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Your value proposition is your ticket to creating a connection with potential customers
In part one of our Digital Economist blog series, we laid out a four-step game plan for building and executing on digital customer acquisition strategies that ultimately drive revenue and profitability. Now, it’s time to move onto the second step of the process and learn about the ins and outs of creating a value proposition that persuades people to buy from your business.
Creating a strong value proposition is just as much about telling a story as it is about making a convincing argument. As a starting point, you have to equip people with all the reasons why your products and services are better than the competition’s. But then you need to go one step further by creating a sense of urgency that incentivizes people to buy what you offer in real-time while equally giving them a good reason to be loyal to your brand for the long-term.
We recently discussed the building blocks of customer segmentation. The big takeaway there was that you must intimately know who your most profitable customers are in order to target, reach, engage, and eventually convert them into actual (and paying) customers. A byproduct of knowing, testing, and constantly redefining who your most profitable customers are is being able to articulate a clear and concise message that will resonate with each customer segment to maximize conversion. This is where building a persuasive value proposition comes into play.
You might be thinking to yourself that this is a bit of a no-brainer. The truth is, it should be; however, more often than you might expect, brands will pepper potential customers with a litany of facts and figures, only to fail at creating a real and meaningful connection with them. So, let’s get back to basics and review the core components of a great value proposition, so you can avoid falling into this trap:
- Core Values: You may know what your brand stands for better than anyone else. But how well do you know what your target customers value most? In the game of digital customer acquisition, you have to put yourself in your customers’ shoes. What do they care about? What do they need (from your brand)? What motivates their daily habits – and beyond? Creating a value proposition that resonates with your target customers means speaking in their language — and showing them that they are your top priority. By tapping into the core values of your most profitable customers, you can carve out a message — through your value proposition and other associated communications — that is both unique to your brand and to your customers wants, needs, and expectations, providing more of an emotional “hook” for them to latch onto. This is why you must pinpoint your customer segments first. Without knowing who your most profitable customers are, how can you tap into their core values? (Hint: you can’t!)
- Differentiation: Every brand wants to stand out from the competition. By rooting your value proposition in your customers’ core values, you automatically achieve this. However, there’s always room to go one step further. Think about who your nearest competitors are. This can include: direct competitors (businesses with the same offering and business model), indirect competitors (businesses with a similar offering and core values but a different business model), and disruptive competitors (businesses with a similar offering but unique core values that solves a customer problem in an entirely new way). Think about how they all communicate externally, closely examining what they do well — and also where they fall short (as that could be an opportunity for your brand). Then take a step back and think about your brand from their perspective. What do you do well? What do you do differently? Understanding what makes your brand unique – in the context of your competition – is an added layer that can bring your core values to life in a way that only your brand can truly own.
- Proof Points: These are what persuade potential customers to believe in your core values and clearly see how your brand stacks up to the competition. These can come in the form of stats, product features, customer reviews and testimonials, and other claims that aim to push customers more quickly down the funnel, from consideration to purchase. The reality is, as wonderful of a story as the combination of your core values and your points of differentiation are, no one is going to believe what you say without a little proof to back it up.
As you go through this process, there are a few things to keep in mind. First, you have to stay laser-focused on who your most profitable customers are and what they care about. This will make it easier to create value propositions that directly address their wants, needs, and expectations — especially in the time and place where they see your marketing message. That’s why you can’t simply create a value proposition in a vacuum; you must tailor your value propositions — yes, plural — to each of your customer segments. Being thoughtful about how you map your messages to specific customer segments will ultimately increase your chances of getting potential customers to a take a desired action. And second, it’s important to remember that creating a value proposition isn’t a “one and done” process. Customer needs will change. Your competitor will launch a new offer. The possibilities for change are endless. That’s why you must constantly revisit your value propositions to make sure they still hold up to ever-changing market dynamics.
Depending on the purchase decision being made or the product or service being offered, brands can choose to pull a couple different levers of decision-making: rational or emotional. Developing a value proposition is a highly rational exercise; after all, your focus here is to create messages and proof points based in rational facts about why your products and services are the best fit for your target customers.
But simply spouting out a long list of facts isn’t all that persuasive. And that’s because, in spite of how rational we all like to think we are, humans by their very nature oftentimes make decisions based on emotional factors as well. In fact, persuasion itself is about creating a connection — or in this case, a reason to believe. So, knowing that creating your value proposition is equally an exercise in communicating rational factors in a persuasive way, your goal must be, above everything else, to tell a story around those facts, creating an emotional connection with your customers that helps them see and feel why your products and services will benefit their lives in more ways than the competition can.
The Principles of Persuasion
Perfect segue! It should be clear by now that creating a value proposition is really all about persuasion at its very core. The story that builds around that value proposition has the power to not only create a meaningful connection between your brand and potential customers but also can inspire more immediate action and long-term loyalty. You may have heard about the six principles of persuasion. These are the motivators that have been shown time and time again to drive action. Here’s a quick overview through the lens of digital customer acquisition:
- Reciprocity: You incentivize customers to take a specific action by promising to give them something in return — whether a promotional discount, a two-for-one offer, or something that makes them feel as though they’re getting a good deal. It’s basically an upfront way of thanking prospects for taking a chance on your business.
- Scarcity: This comes down to supply and demand. The less of something you have to offer — i.e. the potential for a product to sell out or a promotional offer to expire — gives you the opportunity to persuade with a message of urgency. It’s basically the notion of “first come, first served.” (And it works because people love a good deal!)
- Authority: You can talk about how great your products and services are until you turn blue in the face. However, that’ll only get you so far. By inviting outside sources who are considered (or can be viewed as) experts in your industry to give your brand a thumbs up, you’re able to build more (perceived) credibility around your message.
- Consistency: Past behaviors can help predict future behaviors. For example, you may launch an email campaign around a new promotion to re-inspire engagement among your customer database. Based on how those customers responded to past email campaigns with similar offers, you can almost guarantee similar or greater results this time around — because once you’ve been successful at driving a specific behavior, it becomes much easier to drive that same behavior once again.
- Liking: This is about creating that personal connection with potential customers. People, generally speaking, tend to gravitate towards brands that speak like them, that act like them, and that resonate with them. When you build a value proposition through the lens of your customer segments, you can achieve this.
- Consensus: People are easily persuaded by others, especially in large numbers. In other words, the concept of “when it doubt, follow the pack” rings true for many when making big purchase decisions. After all, if the vast majority of people surveyed love a specific product or service, why wouldn’t you as well? This can be a great way to give your message the added support it needs to push customers across the finish line.
So, why mention any of this at all? Because creating a strong value proposition — one that’s unique to your brand and relevant to your most profitable customers — is an exercise in persuasion. As Digital Economists, LQ helps you bring your value proposition to life through digital advertising campaigns that apply the six principles of persuasion. We also refine and test those value propositions regularly to see what drives the highest conversion of your most profitable customer segments over time. Marrying the two is your recipe for success.
- Digital Economist