Rootstrap Blog

Your Business Model Is Your Value Proposition… And So Is Everything Else

At Neon Roots, we do a lot of Rootstraps – and one of the biggest things we talk about with our clients is value proposition. A value proposition is a concise expression of the main benefit or value that you’re bringing into your customer’s lives. Note that this is crucially different from the literal features of your product: yes, your product may have an exhaustive list of features, but those features aren’t necessarily benefits to your customer, and those benefits aren’t necessarily a value proposition.

Uber, for example, has a well-built app with a lot of great features. Users can create profiles, log in, enter payment information, and track the location of their driver, all from right within the app. But those features aren’t really benefits – the ability to create a profile and log in to an app doesn’t add anything to a user’s life. The benefits of the Uber app are that it’s easy to use, extremely reliable, and it allows users to call a car to their location and be on their way to their destination within minutes. But even these benefits aren’t the crux of the thing: Uber’s core value proposition is that it helps people get places easier. Every benefit and feature couched within their app ultimately serves that purpose – and if it doesn’t, it’s not actually valuable to the user.

If you live in the app or entrepreneurship world, chances are you’ve heard this before – there have been plenty of books and blog articles written on features, benefits, and how they relate to value propositions. What you might not have heard, though, is that the actual features and benefits of your user-facing app aren’t the only ingredients to your value proposition. Everything about your business – from monetization model to marketing – is a part of your value proposition. Or, if it’s not, it’s time to start thinking about it that way.

As an example, let’s take PayPal. PayPal charges a fee of about 5% against business owners who use the service to sell goods and services – but those transactions are free to the buyer, and all personal transfers of funds go without any fees. This is the basic structure of their monetization model, but it’s also a critical part of their value proposition for a large subset of their users. PayPal could easily charge a flat fee on all transactions, or charge a monthly or annual subscription fee for usage – but instead, if someone uses it to send money to a friend or family member, it’s completely free. This business model adds a lot of value to a large portion of their user base, and accordingly, it’s actually a part of their value proposition.

Let’s take a look at a smaller company: RiffRaff. RiffRaff is a relatively small but growing e-commerce company selling women’s apparel. While it’d be hard to argue that they don’t have cute clothes, one glance at their website and product catalogue might make one question why they’ve been highlighted by Forbes, Inc. Magazine, and the National Retail Foundation as having one of the country’s best CEOs and huge potential for growth. What makes them so special?

Customer service. RiffRaff is an all-female company with employees only under 25, and everyone working there seems to “get” the brand attitude – and they display that to every customer that calls in. RiffRaff has grown a following of loyal customers who, while they certainly enjoy the clothes, really love the company for the consistent excellence they get in customer service – and that service is one of the most important components of RiffRaff’s value proposition. In a sense, the actual physical thing of value that RiffRaff sells – the clothing – isn’t the thing they sell. Their customer service is.

We’re proposing a new way of thinking about value propositions. It’s no longer just what’s in your product or service, or even what function or benefit your product or service delivers to customers: it’s about every single aspect of your business. Monetization model, customer service, marketing, brand aesthetic, and even supply chain can all be an important, if not the most important element of your value proposition – you just have to treat them that way. So let us ask you: what part of your value proposition is making your business successful (or unsuccessful)? Is it your product, or is it something else? And most importantly, what should it be?

Our thanks to Rawpixel for the image.



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