Module 1: Value Propositions

Video: Generating and Delivering Value to Your Customers

  Watch this video.

Your startup idea is only valuable to your customers if you have the operations in place to successfully provide the valuable benefits that you promised.  Therefore, all of your strategic operations decisions and tactical operations decisions should be made in such a way that they support your Customer Value Proposition. 

In the business marketplace, there are a lot of different types of customers.  Before designing your operations strategy and developing an operations plan for your startup, it is important to know three things: 

  1. WHO is (are) your target customer(s)?
  2. WHAT benefits do your customers find valuable?
  3. HOW MUCH will you charge for your product or service?

Together, this is called your Customer Value Proposition.

Values should always be defined through the “eyes” of the consumer. These are primarily different types of value propositions that startups can leverage to delight and deliver value to their customers.

Functional Value: This type of value is what an offer does, it’s the solution an offer provides to the customer.

Monetary Value: This is where the function of the price paid is relative to an offerings perceived worth. This value invites a trade-off between other values and monetary costs.

Social Value: The extent to which owning a product or engaging in a service allows the consumer to connect with others.

Psychological Value: The extent to which a product allows consumers to express themselves or feel better.

The goal of a value proposition, is to create a “perception” of value in the minds of your target consumers, which influences how much they will be willing to pay to get the benefits of your products.

Because value is a relative term, you can see how a single product can have multiple value propositions based on the type of customers it is being promoted to.

For example, you may promote solar energy to global-warming activists as a way to reduce global emissions, and then offer the same energy to homeowners as a way to reduce their electric bill. Same product, different customer value propositions.

MacBook’s “Light and Speed”
Airbnb’s “Work hard, travel easy”
Airbnb Plus ‘s “All the comforts of home, plus more”
PayPal’s “You do the selling, we’ll get you paid.”
Tony Robbins’ “Master Every Area of Your Life”

Bonus Video: If You Don’t Understand People, You Don’t Understand Business