One man's trash is another man's treasure, the cliche says. But it's true — no good or service is of equal value to every person, not even money itself, as interest rates reveal, it all depends on what year it is. So if you're selling something, it would behoove you to set your customer's expectations before they start weighing costs and benefits themselves.
A Google Ngram would suggest the term "value proposition" first appeared in 1944; however, usage began to spike in the late 1990s. It's said that Michael Lanning, a McKinsey & Company consultant first coined the term in 1984. He later wrote a book, "Delivering Profitable Value: A Revolutionary Framework To Accelerate Growth, Generate Wealth, And Rediscover The Heart Of Business," in 1998, about how companies can grow by paying attention to customers.
In a 1999 book, Neil Rackham writes that a value proposition must include: capability, impact, proof and cost.
Kissmetrics offers tips on how to position your company with the wisdom of the value proposition: "However, if you’re the best in at least one way, you’re the best option for the people who value that aspect."
As noted, it's not enough to be an average store with a decent product — be the best at one thing, often in a way that's memorable.
It's also important to note what a value proposition is not: a product feature. So what if your brand of chocolate melts slower than all the others — if your customer does not live in warm weather, it may not matter to them — therefore, it's not valuable, after all. The intersection of the product and the customer needs is the sweet spot of the value proposition.
Of course, the term only got more relevant in the dawn of social media — and can be used to describe both your product and your advertising itself. Unlike TV ads or billboards, it is no longer enough to buy time in front of a consumer's face. Marketers realized they needed to earn attention. While paid posts on social media can certainly earn more eyeballs than the post would earn organically, a wise social media strategy will have a brand creating good social content that has a value proposition. Yes, your product has a value proposition, but now your marketing itself has a value proposition too.
Your customers ask when they see your brand name, "What will I get in return for reading this?" If there's not a clear value proposition, they'll pass.
What else has a value proposition? Well, Santa Claus, and Oprah, according to one source.
Like any good marketing term, a value proposition isn't a new thing — it's just a new word for a concept that has existed all along. However, now that the term has its own definition, it's much easier to discuss. When used correctly, you'll look smart, and better yet, when implemented well — you'll sell more.