Before you can help customers solve their problems, you have to prove that you deserve their attention. Here's how to craft a compelling unique value proposition.
In two priorarticles we discussed a potential new Avondale venture around private equity (PE) investing. The problem we want to solve is that:
Investors have a lot of cash sitting on the sidelines earning ~zero returns.
Investors are dissatisfied with the current PE model, which elevates fund managers' enrichment above investors' desire for prudent investment.
Some investors want to better control and manage risk and take a more active role in their PE investment choices.
Our target customers are:
Investors with large chunks of investable cash who have not seen satisfactory results from the current PE paradigm.
Businesses with attractive growth opportunities that are constrained by capital and/or human resource limitations and recognize the need for transformation.
Identifying the problem and our target customers are the first two steps in Ash Maurya's 20-minute business model. The next step is to define our Unique Value Proposition (UVP). In his book Running Lean: Iterate from Plan A to a Plan That Works, Maurya defines the UVP as why you are different and worth getting attention. Simple enough right? The clock is ticking, so here we go!
Before we can solve a customer's problem and create value, we must first get their attention; the UVP articulates our attention-grabber. Ash suggests we should:
Target the early adopters (we're not ready to "go mainstream" just yet).
Be different, but make sure our difference matters to our early adopters.
Focus on the benefits.
Answer what, who, why.
We can see those thoughts reflected in the early Amazon Kindle marketing:
Amazon: Low price, wide selection with added convenience anytime, anywhere.
Another approach is to use this formula:
[End Result Customer Wants] + [Specific Time Period] + [Address The Objections]
Ash quotes the Domino's Pizza slogan as an example of this:
Domino's Pizza: Hot fresh pizza delivered to your door in 30 minutes or it's free.
Other UVPs include:
BMW: Ultimate Driving Machine.
Google: Find what you want quicker.
Lean Business Model: Unique Value Proposition
In Avondale's potential venture, we want to help dissatisfied investors link up with businesses that want to grow but require capital and management transformation. What is our UVP?
We had previously brainstormed a short list of ways we can add value in this space:
We give the investor more visibility, control, flexibility and liquidity where they invest.
We develop platforms where we are confident we can create value, and build the talent network that increases our odds of success.
We actively manage our investments with a track record of driving profitable growth.
We bring our years of experience in strategic advisory to identify opportunities in the marketplace, specifically in areas where we have deep experience. Then we build businesses that capture our market insight.
After some quick discussion, we centered on the following:
High-Level Concept: We are private equity without the drawbacks of the traditional fund model.
UVP: We create compelling investment platforms, help you to invest in them flexibly, and actively manage them on your behalf. We bring decades of experience building and growing businesses and a top-notch network to our platforms.
In the next article in this series we will discuss our proposed solution to realize our new UVP.
KARL STARK AND BILL STEWART are managing directors and co-founders of Avondale, a strategic advisory firm focused on growing companies. Avondale, based in Chicago, is a high-growth company itself and is a two-time Inc. 500 honoree. @karlstark