The Value Proposition

In this series of posts, we discuss the role of Product Manager in defining, documenting and communicating market opportunities – in particular answering five key questions about your proposed product…

In this post, we focus on Value Propositions which articulate the benefits you promise to deliver to a specific target customer, for the problem you aim to solve.

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They are a powerful way to turn “it” statements that focus on the product into “them” statements that are all about the customer. They change your perspective from the internal-facing “what” into the external-facing “why”. Using the customer’s point of view, they aim to confirm why your new product or product enhancement should exist. Only when you can be sure you are delivering value to your customer, enough they will pay you to obtain the benefits, you have a business.

There are three key advantages in using Value Propositions:

  1. Aid in feature identification and prioritization – They help you limit scope and prioritize only the features and functionality that will be core to delivering on a customer benefit. Anything that doesn’t fit neatly into a value proposition is either superfluous or addressing a different need.
  2. Generate stakeholder and development team alignment – Good value proposition statements are compelling and exciting. Even before your product is defined, they can be used internally to provide context for the problem you will solve and the impact for your business.
  3. Set the stage for how you will talk to your customers – They describe why customers should buy your product. Whether you are getting validation from users that you are solving a meaningful problem, or marketing your newly-released product, you must be able to explain succinctly the benefits to potential customers throughout the entire product development process.

Value Proposition Best Practices

A simple framework for developing a Value Proposition is to summarize the problem you will solve and identify three compelling statements that together deliver on your overall customer goal. Your statements should always be framed from the target customer’s perspective – and should not merely be features.


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1. Start with a Problem Statement

A problem statement explains precisely the pain-point or unrealized opportunity the target customer experiences today. It sets context for the problem you aim to solve and why your solution matters, and should be supported with evidence. Writing out the problem statement (such as the following “Babylon” example) is helpful to clarify your thinking, and with practice can become part of a verbal pitch to stakeholders. Producing a short, visual presentation is also common and an effective way to communicate why your solution is necessary.

A brief example (for a product called Babylon):

Fresh, organic, GMO-free produce is often quite inconvenient and costly. While users desire a healthier lifestyle, supporting a healthy diet comes at a premium that many families cannot afford. Furthermore, when purchasing produce shoppers can be challenged to know exactly what is in the food they buy. Urban apartment dwellers are particularly disadvantaged since they rarely have room for or access to a garden. There is a need for more affordable, more readily accessible, guaranteed organic produce.

In some cities, housing developers are hard pressed to increase the value of their properties while differentiating themselves in the rental market – leading to downward pressure on rents. Renters expect amenities, yet it is difficult to find low cost solutions that are also attractive, useful, and unique. New policies are aimed at promoting healthy and sustainable living, some which are subsidized with tax incentives.

An opportunity exists to bring a cost-effective solution to support a greener lifestyle, one which intercepts the needs of housing developers and urban dwellers.

For supporting evidence, include both data and emotional arguments. Data are essential to understand the extent of the need or pain-point, illustrating the problem has high impact and is common to your target audience. Emotional arguments might include imagery, quotes, or show the struggles of a day-in-the-life of your customer (in a world without your product).

In our Babylon example, we may include the following supporting evidence:

  • A chart showing the growth in awareness and consumption of healthier foods
  • A summary of the costs in funding a healthier lifestyle
  • Examination of the relative difficulty for urban dwellers to get home-grown food, compared to those who live in rural environments
  • Examples of cities under rental market pressure, and data showing declines in rental charges
  • Examples illustrating renters’ increased expectations for amenities
  • Breakdowns of Tax incentive programs
  • Quotes from renters frustrated with the choices available at grocery stores


“Your customers are the judge, jury, and executioner of your value proposition. They will be merciless if you don’t find fit!” – Alexander Osterwalder


2. Don’t assume you’re addressing a meaningful need

Many well-designed, highly functional products fail simply because the problem they address isn’t actually that important to customers. While potential customers may say the problem is important, in practice it really isn’t – not when compared to all the other demands on their time and money. Perhaps the problem doesn’t happen very often, and the difficulty quickly forgotten about. Or the value derived just isn’t worth paying for.

Unless you already have a product in market, it is difficult to be certain that solving a problem is going to have an impact for your customers and business. Treat your problem statement and value propositions as hypotheses that require constant data gathering, validation and challenging. Use the iterative methods outlined throughout this book to test them constantly on potential customers – practice, present or pitch just as you would with internal stakeholders.

Potential problems belong to one of three categories, and knowing which category your proposed problem statement addresses can help you gauge how critical the problem is that you are solving:

  • An unmet need without a current solution – Have you spotted an opportunity that doesn’t have a solution today? You may require intimate knowledge, first-hand experience, and unique new technology to address the opportunity. Innovation comes with greater risk; solutions are harder to evaluate because customers are often unaware of the problem (and have learned to live with it or find manual workarounds). Solving these types of problem might be considered innovative.


  • A significant pain paint with current solutions – Pain-points can be rational or emotional. Many very useful products have addressed deficiencies in current solutions – they solve the same problem in a better way. Solving these types of problem might be considered disruptive.

Consider these common pain “motivators”:

  • Too Costly
  • Inefficient / laborious / slow
  • Unreliable / low quality
  • Inconvenient
  • Inconsistent
  • Unusable
  • Fear of uncertainty / risk
  • Lack of control
  • Lack of transparency
  • Discriminatory / unfair

The worse existing alternatives are, the greater the opportunity. If the existing solution is “good enough” you will run into significant barriers (called “switching costs”) in your attempt to dislodge an incumbent or change customer behavior. To succeed, you must do an extraordinarily better job, not a marginally better job.

  • A desire or want – These opportunities tend to be less compelling and may appeal only to a niche audience. Customers tend to embrace your product for its cool technology, as a fashion statement, to enhance their reputation, for emotional satisfaction, or as a personal statement. If you are to be successful, brand, design, marketing, and uniqueness in technology are of paramount importance. Early adopters may love your product, but this may not translate into success with a mainstream audience.


3. Define about three statements per target customer

While not a hard and fast rule, a potential customer can easily comprehend a few value proposition statements. Three is a good target: less, and you’re less convincing or too vague; more, and you risk appearing unfocussed and confusing.

Value proposition statements:

  • start with “You” (or “I” or “We” if written from the customer’s first-person view)
  • are mutually exclusive – each one describes a compelling benefit, different from the others
  • collectively deliver on the overall goal of the user
  • are relevant and important (not trivial) to the target customer
  • are singular (be careful not to link benefits together with “and”)
  • are not to be confused with your own business goals, as opposed to those of the target customer

For example, say you have a subscription product and your business goal is to convert free users into paid users. You should define your value proposition statements in terms of the underlying benefits you deliver to users, so that in turn they value the paid product enough to upgrade.

Each separate target customer segment has its own set of value propositions – even if you are addressing both with what is more or less an identical product solution. They likely value different benefits, or see similar benefits as deserving different priority. Our example, Babylon, has two customer segments and what appeals to urban dwellers will not appeal to housing developers, even though they are offering one product to both:

For the Urban Professional:

  • You can save money over buying from grocery stores by removing the middleman and harvesting only what you need
  • You will save time with convenient access to a local source of greens and vegetables right in your apartment complex
  • You control what goes into your food to deliver a healthy, sustainable lifestyle for your family

For the Urban Developer:

  • You can increase the value and appeal of your housing developments with unique differentiated amenities
  • You will make best use of limited common-apartment spaces and budget
  • You may qualify for tax incentives available for healthy urban living policies

A company’s value propositions are evident by observing messaging used in customer acquisition and channels; such as a website’s homepage, an email for a mobile application download, marketing materials, advertising, white papers, or sales pitches. When communicating directly to users, they may not use “you” statements but the benefit to the individual customer is implied in the visuals and language.

Note the overall promise (learn a new skill) used on LinkedIn’s website, supported by three key benefits in becoming a subscriber.



4. Value propositions are the reasons people buy – your features and functions make it possible

Do not include specific features or details of the solution in your value propositions. Stick to “why” your target customers will benefit – not “what” or “how”.

If you already have specific features or a solution in mind, utilize a Feature-Benefit-Value Proposition map. This will help you to group and link features to common benefits, and ultimately to a high-level value proposition.

Here is an example for Babylon’s Urban Professional (courtesy of



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