Getting The Right Value Proposition

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TEAM STARTUPED 12 Jan 2022 . 4 min read
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    Loving the underlying principle of testing, learning, and pivoting by experimenting with the most basic product prototypes imaginable - so-called Minimal Viable Products (MVP) – during the search for product-market fit. It helps companies avoid building stuff that customers don’t want. Yet, there is no underlying conceptual tool that accompanies this process. There is no practical tool that helps business people map, think through, discuss, test, and pivot their company’s value proposition in relation to their customers’ needs. So I came up with the Value Proposition Canvas for a better understanding of the process. The Value Proposition Canvas zooms in on two of those building blocks, the Value Proposition, and the Customer Segment, so you can describe them in more detail and analyze the “fit” between them. Companies need to get both of them right, the “fit” and the business model, if they don’t want to go out of business. The tools work best in combination. One does not replace the other.

    • Purpose
    As mentioned above, the Value Proposition Canvas is composed of two blocks from the Business Model Canvas, the Value Proposition, and the corresponding Customer Segment you are targeting. The purpose is to help you sketch out both in more detail with a simple but powerful structure. Through this visualization you will have better strategic conversations and it will prepare you for testing both building blocks.
    • Achieving Fit
    The goal of the Value Proposition Canvas is to assist you in designing great Value Propositions that match your Customer' needs and jobs-to-be-done and helps them solve their problems. This is also called a product-market fit or problem-solution fit. The Value Proposition Canvas helps you work towards this fit in a more systematic way.
    • Customer Jobs
    First, let us look at customers more closely by sketching out a customer profile. Look at three things. Start by describing what the customers you are targeting are trying to get done. It could be the tasks they are trying to perform and complete, the problems they are trying to solve, or the needs they are trying to satisfy. Ask yourself.
        1. What basic needs are your customers trying to satisfy?
        2. What functional, social, or emotional jobs are your customers trying to get done?
    • Customer Pains
    Now describe negative emotions, undesired costs and situations, and risks that your customer experiences or could experience before, during, and after getting the job done. Ask yourself.
        1. What are the main difficulties and challenges your customer encounters in terms of cost, underperformance, and negative social consequences?
        2. What risks does your customer fear?
        3. What common mistakes does your customer make?
        4. What barriers are keeping your customer from adopting solutions?
    Rank each pain according to the intensity it represents for your customer. Is it very intense or is it very light? For each pain indicate how often it occurs.
    • Customer Gains
    Now describe the benefits your customer expects, desires, or would be surprised by. This includes functional utility, social gains, positive emotions, and cost savings. Ask yourself.
        1. What outcomes does your customer expect and what would go beyond his/her expectations?
        2. How do current solutions delight your customer?
        3. What positive social consequences does your customer desire?
        4. How does your customer measure success and failure?
        5. What would increase the likelihood of adopting a solution?
    Rank each gain according to its relevance to your customer. Is it substantial or is it insignificant? For each gain indicate how often it occurs.
    • Products & Services
    Now that you sketched out a profile of your Customer, let's tackle the Value Proposition. Again, I want you to look at three things. First, list all the products and services your value proposition is built around. Ask yourself which products and services you offer that help your customer get either a functional, social, or emotional job done, or help him/her satisfy basic needs? Products and services may either by tangible (e.g. manufactured goods, face-to-face customer service), digital/virtual (e.g. downloads, online recommendations), intangible (e.g. copyrights, quality assurance), or financial (e.g. investment funds, financing services). Rank all products and services according to their importance to your customer. Are they crucial or trivial to your customer?
    • Pain Relievers
    Now let’s outline how your products and services create value. First, describe how your products and services alleviate customer pains. How do they eliminate or reduce negative emotions, undesired costs, and situations, and risks your customer experiences or could experience before, during, and after getting the job done? Ask yourself if they...
        1. produce savings?
        2. fix underperforming solutions?
        3. put an end to difficulties and challenges your customers encounter?
        4. eliminate risks your customers fear?
        5. limit or eradicate common mistakes customers make?
        6. get rid of barriers that are keeping your customer from adopting solutions?
    Rank each pain your products and services kill according to their intensity for your customer. Is it very intense or very light? For each pain indicate how often it occurs.
    • Gain Creators
    Finally, describe how your products and services create customer gains. How do they create benefits your customer expects, desires, or would be surprised by, including functional utility, social gains, positive emotions, and cost savings? Ask yourself if they...
        1. create savings that make your customer happy?
        2. produce outcomes your customer expects or that go beyond their expectations?
        3. outperform current solutions that delight your customer?
        4. produce positive outcomes matching your customer's success and failure criteria?
        5. help make adoption easier?
    Rank each gain your products and services create according to its relevance to your customer. Is it substantial or insignificant? For each gain indicate how often it occurs.
    • Testing and Pivoting
    Using the Value Proposition Canvas as a thinking and design tool is only a start. To get the best out of it you need to combine it with testing and pivoting. Test step by step, experiment and keep measuring and improving relentlessly, reinvent yourself constantly according to the requirements of both your customers and you.

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