Understand Your Value Proposition

Every business needs to know its “value proposition.” What exactly do they offer to others in exchange for money.

It is a key part of the question every business leader should ask. “What business are we in?” It is surprising how few can give you a reasonable answer. It matters.

At one time the railroads decided they were in the railroad business and lost much of their traffic to trucks, buses, and airplanes. How differently would they have evolved had they decided they were in the transportation of people and goods business?

Why care?

When you know what you do, you can do it better and help others understand.

It begins with understanding Peter Drucker’s observation. “The purpose of a business is to create and keep a customer.”

When you sell goods and services, it is not so difficult to find what works. Innovation and communication about what you do and deliver are fairly straightforward. It is not enough to create a wonderful product unless people know you do it. That’s part of marketing. That’s where the clear expression of your value proposition comes into play. The simple description of the value proposition is essentially the answer to the customer’s first question, “Why should I give you my money?” Every customer expects an answer.

If you cannot answer it in 20 seconds or so, how do you think the customers will arrive at an answer they can live with?

The customer’s motivation to deal with you arises from what they learn about you. Motivation to do business is not to be taken for granted.

Charities frequently cannot answer the question at all. They seem to believe the goodness of their work is definition enough. Never think customers know what you do, how you do it, or why you do it.

All customers and donors are selfish

If the customer or donor doesn’t receive a personal value that is worth more than the money price, they won’t do it. Maybe they will begin, but not continue. The purpose is to create and keep a customer. That comes from making it a good trade for the customer. AND making sure they know it is a good trade. That comes when they understand your purpose and values. They can connect.

How do you get them to connect? You will be amazed at how difficult it is to create your 40-word value proposition. You’ll find the same one doesn’t communicate your message to everyone. People value different things.

In a business, it might be an innovative product, or a proven product, or customer service, or price, or style, or just being nice to them. You eventually work it out. Once you know your values, it is a bit easier. I have a client who told me decades ago that their purpose was to be the best supplier for each customer and to be the best customer for each supplier. The delivery of that leads to wealth-building behaviours.

The first step is to know what your customers want and need. Then to find ways to deliver it for a price and other terms you can each accept as fair.

A charity is much harder because the customer benefit is harder to assess. Innovation is not so easy either. I knew someone about 20 years ago who was working out the logistics for an online religion. Group posts or emails instead of sermons. A message board for the group to interact. and best of all a 3% tithe instead of 10%. The price to value equation is quite different when the delivery method is much less costly. I know he got stuck on pricing indulgences, but there is an interesting value to thinking it through.

What do customers value? Is the process the product to some extent?

Working at the value proposition is a never-ending task.

The bits to take away.

If you don’t know in detail why people will trade their money for what you offer, customer development will be impossible.

For customers and donors alike work through the motive, means, and opportunity triad.

It’s about meaning. What do you mean to the customer and what do they mean to you?


Help me, please. If you have found this useful, please subscribe and forward it to others.


I build strategic, fact-based estate and income plans. The plans identify alternate ways and alternate timing to achieve both spending and estate distribution goals. In the past, I have been a planner with a large insurance, employee benefits, and investment agency, a partner in a large international public accounting firm, CEO of a software start-up, a partner in an energy management system importer, and briefly in the restaurant business. I have appeared on more than 100 television shows on financial planning, have presented to organizations as varied as the Canadian Bar Association, The Ontario Institute of Chartered Accountants, The Ontario Ministry of Agriculture and Food, and Banks – from CIBC to the Business Development Bank.

Be in touch at 705-927-4770 or by email at don@moneyfyi.com

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