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The Value Proposition Canvas (VPC) is a tool which will help to create products and services that are needed by the customer. The goal is value creation for the target customer with a specific value proposition.
The Value Proposition Canvas was originally developed by Dr Alexander Osterwalder as a framework to ensure that there is a better fit between products and the market.
You don't know where to start? Don't worry, we will guide you through the process and provide you with a free value proposition template by Really Good Innovation. Creating a value proposition will benefit you and your customers!
The Value Proposition Canvas looks at two of the building blocks from the Business Model Canvas. The tool can be used both to improve existing value propositions, or create new ones. On the left side is the Value Proposition, which describes the proposed value of your business model in detail. On the right side, the Customer Segment Profile describes the specific target customer. Use this as a positioning statement and write a value proposition to offer better value to your target market.
The Value Proposition Canvas is divided into two parts: the customer segment and the value proposition that should fit together. Both of these parts consist of three sub-categories.
What are customers trying to get done in their work or in their life? This doesn't only include functional jobs (e.g. driving from A to B) but also social jobs (e.g. gaining a good reputation) or personal jobs (e.g. achieving peace of mind or feeling more safe). This might require both observation and talking to customers to find out about their jobs. Try the empathy map to better understand customers and to create customer profiles.
What do the customers dislike? What problems do they have? What obstacles are in their way to get certain jobs done?
Getting specific jobs done and thereby satisfying a need is often stopped or made difficult through various factors.
These inhibiting factors are often external and therefore not changeable by the users themselves. As the creator of the solution, we need to think of how to adapt our offerings so we can take these customer pains away.
What are the outcomes customers aspire? What does the customer expect from a value proposition? Customer gains make your customer happy, save effort, time or money. How can we enhance our value proposition so that customers benefit even more? Can we somehow take pains away and add gains at the same time, maybe with a single feature?
List all the products and services your value proposition includes and how relevant they are. You can thereby also already think about how these individual aspects are interlinked and play together to create value for the customer. Think also about individual features that are part of your product.
Like this, you can figure out which features are necessary and which ones do not create value.
How does your value proposition address and solve specific customer pains? This can be on different levels and can either help the customer directly or indirectly. It does not have to be a direct negative effect that is reduced but can also be a risk that is lowered. Do you really understand your customer's pains? Make sure to be empathic and invest enough time to develop a deep understand for your customers.
How does your compelling value proposition enhance or create specific customer gains. How do your products and services help the customer to gain more happiness, time, money or something else? Here it is crucial to understand well what the gains are that your customers are looking for. If you think that your customers are gaining something from your product but this is not connected to their main goal, the created value is not very strong.
In the end, your value proposition and your customer segment need to fit together! Otherwise either side needs to be realigned. There is not one solution to do that but in order to create fit, you must really understand both sides of the canvas and how they can be aligned.
Fill out the Value Proposition Canvas to the best of your abilities. Identify the main Jobs-to-be-done of your customers and their pains and gains based on your data. Then go out and talk to the target customer to refine the canvas.
Do the same with your value proposition. Sit together with your team to discuss what pains your offering relieves and what gain it creates. After that, go and observe customers or interview them in order to find out whether there are some gains and pains that you did not think of.
Use the VPC to visualize all your learnings, both from your team discussions and from the interaction with your users.
Last but not least, either adjust your unique value proposition depending on the insights you gained from observing and talking to your target audience or focus on a different target customer that benefits more from your offering. Bringing the two parts together will ensure Product-Market fit.
Check out this video where the Value Proposition of Netflix is explained and the canvas is filled out, showing how Netflix creates value for their specific target customer. This is a great value proposition that is tailored to the user.
Download the Free Template by Really Good Innovation in order to print and use in a workshop with your team members or as inspiration to design your own template.
Osterwalder, A., Pigneur, Y., Bernarda, G., Smith, A. (2014) Value Proposition Design: How to Create Products and Services Customers Want, John Wiley & Sons.
Really Good Template that helps to create better products that the target group actually needs. Strategyzer has done a great job with this canvas and it can be used not just by startups but also by big corporations.
Sometimes it is not 100 clear what the specific gains and pains for a customer are. It takes hard work and time to find out exactly what the customers need.
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