Value Proposition: How to Write With Examples

Alexandra Twin has 15+ years of experience as an editor and writer, covering financial news for public and private companies.

What Is a Value Proposition?

A value proposition in marketing is a concise statement of the benefits that a company delivers to customers who buy its products or services. It serves as a declaration of intent, both inside the company and in the marketplace.

The term value proposition first appeared in a McKinsey & Co. industry research paper in 1988, defining it as "a clear, simple statement of the benefits, both tangible and intangible, that the company will provide, along with the approximate price it will charge each customer segment for those benefits."

Key Takeaways

• A company’s value proposition tells a customer the number one reason why a product or service is best suited for them.
• A value proposition should be communicated directly to customers, either via the company’s website or other marketing materials.
• Value propositions can follow different formats, as long as they are "on brand," unique, and specific to the company.
• A successful value proposition should be persuasive and help turn a prospect into a paying customer.

Understanding Value Propositions

A value proposition is a promise by a company to a customer or market segment. It is an easy-to-understand reason why a customer should buy a product or service from that business. A value proposition should explain how a product fills a need, communicate its added benefit, and state why it’s better than similar products on the market. The ideal value proposition appeals to a customer’s strongest decision-making drivers.

Companies use this statement to target customers who will benefit most from their products, helping maintain an economic moat. An economic moat is a competitive advantage. The moat analogy—coined by super-investor Warren Buffett—states that the wider the moat, the bigger and more resilient the firm is to competition.

A great value proposition demonstrates what a brand has to offer customers that no competitor has and how a service or product fulfills a need no other company can.

Components of a Value Proposition

A company’s value proposition communicates the number one reason why a product or service is best suited for a customer segment. Therefore, it should always be displayed prominently on a company’s website and in other consumer touch points. It also must be intuitive, so that a customer can read or hear the value proposition and understand the delivered value without needing further explanation.

Value propositions that stand out tend to make use of a particular structure. A successful value proposition typically has a strong, clear headline that communicates the delivered benefit. The headline should be a single memorable sentence, phrase, or even a tagline. It frequently incorporates catchy slogans that become part of successful advertising campaigns.

Often a subheadline will be provided underneath the main headline, expanding on the explanation of the delivered value and giving a specific example of why the product or service is superior to others. The subheading can be a short paragraph and is typically between two and three sentences long. The subheading is a way to highlight the key features or benefits of the products, often using bullet points or another means of highlighting standout details.

This structure allows consumers to scan the value proposition quickly and pick up on product features. Added visuals increase communication ease between business and consumer. To craft a strong value proposition, companies often conduct market research to determine which messages resonate best with their customers.

Special Considerations

Value propositions can follow different formats as long as they are unique to the company and consumers it serves. Effective value propositions are easy to understand and demonstrate specific results for a customer using a product or service. They differentiate a product or service from any competition, avoid overused marketing buzzwords, and communicate value within a short amount of time.

For a value proposition to effectively turn a prospect into a paying customer, it should clearly identify the customers, their main problems, and how the company’s product or service is the ideal solution to help solve those problems.

Frequently Asked Questions

What Is the Purpose of a Value Proposition?

A value proposition convinces stakeholders, investors, or customers that a company or its products or services are worthwhile. If the value proposition is weak or unconvincing, it may be difficult to attract investment and consumer demand.

What Is an Employee Value Proposition?

An employee value proposition (EVP) applies to the job market. Here, a company hiring will frame itself as a good place to work, offering monetary compensation, benefits, perks, and a productive environment. In return, the job candidate must convince the hiring company that they have the appropriate skills, experience, demeanor, and ambition to succeed.

What Happens if a Value Proposition Fails?

If a company cannot convince others that it has value or that its products or services are valuable, it will lose profitability, access to capital, and may ultimately go out of business.