Over the last year, we have been leading workshops across Ontario designed to help entrepreneurs with the basics of business development.
The ideas coming out of Ontario cover an impressive range of technologies, from cleantech manufacturing solutions to online platforms for innovative services.
Yet we found that the entrepreneurs often had the same challenge: they were unable to explain the value of their offering in a clear and concise manner. We also hear this comment from venture capitalists and investor relations professionals — that entrepreneurs spend too much time thinking about technology and not about value.
Watch this video to see how scientists are often so passionate about their technology they can’t articulate the value of their offering.
A value proposition is essentially an answer to the question “what do you do?” The temptation is to explain the technology that your business is based on, but the reality is that there are very few industry-specific people who care about your technology. People want to know what the value of your technology is.
Values can be vague and very personal, but when people pay for products, the same patterns keep cropping up. When engaging in B2B sales, for instance, potential customers are often drawn by promises of saving time or money. These aren’t the only things that get people buying, however. Products and services can be sold on the promise of higher quality, convenience, lowering risk or enabling productivity.
When selling directly to consumers, values are often harder for customers to articulate. Instead of being rational and business-driven, consumers make emotional decision based on latent values, such as status, aesthetics or newness.
The next step is to find out exactly which values matter to your target customer. When you craft a value proposition, it should speak to a very specific market segment. Even if you have a wide-ranging “platform technology,” you need to start selling your product to a specific target customer and then expand later.
The best way to find out what your target market values is to get out of your office and ask them. Observe them at work, read their publications and get into their head to find out what problems they are trying to solve when they go to work. You can use other tools, too, like Alexander Osterwalder’s Customer Empathy Map or the Day in the Life Scenario in our Entrepreneur’s Toolkit Market Strategy Workbook.
When you’re finally ready to draft your value proposition, use these points as a guideline:
- What are you offering?
- Who is your target customer?
- What value are you bringing your target customer?
- How is your product unique?
If you can get those four points into one sentence, you’re finally ready to talk about your product in a way that investors will understand.
Downloads and resources from the Entrepreneurship 101 lecture on value proposition:
- Class summary: Value proposition
- Video: Developing a value proposition
- Presentation: Value proposition
- Workbook: Market Strategy Workbook: Critical Value Factors
- Articles: 1. Value proposition. 2. Target customers
- Join the Facebook Group: Entrepreneurship 101
- Register to get weekly updates
Reposted from MaRS
JosephWilson is currently an education advisor at MaRS. He also writes on issues of technology and culture for NOW Magazine, the Globe and Mail, Spacing and Yonge Street. He is the Executive Director of the Treehouse Group, dedicated to fostering innovation by hosting cross-disciplinary events.
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