What is Value Proposition Canvas
The Value Proposition Canvas (developed by Dr. Alexander Osterwalder) is a great product development tool for startups and entrepreneurs. It provides a detailed look into the relationship between two broader parts of the Osterwalder's Business Model Canvas: customer segments and value propositions. It makes sure that a product focuses on the customer needs and desires!
The Value Proposition Canvas has two sections: customer profile and value proposition
- Customer jobs: the functional, social and emotional tasks customers are after in pursuit of their related goal(s)
- Gains: the benefits that the customer expects/needs when a purchase is made increasing the possibility of adopting a value proposition.
- Pains: the negative experiences, drawbacks, demerits, risks or emotions that are associated with the process of getting the job done.
- Gain creators: the ways that the product creates gains and added value for the customer
- Pain relievers: the ways that the product addresses customer pains
- Products and services: the products/services that relate to the creation of value for the customer
The Value Proposition Canvas is all about the customer so creating one starts with them. If you target more than one market segments (personas) you need to have a separate Value Proposition Canvas for each one.
How to Fill Out the Value Proposition Canvas
This section looks at the customer profile, focusing on three things. What the target customers want to get done, the tasks they want to complete, and the problems or needs they want to satisfy. You can fill out this section by sketching a customer profile.
- Functional jobs the customer wants done (completing or performing a task, solving a particular problem)
- Social jobs the customer wants done (trying to look good, achieving a social status or gain power)
- Emotional jobs the customer wants done (feel good, esthetics, or security)
- Basic needs the customers wants to satisfy (communication or sex)
Customer pains are the undesired situations, costs, negative emotions, and risks that the customer may encounter. This could be at any stage of getting the job getting done, including before, during, and after.
- What makes the customer feel bad (annoyance or frustrations)
- What the customer finds to be costly (money, time, or substantial amount of efforts)
- The main challenges and difficulties experienced by the customer (getting things done, understanding how things work or resistance)
- Barriers the customer may experience in adopting solutions (resistance to change, learning curve, upfront investment costs)
- The risks that the customer fears (technical risks, social, financial, possibility of things going wrong)
When sketching this section, rank each of the customer's pain based on the intensity it presents to the customer. Also indicate how often the pain occurs and the degree of intensity.
In this section, describe the expected benefits, customer desires, or surprises. This may include social gains, functional utility, cost savings, and positive emotions.
- The savings that would make the customer happy (money, time, effort)
- How the current solutions can delight the customer (performance, specific feature, quality)
- Expected customer outcomes and what is likely to go beyond those expectations (quality level, less of something, more of something)
- Positive social consequences desired by the customer (gain more power, look good, increase their status)
- How the customer measures their success and failure (cost reduction, increased performance)
Once you have identified the gains, rank them according to their relevance to the customers. Consider which ones are insignificant and which ones are substantial, then indicate how often each occurs.
This section focuses on the value proposition. Start by listing the products and services that your value proposition is built around.
- Your products and services that help the customer satisfy basic needs or get either a social, function, or emotional job done.
- The products and services can be virtual/digital (online recommendations or downloads), tangible (face-to-face customer service or manufactured foods), intangible (quality assurance or copyrights), or financial (financial services or investment funds).
Rank the products and services based on the importance: whether the customer considers them trivial or crucial.
The focus of this section are the functions and characteristics of your products and services that alleviate the customers' pains. Think of how they reduce and eliminate negative emotions, customer risks, and undesired situations and costs before, during, and after getting the job done.
- Savings produced (money, time, efforts)
- Eliminating customer risk and fears (social, financial, technical)
- Limiting customer mistakes (usage mistakes)
- Eliminating negative social consequences for the customer (loss of face, trust, power, status)
- Eliminating barriers preventing the customer from adopting solutions (less resistance to change, flatter learning curve, lower upfront investment costs).
Once you have identified your pain reliever, rank them based on the intensity for the customer. Determine whether they are intense or light, and indicate how often they occur.
The last section describes how your products and services create gains for the customer. Think of what functions and attributes create the benefits that your customer desires, expects or would be pleasantly surprised by. These may include functional utility, positive emotions, social gains, and cost savings.
- Savings created to make the customer happy (money, time, efforts)
- Outcomes produced that meet or go beyond customer expectations (better quality level, less of something, more of something)
- Positive social consequences created on customers desires (increase in status or power)
- Streamlining the process of adopting a solution (lower costs, lower risk, less investment, better quality)
- Achieves something customers are looking for (specific features, guarantees, good design)
Once you have identified the gains of your products and services, rank them based on the relevance they have on the customer. Determine which ones are substantial or significant, then indicate how often each occurs.
Value Proposition Canvas Example
This is how the Value Proposition Canvas would look for Emerging Humanity. The Customer is an entrepreneur or startup founder.
- Customer jobs: Define strategy, Raise funds, Develop product
- Gains: Be on top of things, Improve over time, Maximize ROI
- Pains: Startup chaos, Info overload, Unknown unknowns
- Gain creators: Teach skills/tools, Minimize overhead, Provide practical resources
- Pain relievers: Systematic approach, Concise info, Comprehensive methodology
- Products and services: Education, Coaching, Consulting
Value Proposition Canvas Guidelines
- Approach the Value Proposition Canvas as two distinct building blocks. The right (customer) side is about observing the customer and it includes items beyond your control. The left (value proposition) side is about your product and what you will deliver to the customer.
- Create a separate Value Proposition Canvas for each customer segment. If you have multiple segments, do not squeeze them onto one canvas.
- Jobs to be done are not just functional tasks. Include the social and emotional "jobs" as well.
- Gains are not necessarily the opposite of Pains. Customers tend to be more aware of pains they feel than gains they may receive. Gains is an area with a lot of potential for delighting the customer beyond their expectations.
- When filling out the right (customer) section, do not rush ahead thinking only about items that your product will address. Focus on the customer and paint an honest and detailed picture.
- Similarly, Gain Creators and Pain Relievers focus on your product not on the customer benefit. They are functions, features, attributes, characteristics, etc.
- Do not feel obliged to address every single job/pain/gain. The goal is to provide value not to solve every problem.
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