The Pickup Line: What to know about value propositions

The story goes an eager entrepreneur walks into the office of a potential investor. Eager to present his pitch, the inventor sits in front of the investor’s desk and gets ready to start his well -rehearsed pitch. Before he could get out the first word, however, the investor throws a match book across his desk and quietly says, “On the back of that, describe your idea”.

Here is how to get someone's attention in one minute. (HINT: the hook, the body and the close)

What is your one-liner? How would you pitch your movie idea?

While there are unique challenges and characteristics of new bioenterprises, fundamentally the elements of success are the same as any other business.

The first task is to define your position based on the target segment you intend to dominate. Too often, particularly with technologically based companies, the inventor or scientist discovers or invents something . They then start the process of a solution looking for a problem. Instead of being problem solvers, a more successful strategy is to be a problem seeker, design a solution that is better than what is presently offered and execute a plan to commercialize it. Instead, you need to tell a story in one sentence describing who's problem you intend to solve and how. Think like a Hollywood screenwriter:

In Hollywood cinema, one of the greatest loglines of all time belongs to the iconic thriller that kept kids out of the ocean during the summer of 1975:

A police chief, with a phobia for open water, battles a gigantic shark with an appetite for swimmers and boat captains, in spite of a greedy town council who demands that the beach stay open.

Once you identify a large, growing, important, potentially profitable unmet need, the next step is to define a value proposition that describes how you intend to dominate the market you’ve identified. Value is the difference between the tangible and intangible benefits of buying a product or service minus (or divided by) the tangible or intangible costs. Your value proposition is the promise you make to your customers to provide them with value if they buy or use your product.

The third element of success is to construct a business model, i.e. provide your product or service in such a way that it costs less to make it and sell it than what people are willing to pay for it thus generating a profit and sustaining the business.

Your value proposition and business model will need to be better than the competition. Otherwise, there is no reason for customers to switch or consider your product.

Finally, you need to tell your story to various stakeholders. There is a difference between story branding and storytelling. Since people buy emotionally and justify rationally, the idea is to evoke emotions. You can do it with words, pictures, sounds, smells, or touches. Here are some digital storytelling tools.

Do you hate to write stories? No problem. Use these tools.

?Here are some essential tips for ensuring your startup’s storytelling success:

1. Make sure your story is authentic. Your audience will see right through any attempts at manipulation, so make sure your story is honest and representative of who you are as a company.
2. Keep it simple. Don’t try to cram too much information into your story- focus on the most important aspects and leave the rest for later conversations.
3. Be clear about your goals. What do you want people to take away from your story? What action do you want them to take? Articulate this clearly and make it easy for people to understand what you’re trying to achieve.
4. Engage your audience emotionally. People are more likely to remember and connect with stories that evoke strong emotions- happiness, sadness, anger, fear, etc.). Make sure yours does this effectively.
5. Practice often and be prepared for questions. It’s important to be comfortable telling your story and fielding questions from your audience. Practice in front of a mirror, with friends, or even in front of an empty room- the more you practice, the better you’ll become.

I can almost guarantee that your first value proposition will change if you take the time to interview 100 potential customers or users. Changing your strategy without chaning your vision is called "pivoting"

Here is the ultimate list of customer discovery questions you should ask. However, asking the right questions is only the first part. You need to learn to listen to get to the real jobs, pains and gains your customer wants you to do or solve.

There are several models for articulating your value proposition and they are typically used to create an elevator pitch.

One model , described by Geoffrey Moore in his book “Crossing the Chasm”, is to use the following template and just fill in the blanks:

• For (describe the target customers-beachhead segment only)
• Who are dissatisfied with (describe the current market alternative or problem statement)
• Our product is a (new product category)
• That provides (key problem solving capability)
• Unlike (the product alternative or competition)
• We have assembled (key whole product features and benefits )

Another similar model is the NABC model:

• Define the NEEDS of the target segment
• Say what APPROACH you are taking to eliminate the market pain
• State clearly the BENEFITS /Cost of using your product
• Differentiate your product from the COMPETITION

Here are 10 questions to ask about your value proposition:

1. Does it have not just technical, but commercial and clinical validity?
2. Does it respond to the most important, highest level of jobs, pains and gains of your target customer?
3. Does it focus on a few things, rather than trying to do too much?
4. Does it address functional, social and emotional jobs?
5. Does it align with how customers measure success?
6. Does it address a big market by volume or revenue?
7. Does it offer at least 10x the perceived user defined value when compared to the competition?
8. Does it dominate the market in at least one value factor?
9. Are there high barriers to entry?
10. Does it fit into your VAST business model
11. Is it stated in language that the customer would use and understand?
12. Is it stated using as few words as possible?

Here is what you should know about B2B value factors.

Here is what you should know about B2C value factors.

Digital health entrepreneurs are getting better at refining their value propositions, whether it be for reproductive health, eldertech or chronic disease management.?

The development of your feasibility, commercialization or business plan should result in a clearer and more precise, compelling value proposition as you go through several iterations of analysis. But, creating a clear value proposition is but the beginning of what you will need to raise money. Here are the differences between a value proposition, and executive summary, a pitch deck and a business plan and what they should include.

Here are some value proposition design and delivery rookie mistakes:

1. Not identifying a person as a customer. A job title (for CFOs) or an organization ( for leaders at the University of ___) is not a customer
2. Failing to understand the persona or archeYOu type of your target customer.
3. Too wordy
4. Too much jargon and complex. Tell it so someone with a 6th grade reading level can understand it
5. Emphasizes features not benefits
6. Think: So what, who cares, who pays, how much?
7. You create a solution looking for a problem
8. You don't have a unique selling proposition and don't fully understand the competitive landscape or market map
9. You have not solved the problems of the 7-8 members of the sick care buying group or decision makers, all of whom want you to prioritize solving their particular problem
10. You are confusing the clinical mindset with the entrepreneurial or venture mindset.

Researchers have discovered what works on a first date. (HINT: Women like it when you listen, guys) You’ll know you are getting close to connecting with your idea?when you can tell someone with a 6th grade reading level your value proposition in the brief time it takes to go up a few floors in an elevator, in 30 seconds at the bar, or on the back of a matchbook.

Arlen Meyers, MD, MBA is the President and CEO of the Society of Physician Entrepreneurs on Substack