Finding value propositions with the Value Proposition Canvas
In identifying the right business model for a startup, one of the most complex and difficult parts to obtain is also the most crucial one: the value proposition, i.e. the promise of value that a company makes to the market, expressed in terms of perceived advantages, tangible or not, that consumers can obtain by purchasing the proposed solution. But how does it work? How do you understand, specifically, what that product or service is and what it looks like in the eyes of your customer segment? Using the Value Proposition Canvas.
What is the value proposition
A value proposition is a short statement that communicates why your customers should choose your products or services instead of the competition. It’s more than just a description of a product or service – it’s the specific solution your company provides and the promise of value a customer can expect from you.
Value propositions are one of the most important conversion factors. A great value proposition could be the difference between losing a sale and closing it.
For this reason, it’s important to create one that accurately represents your products and services and makes it clear why you are the best choice.
Value Proposition Canvas: what is it?
In 2012, Alexander Osterwalder and his team released their Value Proposition Designer. Their canvas version of finding the best value proposition is copyrighted and can only be used with credit to www.businessmodelgeneration.com. Value Proposition Design includes different thinking elements of the Lean Startup movement such as “customer jobs” and “customer difficulty”.
The Value Proposition Canvas is the visual thinking tool that helps you find the right value propositions in relation to your customers, in order to create interesting products and services that customers want to buy, correctly identifying their real needs and relating them with the value your company can offer them.
With its six blocks, the Value Proposition Canvas focuses on the overview and helps you to better solve the problems, difficulties and needs of your customers.
At first glance, this tool is a simple sheet of paper with a large square on the left and a circle on the right. It is a geometric collage formed by the customer segment canvas and the value proposition model. Together they aim to provide an understanding of the features and functionality a product should possess to meet the requirements of a particular category of users.
Here’s a quick overview of the canvas:
After talking about the meaning of the Value Proposition Canvas, let’s take a detailed look at the constituent parts.
How do you fill out the Value Proposition Canvas?
The tool can be modeled on two circles or squares or other geometric patterns that you might like. But its essence lies in the content to be specified inside. The original Value Proposition Canvas structure is just the most cost-effective and usable way to break down customer experience and product value. So, here it is.
The circle: Customer profile
Traditionally, the introduction to the canvas starts with the right part representing the customer profile. The circle is divided into three parts where you have to define the tasks and expectations that customers will fulfill, as well as the positive and negative experiences associated with them. You are not concerned with the product now, only with the challenges of the end user.
Customer jobs are what your customers try to do in their work and in their daily life; it can be the activities they try to accomplish, the problems they try to solve or the needs they try to satisfy. It is essential to put yourself in the customers’ shoes when analyzing this part of the canvas. In this way, you refine the customer segment from an emotional (preferences, popularity), social (reputation, sense of duty) and functional (feasibility) points of view.
Pains are anything that bothers your customers before, during and after trying to get a job, or simply prevents them from getting it done. This term also includes risks, i.e. potential negative outcomes, deriving from performing a job poorly or not performing it at all. Based on the above, it is possible to identify which negative/frustrating results/experiences could be associated with the jobs described. Since the perception of the negative experience differs according to versatile categories of users, it is best to cover as many difficulties as possible.
Gains are the results and benefits your customers want; they may be necessary (without which a solution would not work), expected (fundamental even if we could do without them), desired (they go beyond what we expect, but we want to have them) or unexpected (they go beyond expectations) . It should be noted that difficulties and advantages are not opposite notions. That is to say, the benefits should include things that make customers satisfied or even happy rather than simply being an opposite of difficulties. They can be quite existential and devoid of any extraordinary nature.
In the customer profile, therefore, you try to read the thoughts of your customers. It is not about telepathy, but about understanding why they want to complete certain tasks, what causes the negative experience, and how to meet their expectations.
The square: the value map
Now, let’s move to the left to fill in the square where the value proposition map is introduced. Similar to the circle, the product section is divided into three parts. They correspond to the relevant section of the customer profile. Here we will deal with the product. The focus is on the features, functionality and benefits it can offer to not only attract customers, but also to meet their needs on the right side.
Products and services
Here you can mention a list of what your startup offers in terms of products or services. However, this field does not need to be filled in with a list of features that your product / service has. Focus on what you can offer to complete client jobs.
This section of the value proposition template is responsible for your product’s ability to solve defined problems. It is not necessary to describe in detail how the difficulties are alleviated. A simple affirmation of the fact that it eliminates the current frustration with the specific task that the customer has to perform will suffice.
This field is like a mirror image of the one above. The benefit generators should explain what extra value your product/service will provide to customers. The idea is to offer something new and unique to make the customer experience not only better but also exciting.
Fit or misfit?
The Business Value Proposition Canvas aims to achieve a fit between what the customer wants and what your product/service can offer to overcome difficulties and generate benefits. Basically, the customer profile can have tons of jobs, difficulties, and benefits, but the value map outlines which of them you focus on. The more items from the right side have matches on the left, the greater the likelihood that your product will then have a market fit.
Value Proposition Canvas: why it matters
The Value Proposition Canvas is a visual representation of how your startup’s product/service intersects with your customers’ wishes and expectations. When done right, it illustrates the match between what you offer and why people buy it. Your value proposition represents the intersection of your business strategy and your brand strategy. Here are some reasons why you should use this technique when drafting your product strategy.
It makes you more customer centric
The Value Proposition Canvas serves to allow you to systematically understand what customers want and to help you create products/services that match their needs. As such, it can be used as an instrumental part of your strategy and should be the anchor around which you will build your business model.
It keeps you on track
The Value Proposition Canvas is built on a solid foundation of thorough customer research and gives you a clear idea of what your customers want. Therefore, if you do it right, applying this method ensures that you are doing something that answers your client’s real problem.
It keeps you focused
As the visual aspect of the Value Proposition Canvas is its driving force, mapping everything clearly forces you to focus specifically on how your product/service directly alleviates problems and provides benefits for your customer, emphasizing only the most important problems and gains.
It provides you with a simple and practical tool
Finally, its simple, straightforward and intuitive design makes the Value Proposition Canvas a unique, quick, functional and analytical way to reinforce your product strategy and overall business.
Value Proposition Canvas: practical examples
One of the most fitting examples of value propositions is that of Tesla supplied by Strategyzer.
Tesla’s Value Proposition Canvas is a concrete example of how to create a fit between what the customer wants and what your product can offer. Tesla, in fact, has very well understood the potential target audience of an electric car. You can see that the most important activity for a Tesla customer to do on a daily basis is to go to work. But it’s not just about that. Being different from others and conveying a successful image is an important social aspect of the work to be done for this customer segment. In addition to that, the person wants to feel comfortable while traveling long distances. The difficulty when it comes to electric cars is that there are no charging stations and therefore you have to look for a parking space that has them available. In addition, another significant difficulty is that you often have to load your car and, while driving, you may be afraid of not reaching your destination. Design, being recognized for good taste in choosing a brand and receiving approval from a friend are some of the advantages in this example. Other benefits are safe travel and high-end battery technology.
If we look at the left side of products and services, we see that a Tesla has a very good understanding of its customer segment. Beautiful design, including a 17-inch screen, makes it unique as no car has ever had such a large screen! Having only a few options radiates exclusivity. On top of that, Tesla has an 8-year battery warranty. In short, we can really say that there is a perfect square between the left and right side of this Value Proposition Canvas.
Value Proposition Canvas: template
Below you will find Strategyzer’s Value Proposition Canvas template that you can use to find the right value propositions for your startup.