Following the value proposition to entrepreneurial success
The value proposition is the collection of things a new business offers to the target market to satisfy a specific need, attracting customers away from the other competitors. Entrepreneurs must find solutions for the problems and needs that follow disruptive industry trends.
The value proposition — the collection of things a business offers to the target market to solve a problem or satisfy a specific need — is how an entrepreneur attracts customers away from the other choices they have among all of their competitors.Skip to next paragraph
Jeff is the Jack C. Massey Chair in Entrepreneurship and Director of the Center for Entrepreneurship at Belmont University in Nashville, Tenn.
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Most value propositions for new businesses come from some fundamental trend in the economy, in demographics, in technology or in society and culture. These trends lead to changes within industries.
For example, the widespread use of the Internet forever changed industries such as music and newspapers. Inflation in the economy both led to soaring healthcare costs and more recently begun to affect the food industry. Inflation has clearly shaken up both of these industries.
A fundamental role of being an entrepreneur is to find solutions for the problems and needs customers have that result from the change that follows disruptive trends like these.
Once the entrepreneur identifies the new business opportunity, the next step is to identify the specific offerings that provide enough value to customers to get their attention and motivate them to purchase from the new business.
It could be something about the product itself, such as its price and value, features, performance, durability or design. It could also be something about how the product or service is delivered to the customer, such as its method of delivery (in their homes, on-line, in an exciting new retail location, etc.) or the specific services offered to go along with the product. Or, it might be something about the personnel of the company, including their expertise, responsiveness, or reliability.
It is almost always best to identify and focus on one or two things that will make your business stand out to customers. Focus on the most important need or problem the customers are facing. Offer that feature to the customers with excellence in mind, making sure all employees understand its importance. And make that key feature the heart of all of your promotion and other communication with the customer.
The best way to develop the key features that are at the heart of your value proposition is to listen to your customers, as while you may think you know what the customer wants, most of the time you will not have it quite right. You will probably have to adjust your product or service to fit with what the customer actually wants or needs.
You may have started with something that is too complex and confusing to the customer. What you thought would be one of many features of your product may need to become the only thing you focus on.
Sometimes the entrepreneur starts too narrow, and what was thought of as the product or service is only one of its key features – you may need to broaden what it is you offer.
Or you may discover that what you offer is a great value, but you have not been selling it to the right target market.
Once your customers affirm that you are offering the right value proposition, it needs to become the focus of everything you and your employees do every day.
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