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When faced with an important decision, there are a variety of informal methods you can use to visualize various outcomes and choose an action — perhaps you talk it out with a colleague, make a pros and cons list, or investigate what other leaders have done in similar situations.

Particularly when it comes to marketing, this can feel risky — what if my colleague is so attached to a new product, she doesn’t want to mention any of its shortcomings? What if my marketing team doesn’t mind office growth, but they haven’t considered how it will affect our strategy long-term?

Sometimes, you can’t make a decision properly without introducing a formal decision-making method. In cases like those, you might need a decision tree.

The visual element of a decision tree helps you include more potential actions and outcomes than you might’ve if you just talked about it, mitigating risks of unforeseen consequences. Plus, the diagram allows you to include smaller details and create a step-by-step plan, so once you choose your path, it’s already laid out for you to follow.

Here, we’ll show you how to create a decision tree and analyze risk versus reward. We’ll also look at a few examples so you can see how other marketers have used decision trees to become better decision makers.

Decision Tree Analysis

Let’s say you’re deciding whether to advertise your new campaign on Facebook, using paid ads, or on Instagram, using influencer sponsorships.

For the sake of simplicity, we’ll assume both options appeal to your ideal demographic and make sense for your brand.

Here’s a preliminary decision tree you’d draw for your advertising campaign:

As you can see, you want to put your ultimate objective at the top — in this case, Advertising Campaign is the decision you need to make.

Next, you’ll need to draw arrows (your branches) to each potential action you could take (your leaves).

For our example, you only have two initial actions to take: Facebook Paid Ads, or Instagram Sponsorships. However, your tree might include multiple alternative options depending on the objective.

Now, you’ll want to draw branches and leaves to compare costs. If this were the final step, the decision would be obvious: Instagram costs $10 less, so you’d likely choose that.

However, that isn’t the final step. You need to figure out the odds for success versus failure. Depending on the complexity of your objective, you might examine existing data in the industry or from prior projects at your company, your team’s capabilities, budget, time-requirements, and predicted outcomes. You might also consider external circumstances that could affect success.

In the Advertising Campaign example, there’s a 50% chance of success or failure for both Facebook and Instagram. If you succeed with Facebook, your ROI is around $1,000. If you fail, you risk losing $200.

Instagram, on the other hand, has an ROI of $900. If you fail, you risk losing $50.

To evaluate risk versus reward, you need to find out Expected Value for both avenues. Here’s how you’d figure out your Expected Value: take your predicted success (50%) and multiply it by the potential amount of money earned ($1000 for Facebook). That’s 500.

Then, take your predicted chance of failure (50%) and multiply it by the amount of money lost (-$200 for Facebook). That’s -100.

Add those two numbers together. Using this formula, you’ll see Facebook’s Expected Value is 400, while Instagram’s Expected Value is 425.

With this predictive information, you should be able to make a better, more confident decision — in this case, it looks like Instagram is a better option. Even though Facebook has a higher ROI, Instagram has a higher Expected Value, and you risk losing less money.

While the Advertising Campaign example had qualitative numbers to use as indicators of risk versus reward, your decision tree might be more subjective. For instance, perhaps you’re deciding whether your small startup should merge with a bigger company. In this case, there could be math involved, but your decision tree might also include more quantitative questions, like: Does this company represent our brand values? Yes/No. Do our customers benefit from the merge? Yes/No.

To clarify this point, let’s take a look at some diverse decision tree examples.

Decision Tree Examples

The following example is from SmartDraw, a free flowchart maker:

Example One: Project Development

Here’s another example from Become a Certified Project Manager blog:

Example 2: Office Growth

Here’s an example from Statistics How To:

Example 3: Develop a New Product

To see more examples or use software to build your own decision tree, check out some of these resources:

• IBM SPSS Decision Trees
• LucidChart Decision Tree Software
• Zingtree Interactive Decision Tree Template

Remember, one of the best perks of a decision tree is its flexibility. By visualizing different paths you might take, you might find a course of action you hadn’t considered before, or decide to merge paths to optimize your results.

Your value proposition is the core of your competitive advantage. It clearly articulates why someone would want to buy from your company instead of a competitor.

It’s also one of the most important conversion factors (learn all about conversion best practices with this free guide). A great value proposition could be the difference between losing a sale — and closing it.

So how do you actually write a value proposition that’s strong enough to lift conversion rates and sales? Below is a simple definition of a value proposition, what a value prop isn’t, and how customer value propositions differ from employee value propositions.

Then, at the bottom of this article, check out an infographic from QuickSprout, which illustrates what a great value proposition looks like and the top tactics you should keep in mind when creating it.

What Is a Value Proposition?

A value proposition isn’t just the product or service you agree to deliver to the customer — it’s the ingredient of your business that solves a problem competitors can’t.

Your value proposition is your unique identifier. Without it, people don’t have a reason to work with you over somebody else.

While your value prop should help differentiate you from the rest of the industry, keep in mind it’s not a slogan, tagline, or even a way to position yourself in the market. Those types of copy are important accessories to your brand, but your potential customers and employees don’t choose one business over the other based on a high-level mission statement.

Your value proposition goes deep into the problems you want to solve for people, and what makes you the right one for the job.

Customer Value Proposition vs. Employee Value Proposition

Although customers are your bottom line, you also need to attract staff that can help you deliver on your value proposition. This is where employee value propositions come into play.

Employee value propositions are written for the candidates you want to work for you. They touch on the internal company values that specifically benefit the people who work there. Here are some key differences between the customer value prop (CVP) and the employee value prop (EVP).

• CVPs describe a solution to a customer’s problem. EVPs describe a reward for an employee’s talents.
• CVPs explain why someone should buy from you. EVPs explain why someone should work with you.
• CVPs are about you serving the customer. EVPs are about you and the employee serving each other.

Now, compliments of QuickSprout, take a look at how great value propositions help a company grow.

Want more tips on company branding? Read 10 Cliché Marketing Taglines We Should All Stop Using.