value-proposition-canvas

What Is a Value Proposition? Value Proposition Canvas Explained

A value proposition is about how you create value for customers. Value Proposition Canvas is a methodology which integrated with the business model canvas can help you design a value proposition for your business model.

In fact, the value proposition canvas starts from understanding the customer profile and creating a value map to achieve a fit and draft a compelling value proposition to plug into your business model canvas. 

In this article, we’ll see step by step how to draft your value proposition with the value proposition canvas.

It all starts with a profitable and scalable business model

A value proposition design is critical for the success of a company. Yet it is important to insert it in but to make it work you need to insert it in the context of a scalable and profitable business model.

Thus, before jumping into the value proposition design, you can deeply understand what a business model is and how it works.

Once you understand what a business model is you can start designing it. There are several methodologies to do it, I’d suggest you start with the business model canvas.

As you will notice, while the business model canvas is a great tool at “hindsight” to analyze and understand other organizations’ business models, you might want to use the lean startup canvas to draft your startup business model.

Once you get through those resources you’re ready to dive into the value proposition canvas.

In fact, the value proposition canvas is like a plug-in to the business model canvas.

In fact, the value proposition canvas focuses on two segments of the business model canvas: “value propositions” and “customer segments.”

business-model-canvas-value-proposition-canvas

What is a value proposition? The value proposition is about how you create value for customers.

In short, it describes the benefits customers can expect from your products and service, and how it can help them solve pain points and generate short and long-term gains.

What is a value proposition?

overall-business-models

The value proposition is really about understanding your customer’s problems and needs.

In short, this is the primary reason that makes you unique compared to others.

You don’t need a thousand words to communicate your value proposition. You need a line:

duckduckgo-value-proposition

In this blog, we analyzed several aspects of DuckDuckGo business model and how DuckDuckGo challenged Google with a compelling value proposition “the search engine that doesn’t track you.

In fact, today one of the most critical drivers for DuckDuckGo growth is privacy.

Where Google has built its business model on the data of its users, DuckDuckGo throws that data away to make the search experience as private as possible.

Thus, with a single line, DuckDuckGo is communicating what makes it unique compared to other search engines, what issue can it solve (privacy) and what gains a user has (avoid tracking from Google).

As pointed out on strategyzer.uservoice.com there are several elements of the product or service that help craft a compelling value proposition:

  • Newness
  • Performance
  • Customization
  • “Getting the job done”
  • Design
  • Brand/status
  • Price
  • Cost reduction
  • Risk reduction
  • Accessibility
  • Convenience/usability

Those elements are critical to putting together a value proposition which comprises two main aspects: customer profile and a value map.

The customer profile

A customer profile needs to be understood in the function of the market in which the customer is served.

In other words, it doesn’t make sense to make grandiose plans or assumptions about your customers.

Those need to be tested and validated by looking at three aspects.

Understand what’s important and what’s insignificant about customer jobs

Understanding customer jobs might comprise the set of tasks your customers are trying to perform what problems they are encountering and what needs they’re trying to satisfy.

The aim is to prioritize and find what’s important and what’s insignificant. There are several types of jobs to take into account as explained by strategyzer.uservoice.com:

  • Functional jobs
  • Social jobs
  • Emotional jobs
  • Supporting jobs

Understand what extreme and what’s moderate about customer pains

One of the most valuable aspects of a product or service is its ability to relieve customers from a pain point, a problem they have, the obstacle that prevents them from getting the job done.

Thus, this process is really about understanding customers frustrations, problems, and pain points.

The main aim is to understand the intensity of those problems as a sort of thermometer that tells you what issues are extreme and what are moderate.

For instance, with the team at WordLift, we’ve been having dozens of interactions with potential customers (SEO experts and publishers), and they were all reporting similar issues, related to technical SEO stuff, such as structured data creation.

Understand what’s essential and what’s nice to have by generating customer gains

Those comprise the gains that customers required, expects, and desire within the product or service to make them come back.

Also, there is another critical aspect which is about unexpected gains that can be a powerful lever to hook your customers.

Once profiles the customer it is essential to create a value map.

The value map

Once understood the customer profile, the value map is the tool to fill in the blanks and make the customer profile reflected in the product or service.

In short, the value map allows you to be clear and structured on what specific steps to take to make your customers happy, avoid the pain and what particular features will help.

Thus you want to focus on three aspects:

  • products and services
  • pain relievers
  • gain creators

It’s all about product-market fit!

The goal of the Value Proposition Canvas is about designing the value proposition that can make you reach the so-called product-market fit. 

Have you reached it yet? If not, it’s time to design your value proposition with the value proposition canvas:

Value-proposition-canvas

Sourcebusinessmodelsinc.com

Key takeaway

Small businesses and startups need tools to get clear about their business models and how to create value for their customers.

The value proposition canvas is a great tool any entrepreneur can leverage on to understand the needs deeply, wants and pains of customers to craft and design a compelling value proposition to plug into a scalable and profitable business model.

That is how you build long-term success for your business!

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Published by

Gennaro Cuofano

Creator of FourWeekMBA.com | Head of Business Development at WordLift.io | International MBA

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