you offer that are important to your prospects that you also share with your competitors. Most marketers spend their time here, loudly trumpeting how they can do what their competitors do too, only *better*! That’s a strategy to fail.
- Points of Difference (PODs): Here’s where you can win the game. These are the features that are important to your prospects and not available from your competitors.
- Points of Irrelevance (POIs): You may have spent a lot of effort developing great features, but if nobody wants them, you should kill them.
Your PODs are where you should focus. These are the features you can emphasize that will move your prospects to action. They are your differentiators.
You can use your PODs to destroy your competition.
But all PODs are not created equal. Some will be more important than others and some will only be important to certain customer segments.
No matter how much effort you’ve put into researching and brainstorming your value proposition points, you should test them to validate whether they’re best!
At WiderFunnel, we often run experiments where we create and test value proposition alternatives for our clients. When combined with data from customer surveys and market perceptions, these tests add quantitative validity to qualitative insights. The learning from these value proposition tests often generates powerful marketing insights that impact the overall marketing strategy.
Pro Tip: Landing pages are your best Value Proposition test opportunities
Your best opportunities for testing your value proposition are with first impression visitors. These are usually new visitors to your high traffic landing pages or home page. When I refer to landing pages, I’m specifically talking about website entry pages. These are the first pages your visitors see when the arrive on your website.
By split testing your alternative value propositions with new visitors, you’ll reduce your exposure to existing customers or prospects who are already in the consideration phase. New prospects have a blank canvas for you to present your message variations and see what sticks.
Then, from the learning gained on landing pages, you can validate insights with other target audience groups and with your customers to leverage the learning company-wide.
Landing page testing can do more than just improve conversion rates on landing pages. When done strategically, it can deliver powerful, high-leverage marketing insights.
All value propositions have varying degrees of value depending on how they’re interpreted and how they’re communicated. Your benefits hold different weight for different people―it’s all about finding out which of your benefits are perceived to be most important to your prospects.– Michael St Laurent, Optimization Strategist, WiderFunnel
How do you optimize your value proposition? How do you know which features are most important to your prospects? How would you discern your POPs from your PODs? Add your comments below.