Before getting into the details of Value Proposition, we need to take a more general look and value proposition and customers first.
Do you know why customers will buy your products or services? Most entrepreneurs think it’s because of their product or service and its features, functions, and benefits. That is what entrepreneurs ask potential customers about, and that is what established, competitive
companies fight over. This attitude is a short-term, transactional mindset.
Successful companies know what their potential customers want. They are customer-focused rather than product or company focused. They know that customers want to buy products and services from companies whose products and services were created for them. When that happens, they become long-term, loyal customers.
For example, Apple said they wanted to design computers that would empower individuals and be easy to use. That purpose drove the company to make computers that a segment of customers wanted and was willing to pay a premium to get it. Customers believed what Apple
believed. This outward, customer-focused approach led to long-term, loyal customers.
Here is an example of the opposite inward product looking approach. Honeywell started a computer division in the 1960s and claimed they were “The Other Computer Company,” taking the assumptive position that they were second only to IBM. But customers didn’t see it that way.
They didn’t believe it. Honeywell’s computer features, functions, and benefits were not broad enough to displace IBM. They only had short-term, transactional customers and were forced to sell the computer division after several years of losses.
Startups need to start with what the customers want, not what the founders want. You still need to ask critical questions about your value proposition and determine the importance of each feature, function, and benefit. And you have to ask about every aspect of your product offering, including quality, functionality, packaging, service features, ease of use, reliability, and more.
It would be best if you also had a lot more than demographic information. You need to get into the market and talk with prospects so you can get into the minds of buyers, users, influencers, decision-makers, and even people who could kill the sale. And you need to classify these potential customers by
the reasons they buy.
