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Crafting your startup value proposition

March 8, 2017

I’m currently working with a retired farmer who had taken up creating his own brand of home made wine on an industrial scale from his farm in Rossendale. When I visited his farm for our first meeting I knocked on his door, to be greeted by a friendly, warm, physical handshake and a beaming smile: Come on in, would you like a drink of my wine? Was the first thing he said.

He’s always looking for a victim said his wife. Right I’ll be back in a minute. He disappeared into a large pantry at the end of the kitchen and came back with a bottle of amber liquid and two glasses.

This is my rhubarb he said, tipping out two good measures. I took a sip and then a good swallow, and gasped as the liquid blazed a fiery trail down to my stomach. It’s strong stuff I said breathlessly, but the taste was very pleasant indeed. He watched approvingly as I took another sip. Yes, nearly two years old.

I drained the glass and this time the wine didn’t burn so much on its way down, but seemed to wash around the walls of my empty stomach and send glowing tendril creeping along my limbs. Delicious. He refilled the glasses and watched with rapt attention as I drank. When we had finished the second glass he jumped to his feet and trotted to the pantry to emerge with another bottle, this time of a clear, colourless liquid.

Elderflower, he said smiling. When I tasted it, I was amazed at the delicate flavour, the bubble sparkling and dancing on my tongue. Terrific, just like champagne. I never thought home made Lancashire country wines could taste like this. I sipped appreciatively at my second glass, and I hadn’t got more than half way through it before my host was clattering and chinking inside his pantry again, emerging with a bottle of a blood red wine.

You try that! he gasped. I was being beginning to feel like a professional taster and rolled the first mouthful around my mouth with eyes half closed. Wow, just like an excellent port, but there’s something else here, a fruitiness in the background. Blackberry, one of the best I’ve done, made it two backends since.

Leaning back in the chair, I took another drink of the rich dark wine. It was round flavoured, warming and behind it an elusive hint of brambles. I could almost see the heavy-hanging clusters of berries glistening black and succulent in the autumn sunshine. The mellowness of the image matched my mood which becoming expansive by the minute.

I couldn’t make my mind up which had been the best. But you haven’t started yet, he said, I’ve got dozens of bottles in there, all different, and he shambled over again to the pantry and this time when he reappeared he was weighed down by an armful of bottles, different shapes and colours.

What a charming man! Wide eyed and impassioned, he rambled at length over the niceties of fermentation and sedimentation, of flavour and bouquet. He dealt learnedly with the relative merits of each and his plans for his startup online business. I sat spell bound listening to him. And drinking.

He poured endless samples of his craft in front of me, mixing and with a meticulous attention of his bottles, their date, origin and fruit. We tried parsnip and dandelion, cowslip and parsley, clover, gooseberry, beetroot and crab apples. Incredibly he had some stuff made from turnips, which was exquisite.

Everything gradually slowed as we sat there, time slowed and eventually became meaningless. Frank’s visits to his pantry became laboured, unsteady affairs, sometimes he took a roundabout route across the kitchen. Eventually it was time to go, and I left with a bottle in each pocket – trousers and coat – including elderflower, of course.

So a great experience with my retired farmer friend, and his aspiration to build on an on-line wine merchant business from his range of home made Lancashire wines from the vast acres of his fields. We’re now just a few weeks away from launch and I promise we’ve been talking and planning and crafting his business thinking, not just drinking.

But how do you start to put his idea of Lancashire Farm Wines to launch a business? Any startup business idea has to start with thinking about its potential customers – not its product – at the core of its business model: what are the pains and aspirations of your customer? Does your product truly solve your customers problems, or does it fulfil its promise of doing something in a better way? What does it do differently?

Most startups wrestle with these questions at their outset, when they are in the customer discovery and customer validation phases, seeking to determine their value proposition and building what their offer is for their target market, seeking product-market fit.

For a startup to attain product-market-fit, its value proposition should neatly map to three needs:

  • The product should eliminate the customer’s pain or problems
  • The product must meet the majority of the target customer’s needs
  • The product has to provide more value than other alternatives

It might sound basic, but these core ideas can get lost in the fray of rapid iteration of a product, particularly during the early phases of development, when you’re generating a huge number of ideas and your passion for what you’re doing can often cloud your judgement of why would a customer buy from you?

Whatever stage a company may be in, the business needs a mechanism to communicate how the product meets the needs of the customer. There are many ways to define your value proposition, but one approach I’ve favoured is a process referred to as The Three Legs of the Value Proposition Stool.

The collection of reasons why people buy typically fall into three major buckets that, in sum, form the three rules of winning value propositions:

  • Buyers have to want and need what you’re selling. You have to resonate.
  • Buyers have to see why you stand out from the other available options. You have to differentiate.
  • Buyers have to believe that you can deliver on your promises. You have to substantiate.

This applies to Lancashire Farm Wines as to any consumer tech product or digital service. What you have to do is ask the right questions so you focus on the customer and the market, not your product:

Where is the white space? It’s obvious, but it needs to be asked: is there a real and unmet market need that your startup can address? For example, Frank’s farm venture is aiming at the wine enthusiast, not the connoisseur, who has an appetite and sense of adventure for a range of traditional English home made country wines.

Is there another supplier in this market? What is their proposition? Is there an online model? Envision the market years down the road and use that as inspiration.

What do my (potential) customers want? Get out of the building, do the research yourself and take the time to interact with your potential customers personally. You’ll receive the best feedback from those who would pay for your product (or are already paying you, if you’re in beta.)

You obviously don’t always have the same read on buyer needs as the buyers themselves, so it’s worth your time to explore every angle and have the research to hand.

Is my product vastly superior to my competitors? If someone else is already doing what you intend to do, or something substantially similar, fear not, there are still ways to show that you have an edge, and they all have to do with creating unique points of difference – for Frank, this could be product range, price points/offers, or customer experience – things you know you can do better than existing products and make genuinely standout.

In short, what can you create that is ten times better than your competitor’s product, and thus create a compelling and sustainable advantage?

Let’s look at some of the best unique value proposition examples we see in some of tech businesses today – where the focus is on the user experience, not the insanely smart technology.

Apple iPhone – the experience is the product The smartphone revolution has been led by Apple, its value proposition becoming the brand in a saturated consumer electronics marketplace such that it is the iconic product. So what sets the iPhone apart from the plethora of competing devices, especially given Apple’s consistent premium pricing policy?

Apple’s strategy is as much about a commitment to sleek, elegant product design as its actual product functionality. Its focus is on the user experience. Apple reiterates its value proposition includes the simplicity in terms of ease of use that has been a cornerstone of Apple’s design aesthetic since the launch of OS X, and the aspirational qualities that an iPhone offers the user. This aspirational messaging is Apple’s value proposition.

We could sit here and poke fun at Apple’s lofty design aesthetic, but it’s design focus has been a remarkably effective marketing approach that has helped Apple remain at the front of a brutally competitive market for almost a decade.

Rather than focus on a specific user feature or the technology – virtually none of which are unique to the iPhone or iOS – Apple’s focus is on the experience of using an iPhone device, and creating a brand identity as ‘an Apple user’. Take, for example, Apple’s commitment to personal data security and privacy. This is a clever strategy in terms of creating a brand identity based on appealing to the personal principles and beliefs of Apple customers.

Recall the disastrous FBI San Bernardino iPhone unlocking lawsuit, where Tim Cook’s stance was clear and championed the cause of privacy and personal data, an issue most of us are concerned about. He managed to simplify the complex topic of encryption into easily understandable language based on a set of personal principles, which users felt good about.

Apple do respect and protect my privacy as a company, and this shows through their products. Nothing to do with the core underlying functionality of the phone, but the values of the company are part of the value proposition to customers.

Apple understands that even focusing on the unique features of iPhone wouldn’t be enough to distinguish the device in such a crowded market. By emphasising the overall experience of using the device and aligning the brand to the identity of the customer, Apple’s value proposition is as unique as its approach to product design and aesthetics.

Slack – be more productive at work Slack is a workplace team communication instant messaging app that is deceptively simple to use, yet robust enough for large distributed teams working on complex projects. Slack use case on their homepage is the NASA Jet Propulsion Lab as an example of how it can be used. But what is, so what sets Slack’s value proposition apart from other messaging and productivity apps?

Essentially, Slack distils its value proposition as to ‘it makes users’ working lives simpler, more pleasant, and more productive’. The NASA JPL example is smart in that it subtly implies that if it’s good enough for large teams of scientists at NASA – the kind of people who put robots on other planets – then it’s good enough for anyone’s more mundane projects.

However, while this might seem like the identical value proposition of virtually every productivity app, Slack has several advantages that support its core proposition of not just enabling project management, but making team collaboration simpler.

No other productivity apps boast as many integrations as Slack. This means that it is highly likely to be compatible with a company’s existing communications and workflow tools. It’s this diversity of supported apps that has helped Slack dominate the workplace productivity space. It’s the ubiquity and integration of the app that unlocks synergistic value from information and investment in other tools, not the functionality of Slack itself.

Like Apple, simplicity is also a core theme of Slack’s value proposition. The premise of ‘find anything, anywhere, anytime, from any device’ is a catchy and compelling reason to adopt Slack. Slack essentially addresses every common pain point you can think of about collaborating with others at work, then simplifies it in an almost irresistible way.

Slack’s mantra of ‘Be Less Busy’ isn’t just a catchy slogan – underpinned by ‘all tools in one place’, ‘search your entire archive’ and ‘everywhere you go’ – capture the company’s value proposition neatly summarised into three beautifully simple words.

I’m sure Frank will appreciate my ramblings on the value proposition of these two tech behemoths that have created their own market space with their own unique value propositions based on great product features and benefits, but also a focus on the user experience.

Sitting the customer’s side of the table and imagining their journey is the way to craft your value proposition. So Frank and I will spend more time sat the table quaffing his fine wines and thinking customer not product. After all, life’s too short to drink bad wine, as it is not to have developed an innovative value proposition, so, whatever you do, pour yourself into it.

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