What every company wants is to have products and services that are popular in the market and of great value to customers. But you are far from done with just a good product or service. Customers don’t come by themselves. You have to convince and entice them to buy your offer. But your company isn’t the only one who wants this, there are privateers on the coast to win the hearts of customers. The Value Proposition Canvas (also known as the Value Proposition Model) can help you develop winning propositions that will help you win the competition.
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Explanation Value Proposition Canvas
The power of the Value Proposition Canvas is that it provides insight into how you create value for customers. With the Value Proposition Canvas, you zoom in more deeply on two building blocks of the Business Model Canvas, namely customer segments and value propositions. Like the Business Model Canvas, the Value Proposition Canvas was invented by Alexander Osterwalder and his colleagues at Strategyzer.
- Provides insight into how your offer creates value for specific customer segments
- Provides insight into how you can better match products and services to the needs and wishes of customers
- Helps to design winning propositions and beat the competition.
I will explain the value proposition canvas using an example from Hellofresh.
1. Determine customer segment
Determine for which customer segment you will develop the Value Proposition Canvas. Start on the right side of the canvas: The customer profile. This section takes a closer look at the customer’s needs.
I. Customer tasks
Customer tasks are the things that your customer does that you want to respond to with offer. What is the customer doing where he/she needs your product or service? The following customer jobs can be distinguished.
Functional customer jobs: specific tasks that a customer tries to perform (e.g. making a quotation, getting from A to B or mowing the lawn).
Social customer jobs: these are tasks that describe how customers like to be seen by others (eg look trendy or professional).
Personal/emotional customer jobs: the emotional state a customer pursues (e.g., feeling valued, safe, understood, or happy).
II. Pain points
Pain points are annoyances that occur when performing the customer task. Think about what annoys your customers? What risks are associated with this? And what obstacles do they impose? The following pain points can be distinguished:
Undesirable outcomes, problems, and features: The things people don’t like about the customer task (eg, things that work poorly, want to do something they can’t do, or things that are inconvenient to use).
Obstacles: Matters that hinder customers from performing the customer task (e.g. it is very complexly explained and therefore difficult to understand).
Risks: Things that can go wrong and then have negative consequences for the customer (e.g. the chance of making a wrong choice and being stuck with the offer for a very long time).
The benefits are the things a customer is looking for and that make the customer task more pleasant and easier. Benefits are NOT simply the opposite of pain points. Instead, it’s about the (hidden) ambitions that customers have. When would your customer be jumping in his chair and dancing for joy? The following gains can be distinguished:
Required gains: Benefits that are necessary (e.g. having a degree).
Expected gains: Benefits that are obvious to the customer (eg good service).
Desired Benefits: Benefits that go beyond customer expectations, but which customers would like to experience if possible (e.g. easy returns).
Unexpected Benefits: Benefits that exceed customer expectations. If this succeeds, the customer will be really happy (eg be seen as a though leader in the field).
2. Prioritize the different customer tasks, pain points and benefits
This step is very important if you want to apply the Value Proposition Canvas correctly. Rank the post-its and use numbers to indicate the most important customer tasks, pain points and benefits.
3. Value map
Now it’s time to look at the benefits customers can expect from your offering. In what ways does your offering create value for them? Describing these benefits is done using the value map. The Value map is the left side of the Value Proposition Canvas and this section describes the value all the products and services deliver. The value map consists of 3 components: Products and services, pain relievers and benefit providers.
I. Products & Services
What is your offer? Do you only offer products or also services? Your offer forms the basis for the value proposition. There are 3 types of products and services?
Not physical: Services and copyrights (eg haircut).
Digital: Non-physical products that can be transferred digitally (e.g. e-book or Netflix movie and series offering).
Financial products: Eg. insurance and investment funds.
II. Pain relievers
How will your offer ease your customer’s ‘pain’? Pain relievers are about how products and services alleviate customer pain points. Good propositions focus on the pain points that are most important to the customers, or the serious pain points. The following is important: Link the pain relievers to the pain points described in the customer profile (right side canvas).
Describe briefly and explicitly:
- How your product or service helps the customer with the unwanted results and problems of the customer task (eg easy to use due to the limited size).
- How your product saves money (e.g. a lower energy bill by using solar energy).
- How your product or service removes obstacles for the customer (e.g. at any time, without having to cancel).
- How your product or service reduces risks (e.g. 100 days no good, money back guarantee).
III. Gain creators
How will your offering improve the customer’s life? The gain creators are the benefits that your products & services create for the customer. Again, good propositions focus on the benefits that really make the difference for the customer. Make sure that the benefit providers are linked to the described benefits.
Describe briefly and explicitly:
- How you will realize the benefits, wishes and expectations or the things that would surprise customers.
- How your product will really make the customer happy.
- How will your offering improve the customer’s life?
Tips to apply the Value Proposition Canvas
Although the Value Proposition Canvas may seem like a simple tool, in practice this great tool is often misapplied. This is unfortunate and totally unnecessary. Below are a few tips:
- Make sure the goal is clear
- Write things down briefly and to the point
- Be as specific as possible
- Create a separate value proposition canvas for each persona
- Follow the steps carefully, start with the customer profile (right) and prioritize
- Separates assumptions from facts
- Process new insights, test and sharpen
- Make sure that at least 5 functional, social and emotional jobs-to-be-done have been identified and prioritized.
- Ensure that you have identified and prioritized at least 5 concrete pain points and 5 concrete customer benefits.
- Make sure the elaboration contains multiple characteristics of a successful value proposition.
- Do not list orphans on the canvas. Make sure the value map and customer profile are linked on all fronts
Ready to hack your business model?
The value proposition is the heart of a successful business model. Get started with the Value Proposition Canvas and design winning propositions