When I’m working with a new client this is the first question I like to ask:

What is your value proposition?

The best responses are concise and answer 3 additional questions:

  1. Who is your customer?
  2. What is their problem?
  3. What is being exchanged?

It is amazing to see that flash of terror running across their face as if they have just been called on to answer a question in front of the head master. Most people are are so wrapped up in the day to day work of running their business that they need to stop and think because their value proposition is not always front of mind.

In some cases, the answer surprises me. They define their customer in a way that does not align with my understanding of their business. So what defines a customer?

A customer engages in a value exchange with you and your business.

A customer is distinct from a user. A user has a problem and your product or service solves that problem, but the user does not provide any value to you in the form of revenue, attention or anything else for that matter. All too often I come across businesses who are solving problems for users and looking for someone else in the value chain to pay. The ones who have money but for which your product doesn’t solve a problem aren’t customers.

That was true of one of my earliest startups. PocketChoice. We offered a service where consumers could see a list of every SMS marketing campaign and subscription service they had subscribed to. We provided full detail of their opt-in and the ability to turn any given campaign on or off at any time. It was a great service and consumers loved it, but they wouldn’t pay for it. They were “users”.

We tried to find customers. We looked at the network operators, SMS aggregators, brands and service providers – we even looked at industry associations. None of these groups had a problem and certainly not one that they were going to pay for. It was a painful lesson to learn. You have to solve a problem that is big enough that people are willing to pay for to have the pain taken away. You have to have customers – not just users.

Sometimes the value exchange is cash for a product or service. Other times, the exchange is attention for content (media sites). In each case there is a value exchange in which you are both getting and giving something of value. Beyond the tangible, there is also intangible or emotional value.

A good example of this is when you are volunteering with a charity. In this case the value exchange is “time for a sense of feeling good.” If you look closely enough into your own situation, you can often see the emotional value exchange for your own product and service. A good example is a lottery ticket.

On the surface the value exchange is transactional. Cash in exchange for a chance to win a prize. But there is more. Why do people play the lottery? For a bit of fun. For a thrill. To feel like they are part of something bigger. There are lots of reasons to play the lottery that are more than just buying a ticket with a chance to win a prize. There is an emotional value exchange taking place beyond just the chance to win a prize.

What if you are working for a large organisation and maybe you are not sitting on the front line of customer engagement. Does this whole value proposition thing still apply to you? You bet it does.

If you are in the marketing department you are exchanging your skill and expertise for a salary and a sense of job satisfaction. (You might even have some fun coming up with zany new ideas for attracting leads!) Your customer is the sales department at your employer and the pain you are solving is the company’s need to have new business leads.

Bottom line: Everyone has a value proposition for themselves as well as for the company they work for.


In a classic “physician heal thyself” sort of way – it took me an awfully long time to answer the question for myself! Tell me if you think my value proposition works and what I can do to make it better.

Troy Norcross – Principle Strategist

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Article by Troy Norcross