The Importance of Your Value Proposition

In every social enterprise, there’s a tension; two competing ideas that will shape almost every decision you make. These ideas are so important that they’re the focus of the first two sessions of our Two Feet Program.

The first is your ‘Intent’; why your organisation exists and what change you want to see happen in the world. There’s a skill in creating a clear statement of intent, but it’s also easy for social entrepreneurs to talk for hours about their passion for social impact. I find these sessions quite inspiring.

The second is your ‘Value Proposition’ to your customer; why people buy from you, and what keeps them coming back. This is often difficult to identify but the challenge is to walk in your customers’ shoes and see what motivates them.

Your value proposition is often separate from the product/service itself. Think about Apple and how they pitched the iPod, or the appeal of owning a Harley Davidson. Look at what Louis Vuitton offers customers, or what the most popular AFL teams offer their fans. These brands aren’t selling themselves with the technical specifications of their products, but by how they make people feel.

If you want to learn more, I’d recommend books like:
Value Proposition Design by Alexander Osterwalder
& Contagious by Jonah Berger, or come see us at TDi.

You can see why there’s a tension. Customers fuel your business, but what if they don’t share your passion? How do we create things that delight our customers, whilst simultaneously fulfilling our social mission? This is not about compromise, where both get done poorly; it’s about deliberately designing a model that can do both.

This is the focus in one of our many Two Feet sessions; to identify our customers and their pain points, then examine what parts of our products/services act as pain relievers. Why do they choose us over our competitors?

This then leads to some exciting questions: What else could we give them? How could we solve their other problems? Who else can we delight by slightly modifying our products/services?

This is partially an exercise in empathy; to observe our real life customers rather than imagining convenient fictional customers who share our views.

It’s also an exercise in design; being willing to alter and reinvent what we do in order to better delight our customers.

A strong value proposition is the heart of a good business model, so we need to get it right. That means we need to clear up any faulty assumptions that are in our thinking, and the way to do that is through real-world testing. Go talk to customers, pitch your value proposition, and see how they respond. Then ask for the sale; dollars on the table. How does the response change?

When you tell people about your social enterprise, they will congratulate you and give you encouragement. But ultimately, people vote with their feet, and with their wallets. You’re not looking for moral support; you’re looking to see if customers like what you’re doing enough to pay for it.

For our Two Feet cohort, the challenge is to learn from the market, as quickly and as cheaply as possible. This is a combination of art and science, crafting good questions whilst carefully measuring the responses.

Testing can be confronting, but what’s the alternative? Invest your time, energy and dollars into something that people might not want?

Isaac is an Associate at TDi and a Financial Analyst at Business for Development.
You can read more of his blogs here.

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