Skip to Content

Why It’s Time to Rethink The Value Proposition

According to a recent report by Brian Solis of the Altimeter Group, 88% of companies are undergoing a formal digital transformation effort in 2014. These companies are amongst those who are realizing that digital technologies are showing no sign of slowing down and are fueling the next generation of disruptors across their industries and markets.

Technology and disruption aside, could there be a greater undercurrent that is lurking behind how our consumers want to engage with businesses? Could “digitization” be merely just the first stop on a greater journey of adapting to the change?

Fundamentally, the change that is occurring in front of our eyes has a lot to do with the core way of how businesses create and capture value. The very foundational principles that many existing companies have been built and grew on are being challenged every day.


In traditional product or service companies, creating value meant identifying enduring customer needs and manufacturing well-engineered solutions. In a Connected Economy, the usage of products and services is continuous and value can be created (and co-created) in so many different ways. Digitization has now reached a point where many consumers have moved from passive recipients of products and services to co-creators of value, making the distinction between product and service irrevocably blurred. Recent examples include companies like Uber, Tesla and Nest who have modeled their businesses around the on-going usage and value from products. Products are now connected with other products, leading to new experiences that are optimized for the way and context by which YOU (as the consumer) want to get value.

In the case of Uber, applying Clayton Christiansen’s “job-to-be-done” concept, a passenger wishing to get from Point A to Point B may choose to use a taxi. The value created for the passenger is likely limited to getting to their desired destination faster or more conveniently over comparable choices.

Uber builds on this context to allow consumers to co-create incremental value such as a choice of price and style, ranging from an SUV to a Carpooling (economic value), automating payment (convenience and security) and choosing a driver based on ranking (safety and efficiency). The simple task of getting from point A to point B has now become an experience which customers are essentially co-creating with Uber, each capturing value in their own unique way and helping the company shape its offerings. Knowing that, Uber is enhancing the experience even further by offering even more tailored experiences such as WIFI in cars and picking up your groceries on their way to pick you up.

As we move from “one-and-done” products into connected services, businesses have been steadily adapting their offerings to these changes in value creation. Consumers and their expectations, however, are evolving at a much faster pace; leaving them in a sea of messaging, value propositions and the complexity of more choices than ever.

Part of the reason for this slow evolution is routed in the very fundamentals of sales and marketing. Since the 1960’s, our approach to attracting and engaging consumers has been based on creating and executing on a Unique Selling Proposition (or USP for short). The concept of a Unique Selling Proposition was first defined by Rosser Reeves, an advertising agency chairman who was known as the high priest of hard sell and in many ways a leader at the cusp of modern-day marketing. A USP is defined as follows:

  1. Makes a proposition to the consumer. Not just words, not just product puffery, not just show-window advertising. Each advertisement must say to each reader: “Buy this product, and you will get this specific benefit.” (In today’s words: Value-Based Selling)
  2. The proposition must be one that the competition either cannot, or does not, offer. It must be unique — either a uniqueness of the brand or a claim not otherwise made in that particular field of advertising. (In today’s words: Differentiated)
  3. The proposition must be so strong that it can move the mass millions (i.e., to pull over new customers to your product). (In today’s words: Scalable)

As you can see, most of the fundamentals we leverage today in sales and marketing come from the core of Reeves’ definition of USP. We craft value propositions, we aim them at our target market with a differentiated spin and of course, everything we do is with an eye for mass scale, one-size-fits-many approach. However, as we cross the line to an unpredictable world where the consumer creates and captures value in their own unique ways, is it time to put the USP concept to rest and invest in next-practices?

The very premise of what we know and do is changing. We need to realize that following the USP model and digitizing existing products and services through our current lens might not work in the long-term. With the evolving role of the consumer now interacting within a connected network of companies and other individuals to co-create value, value won’t necessarily be embedded in products and services, rather the products serve as an anchor by which compelling individual experiences are created.

Zappos serves a good example of a company that has embraced these concepts at their core. Zappos considers itself a service company, that just happens to be selling shoes and apparel. The experience they create for their customers, delivered through a fanatical level of service goes far beyond the value that customers get from the products. On the other hand, some of the largest household names such as P&G are stifled as focus shifts from inventing “the next big product” to reinventing their business model.

Customers are no longer passive consumers of offerings – but active contributors to value creation. Without their contribution, the value of the offering cannot exist.

For businesses, this represents a shift to the focus of innovation. From products and services to experiences that individuals can interact with to co-construct their own experiences, we need to start thinking of our products as carrying a periphery of services and experiences on which their value depends. We need to think beyond digitizing present concepts and shift to a mindset of “offerings” that represent blends of both products and services, wrapped together as part of an experience.

The relationship between a provider and consumer is fundamentally changing beyond a one-way transaction to a reciprocal relationship in which both parties “help each other and help each other help each other”.

The next time you’re asked to come up with a value proposition for your new product or service, think bigger. Think beyond USP and right into the business model where value gets co-created. There are tremendous opportunities to be realized and at the same time, a lot at stake.

Be the first to leave a comment
You must be Logged on to comment or reply to a post.