If we accept, "Why they buy from you" as a simple definition of value proposition, it's amazing to think that many marketers are not getting it right. On websites, from executives and of salespeople in the field, we should be articulating what our customers really value. But there's evidence that companies describe what they offer in words that don't resonate with why customers really buy.
A 2006 contest by Marketing Experiments offered $100K for any new business idea submitted having the best written value proposition. Entries came in from many successful businesses of various sizes, business schools and entrepreneurs. In a total of 275 qualified entries assessed, hardly any were rated highly (2%) , and just 32 (12%) scored at a mid-level quality. So the vast majority of value propositions-- 85% or so -- simply weren't very good.
Here's an example the authors gave as a good value proposition:
"XYZ Corp is the exclusive provider of patent-pending project management software for paving contractors, saving U.S. contractors over $34M in 2005."
Another example comes from Lawrence Friedman, an early proponent of crafting good value propositions; in Go to Market Strategy (2002), Friedman really liked an early IBM's value proposition and tagline,
" Buy IBM, and you can sleep at night."
These examples underscore some essentials to effective value propositions:
1. Address the customer problem or need (as opposed to describing your company or product features)
2. Be concise; if not 10 words or less, at least develop an "elevator" version
3. Include how usage and experience pays off for the customer -- the true benefits for what they pay.
4. State what is unique -- What distinguishes you from competitors or substitutes.
5. There will typically be more than one value proposition, for different product solutions, market segments or even key customers. Craft value proposition "platforms" adaptable to fit unique customer needs.