Value Proposition Canvas Explained
The Value Proposition Canvas is a tool that can help ensure that a product or service is positioned around what the customer values and needs.
It is a detailed look at the relationship between two parts of Osterwalder’s broader Business Model Canvas, customer segments, and value propositions, While these pieces interact in complex ways, a value proposition is really a simple statement centered around customer jobs and your product or service.
So what is a value proposition? A Value Proposition is a direct description of what you will provide to your customer, your value proposition must meet a need by completing customer jobs in order to create a gain.
The Digital Leadership Value Proposition Canvas divides your innovation strategy into manageable segments. We also discuss customer research so you can match your products and services to the customers you want to attract.
Value Proposition Canvas Vs Business Model Canvas
The Value Proposition Canvas is the core of every successful business model. It describes the benefits you’ll bring to customers, and therefore, describes the reason for the business to exist.
The Value Proposition Canvas is a part of the larger Business Model Canvas. It helps to project, test and build the business Value Proposition in a more structured and reflective way, just as the Business Model Canvas helps you do so during the process of designing a Business Model.
Once you have worked on the key aspects of the eXtended Business Model, it typically makes sense to explore the Value Model more deeply. When it is clearly defined, move to the other areas and adjust them in relation to the chosen Value Model.
The Value Model is central to the Business Model because it summarizes your core Value Proposition(s) and related offerings as part of the overall Product System.
The Value Proposition Canvas is a fairly simple tool that allows you to establish a logical starting point for building and testing a product or service.
The canvas allows for managing and enhancing existing Value Propositions, as well as for creating new ones. The great strength of the tool is that it will encourage you to empathize with your customers and translate customer needs into a product or solution which solves an important but underserved customer need and you also apply the Jobs to be Done Theory in Order to understand what’re your customer’s pains and how to solve them.
Digital Leadership has developed a number of tools and checklists to help you conceptualize your value proposition canvas and think through customer jobs further. Our book How to Create Innovation walks you through understanding how your service creates customer gains.
The book includes value proposition examples, customer profiles, and other directions for using the Business Model Canvas, Value Proposition Canvas, and other canvases so you can supercharge innovation strategy.
The UNITE Value Proposition Canvas Structure
The UNITE Value Proposition Canvas consists of 3 main sections:
- Customer Profile
- Product Value Map
Each topic deserves to be considered on its own.
Section (1): Customer Profile “NEED” – Customer Jobs to be Done
The Customer Profile section of the Value Proposition Canvas centers around customers’ Needs. We’re using the capital “N” here to fully represent the core reason why your customers rely on your product or service. While this can involve some complicated psychology and motivational theory, at the heart of Need is the easing of a pain point.
Your Value Proposition must identify a clear but underserved customer need and then directly solve it. Your Business Model Canvas is built around the prototype of your product or service developed through your Value Proposition. As you test the prototype, you identify ways to leverage your Unfair Advantage.
Your ideal customer is someone whose needs perfectly match with what you can offer better than anyone else. That doesn’t mean you should ignore existing customers; rather, you should give thought into how they could become ideal customers, too.
The Customer Profile section we’ve developed for the middle of the canvas draws on neurolinguistic programming and psychological research into motivation and choice architecture in order to focus in on the rational and emotional factors behind decision-making. Unlike some models of decision-making, it focuses less on a dichotomy between “pains” and “gains” because people can be motivated by pains and gains in different ways. The customer empathy sections include:
(1) Main Customers’ Jobs to be done
The primary challenge your customer is trying to address. Chances are, once you’ve identified these customers and their Jobs to be Done, you’ll have a strong understanding of your target market.
(2) Functional Jobs to be Done
The customer’s functional jobs are the rational things that the customer needs to get done. Interestingly, needs are not always conscious: customers can have needs that they don’t know about. Part of our job is to help customers identify these needs.
(3) Emotional jobs to be done
The emotional drivers of decision-making are things that we want to be, do or have. Our emotional jobs are usually conscious, but aspirational thoughts about how we would like to improve our lives. People who run businesses can see themselves and their work in surprising ways. Try to understand the emotional connection a customer has with his or her business.
(4) Customer Fears
Although fear is a type of emotion, it so powerfully affects decision-making, that it is worthwhile to consider it separately. There is fear of making a mistake, fear of missing out, fear of loss and dozens of other related fears. Fears can be a strong driver of purchasing behavior and can be the hidden source of wants and needs.
Section (2): Product Value Map: Your Products or Services Map
In the Product or Services, depending on the nature of your business) section of the Canvas, you explicitly consider what you’re offering to customers. In a nod to modern approaches to marketing, this section includes the Experience you’re selling to customers. We know, for example, that people don’t just frequent their favorite café because it serves the best coffee; it serves the best experience that meets the psychological and emotional needs of its customers.
The Product Value Map includes:
(1) Elevator Pitch
We suggest that you begin crafting your Elevator Pitch right away in order to give yourself an initial version to iterate (we love bad drafts!). Then, you can refine it as you go along. The Elevator Pitch follows a standard structure:
For [your target customer], who has [your customer’s need], [your product or service] is a [market category] that [one key benefit], unlike [the competition], the product [unique identifier].
A feature is a detailed description of how your product works. Thus, here you should outline the functional attributes of your product. The features section should also describe why your customer should trust you (i.e., reasons to believe in your solution7). What makes you and your VP credible?
A benefit is what your product does for the customer and is the core of your VP. Benefits are the ways that the features make your customer’s life easier by solving their problem with a maximum amount of pleasure and a minimum amount of pain. The benefits of your product are the core of your value proposition. Begin by listing all the ways you can think of that your product would make your customer’s life better.
The product experience is the way that owning your product makes the customer feel, the sum total of the combined features and benefits. Product experience is different from features and benefits, however, because it’s more about the emotional reasons why people buy your product and what it means in their lives. The product experience is the kernel that will allow you to elaborate your market positioning and brand essence.
Section (3): Substitutes with “Competing Solutions”
Some companies claim that they have no direct competitors. However, the substitutes on the canvas aren’t just the obvious competitors. Instead, look for existing behaviors and coping mechanisms. How are people solving their Jobs to Be Done right now?
The substitutes are worthwhile understanding in depth because they remind you that your customers are real people who have made it this far in their lives without your product. If your product is not sufficiently better than the existing solutions to overcome their resistance to switching, then you don’t have a real-world value proposition.
Value Proposition Canvas Benefits
The Value Proposition Canvas is a fairly simple tool that allows you to establish a logical starting point for building and testing a product or service.
The canvas allows for managing and enhancing existing Value Propositions, as well as for creating new ones. The great strength of the tool is that it will encourage you to empathize with your customers and translate customer needs into a product or solution which solves an important but underserved Job to be Done.
(1) Provides Clear Direction
With a shared document representing a commitment to innovation, all the stakeholders understand expectations and plans for forwarding movement.
(2) Creates Focus for You and Your Team
Clearly outline shared goals and the strategies for meeting them.
(3) Provides Guidance for Your Marketing Efforts
Ensure your marketing investments focus on your team’s priorities: where can you add value to increase customer gains?
(4) Powerful Customer Involvement
Because the Value Proposition Canvas is so focused on bringing value to your customers, you can be sure their needs remain front-and-center as you develop your Value Proposition.
How to use the UNITE Value Proposition Template?
There are some distinct steps your organization can take to complete the Value Proposition template in a way that will encourage innovation.
Here are some practical steps to take when working on completing your template.
Step (1): Always Start with Your Customers
- Choose a customer segment It’s important to be focused.
- Understand your customers’ needs Consider customer pains.
- Understand customer expectations Can you properly deliver what the customer expects?
- Identify your customer’s segment jobs to be done Find ways to match your customers’ needs with your own value proposition.
- Layout your customer fears Have the products and services customers can use to feel better about their future.
Step (2): Considering the Value Proposition Section
- Understand your products and services Have a clear understanding of how your service creates customer gains.
- Identify your customers’ fear relievers Identify where your service alleviates customer pains.
- Learn to explain how your service creates customer gains Prepare an elevator pitch for each product or service.
- List your product or service value map and how it will release your customers’ fears Where can you make a customer happy?
Step (3): Analyzing your Competing Solutions
- What substitutes for your product or service exist?
- What do customers expect to experience from businesses in your segment?
- Are you completely considering your services customers?
- Do competitors create positive social consequences that you don’t?
- What sort of inertia would make your customers unwilling to change to your business?
When you set to actually completing the template, there are several questions you should work through. Though this list isn’t comprehensive, it will be a good start.
- What are the crucial issues affecting customers moving forward? These could be regulatory, environmental, or something else.
- Where are your customers’ pains and gains? Make sure you know the customers you serve.
- How can you explore additional customer segments? Where will your competitive advantage be useful elsewhere?
- Where are the biggest unmet customer needs? Be aware of your customers’ most significant pains.
- Which emerging technologies are customers adopting? Don’t miss out on innovations most businesses are implementing.
- What are your rivals’ competitive advantages and disadvantages? How can you ensure that your company offers similar customer experiences?
- How easy is it to obtain the resources you need to execute your business model, and how much will it cost? Ensure access to everything you need to execute your brand strategy.
When to use the UNITE Value Proposition Canvas
Our Value Proposition Canvas is extremely useful no matter where your business is in its development, but we’ve identified some situations where we think the Canvas will really help you and your team stay on track and move innovation forward.
Consider turning to the UNITE Value Proposition Canvas if you’re faced with any of these situations:
- Implementing a new product or service
- Expanding into a new market
- Having a startup idea
- Noticed new customer pains (from new regulations, new technologies, new customer expectations)
- Exploring a new target audience
- Targeting a new customer segment or trying to attract customers
- Using this tool internally within your company
Connecting The Dots: The UNITE Business Model Framework
How to Create Innovation includes a number of canvases that focus on value creation and finding the right business model to meet your customer segment and customer needs. The framework is built to inspire drastic changes that help you find a competitive advantage. Our hope is that your company grows through business model innovation, and so we again encourage you to look deeper into our website and the book.
Here is a summary of the key ingredients of the framework:
The centerpiece is the Business Model Canvas, which covers the six main areas of a Business Model (the Operating, Value, Service, Experience, Cost, and Revenue Models).
A Business Model can be broken out into its numerous aspects. Depending on what challenges you face, you can zoom in on your area of interest using an appropriate tool or canvas:
- Your Business Intention and objectives as well as your Massive Transformative Purpose summarize your drivers and give direction to what you do.
- The Value Proposition Canvas details the central components of your offering (the product or service).
- To dig into your Customer Segments, work with data-driven Personas.
- The JTBD Customer Job Statement and Job Map frame the JTBD of your customers.
- The Business Model Environment puts your Business Model in a market context composed of emerging trends and disruptive forces.
- The Innovation Culture Canvas helps you understand and consciously shape a culture that supports innovation.
- The Innovation team structure enables you to draft a team structure for your innovation initiative.
- Using learning and growth metrics, you can measure progress at the initial stages of development. These metrics help you focus on what really matters instead of creating a detailed business plan that will not really help you. Later on, you can expand the financial aspect of the Revenue and Cost Models with a full business case.
- The Operating Model Canvas helps you think through the Operating Model.
Frequently Asked Questions:
What are the types of value propositions?
A Value Proposition is a statement of how a business delivers a product or a service of value to a customer. A good Value Proposition explains why the company or a specific product is better than what was previously available.
There are four Types of Value:
How do you write a Value Proposition?
While every Value Proposition is different, the most effective statements include the following pieces:
- Strong headline: catch customers’ attention using active verbs that resonate
- Descriptive sub-headline: explain how your service or product completes one of your customer’s jobs
- Understanding of problem: more in-depth, show your expertise by concisely describing the customer’s challenge
- Clear benefits and solutions: make the connection between your customers’ needs and the products or services you offer
What are the elements of a Value Proposition?
There are three main elements of a complete Value Proposition:
- Target Market: a profile of the ideal customer for the company’s product or service
- Specific Value: the reason why a customer should choose the company’s product or service
- Customer Outreach: how the company will contact or notify customers about the product or service