Value Proposition Canvas

Value Proposition Canvas – a Tool to Understand your Product’s Value from the Customer’s Perspective

A new project’s inception requires huge efforts to answer a bunch of relevant questions:
– What sort of product are you going to create?
– What category of customers will be interested in it?
– What are the competitors?
etc.

They are aimed at a single goal – to check the validity of the product. In that regard, having a tool that helps you focus on customers’ demands to develop a proper growth strategy is essential. However, it is not enough to understand what your target user wants but also identify in which way your product can satisfy these wants. Fortunately, there is a solution called a value proposition canvas can be a great assistant in executing these tasks. But,we should start with a brief introduction to another canvas that gave rise to it.

Underlying business model canvas

The story began in 2004 when Alexander Osterwalder introduced his research on business models. It contained the first sketches of the template that later would bear the name of the business model canvas. The canvas came out a few years later and firmed up as a strategic tool for analysis of entrepreneurship’s strengths and weaknesses. You can learn more about it here.

It is a simple chart where you can see nine boxes or fields. Each of them carries a message related to a particular aspect of business activities like the structure of costs, available competition, communication channels, etc. The task of an entrepreneur is to fill in these fields in the most detail possible. With that, you get a clear picture of what is lacking or what you have enough of, to achieve a fruitful outcome. For the purposes of this article, we are interested in two particular fields that underlie the value proposition canvas template.

Whereas the business model canvas is an idea-validating tool for revealing flaws and risks your project may face, it lacks a detailed customer focus. Osterwalder offered to extract and scale up two fields in the form of a separate template to bridge this gap.

What is value proposition canvas?

At first glance, this tool is a simple paper sheet with a large leftward square and the rightward circle. It is a geometrical collage formed by the customer segment canvas and the value proposition template. Together they are meant to impart an understanding of what features and functionalities a product should possess to meet the requirements of a particular category of users. That is in brief. Now, let’s have a detailed look at the constituent parts.

Canvas structure

The tool can be shaped either of two circles or squares or other geometric patterns you may like. But its essence lies in the content to be specified inside. The original structure is just the most convenient and usable way to break down the customer experience and product value. So, here it is.

Value Proposition Canvas segments

The circle

Traditionally, the introduction to the canvas starts with the right part responsible for the customer profile. The circle is cut into three pieces where you have to define tasks and expectations the customers are going to fulfill, as well as positive and negative experiences associated therewith. You do not deal with the product now but only with the end user’s challenges.

Jobs

Value proposition canvas customer jobs include different tasks, problems or wish the customers are intended to deal with, solve or satisfy. By doing so, you refine the customer segment from the emotional (preferences, popularity), social (reputation, sense of duty), and functional (practicability) perspective.

Pains

Based on the above, you can identify what negative/frustrating outcomes/experiences might be associated with the described jobs. Since the perception of negative experience differs by versatile categories of users, it is better to cover as many pains as possible.

Gains

It’s the same with positive experiences the customers have. It should be noted that pains and gains are not polar notions. I.e., gains should include the things that make customers satisfied or even happy rather than simply being a converse of the pains. They may be quite existential and free of any extraordinary nature.

In the value proposition canvas customer profile, you attempt to read your clients’ thoughts. It’s not about telepathy but understanding why they want to complete certain tasks, what causes the negative experience and how to exceed their expectations.

The square

Now, let’s move leftwards to fill in the square where the value proposition map is introduced. Similar to the circle, the product-related section is divided into three parts. They correspond to the relevant customer profile section. Here, we are going to deal with the product. The focus is made on the features, functionalities, and benefits it can offer to not only attract customers but also meet their requirements from the right part.

Products & services

Here you can mention not only the product itself but also its versions like premium, standard or anything like that. This field should not be filled with a list of features your product will possess. Focus on what you can offer to get the customer jobs done.

Pain relievers

This section of the value proposition model is responsible for the ability of your product to solve the defined pains. It is not necessary to describe how the pain is relieved in details. A simple statement of the fact that eliminates the current frustration with the job to be done will be enough to put here.

Gain creators

This field is like a mirror image of the one above. The value proposition canvas gain creators should explain your product’s extra value, which it is going to provide to customers. It resembles the unfair advantage section from the lean canvas, which is well explained in this video. The idea is to offer something new and peculiar to make the customer’s experience not only better but also exciting.

If you’re interested in a hands-on value proposition canvas example, you can watch this tutorial. It contains an explanation of how to fill in the template through the example of Uber. And what is next once you are done with your canvas?

Fit or misfit

The canvas aims at achieving a fit between what the customer wants and what your product/service can offer to overcome pains and generate gains. In practice, the customer profile may have tons of jobs, pains & gains, but the value map outlines which of them you focus on. The more items from the right side have matches on the left one, the higher the probability that your product will hit home. Let’s check this out based on the Nissan and Tesla value proposition use cases as a misfit and a fit respectively.

Misfit

Value MapNissanCustomer Profile
Products & services:
– Leaf
UNFITJobs:
– personal mobility
– regular long-distance trips
– be different from others
Pain relievers:
– best-selling electric car
– potential savings from tax credits and other incentives
– limited battery warranty
Pains:
– insufficient number of charging points
– lack of luggage space
– slow charging
Gain creators:
– advanced tech features
– numerous awards
Gains:
– durable battery lifetime
– brand recognition
– interior ergonomics

The customer profile is made of requirements by a particular customer segment, which sets high expectations for the electric car they need:
-a desire to be different from others cannot correlate with the fact that Nissan Leaf is a frequent-to-meet car on the roads;
– such pains as slow charging and the insufficient number of charging points are not covered by potential savings or the title of the best-selling electric car.
– advanced tech features do not extend the battery life, but numerous awards contributed to making the brand recognizable.
The verdict is the misfit.

Fit

Value MapTeslaCustomer Profile
Products & services:
– Model S
– Model X
– Model 3
FITJobs:
– personal mobility
– regular long-distance trips
– be different from others
Pain relievers:
– growing network of charging points
– developed interior ergonomics
– 75 minutes to charge 100% with supercharging stations
Pains:
– insufficient number of charging points
– lack of luggage space
– slow charging
Gain creators:
– 8 years battery warranty
– reputable brand
– self-driving option
Gains:
– durable battery lifetime
– brand recognition
– interior ergonomics

The same requirements find more fits with this product map. Driving one of the Tesla models, you will differ from other e-vehicle drivers. Besides, huge investments in technological development mean a wide range of different gain creators as well.

Advantages and disadvantages of value proposition canvas

Now, you have an understanding of how to fill the canvas and work with it. The question “Why?” continues to be relevant. Below, you will find some reasons to either leverage the tool or reject it.

Why you need it

First, we’re going to introduce the reasons that might persuade you to use the tool for your projects.

Focus and direction

The excitement that a startuper usually experiences due to the inception of his/her idea may hinder fruitful work and create blind spots. Your focus can get fuzzy, and you’re at risk of stumbling upon the question “where to move forward”. Another huge risk is to advance in the wrong direction with a low-demand product as the outcome. The tool acts as fundamental guidance to stay focused and keep the track. It lets you understand your target customers, what they need, and hot to make them satisfied. Based on that, you can shape the idea of what features and functionalities the product should possess to be in demand. With that in mind, your efforts are not dissipated but directed to a certain goal. The canvas allows you to avoid the waste of time at your undertakings and set a proper vector of your activities.

Raised customer engagement

It’s a challenge to sell a product if you can’t engage your customers. Mind reading might not be enough to deliver exactly what customers want. In this case, you need a bridge between understanding customer’s need and delivering the satisfactory product. The value proposition chart will help you to have a proper transition from one to another. Using it, you can define the core factors the audience attaches the biggest value to. Based on that, you will avoid irrelevant elements like unclaimed features or a bling UI. Your engagement with the customers will be as high as possible.

Right messaging + effective marketing

Unless your product is going to be marketed under Google, Tesla or another world-famous name, you can’t count on any brand recognition. On that account, the people who will buy the product after its release must understand what it offers and why it’s worth their money. The value proposition canvas explained in this article is the tool to tailor a well-fitting message to the audience. Your product will provide a particular value, and you need to put in the customers’ minds the explanation of what is so remarkable about it. For example, Tesla is aimed at creating the best vehicle ever rather than just the best electric-driven vehicle.

A well-suited message is just a brick of a marketing wall you’ll have to build for your product. And the canvas will be in use for this purpose as well. As soon as you have the fundamental understanding of the customer segment and the target features your product should give, versatile emanating elements like communication channels, inbound/outbound brand promotion activities, and others will be easier to deal with.

Why the value proposition canvas usage may be ineffective

Actually, the tool does not reveal any substantial features that one might consider a disadvantage. It means, the canvas can bring harm only if used improperly. And here are some cases of errorful usage.

Loss of canvas distinction

The tool consists of two parts we’ve already described above. Despite their interrelation, each part is a separate unit. The biggest error you can make with the canvas is not to differentiate these parts and work with them as a single canvas. Components to specify in both the circle and the square are different. Those on the right are beyond your control, while the left ones are the things that you can change or improve.

Overloading with customer segments

If you watched Railsware’s video on the value proposition canvas for Uber attentively, you should notice that we reviewed only one customer segment – passengers. Another one dealing with drivers is better to analyze on a separate template. It is also possible to narrow down the segment as for the age, social status, interests, etc. If so, you need to fill in separate canvases for each category of users. A big mistake is to mix all of them into a single chart. By doing so, you make it more difficult to identify the highest priority jobs, pains, and gains. As a result, the left part will be misfocused, and your product value will go down.

Improper way of filling

The filling order does matter, and the way you fill in the value map is crucial. When you do it from right to left, you define what values your product should have to be in demand. If you go the opposite direction, you’re likely to fail to understand what customers really need. The right part of the canvas is independent of the left one, which, in turn, aims at achieving as many fits with the customer profile issues as possible.

Business model canvas + value proposition = ?

At first, we thought about comparing both canvases to discover their idea-validating capabilities. However, they are differently directed tools which can give more synergy if used together. The first canvas itself is a strategic tool to reveal flaws and risks your business may face. The second is aimed mostly on who your business is meant for. Regardless of what you’re marketing, products or services, clients are the endpoint of your commercial activities. And the value proposition model lets you understand their needs and adapt your offer in respect to them. As a result, you obtain a winning formula to actualize your idea and deliver a much-in-demand product/service to the market.

Wrapping up

To sum up, let’s recall some key takeaways:

  • The value proposition canvas definition is a graphical expression of what clients need and suffer from, and what a product can offer to cope with that.
  • The tool originates from the business model canvas.
  • The combination of these tools gives a powerful solution to analyze a business and discover the ways of its improvement.
  • The canvas consists of two parts – customer segments (circle on the right) and value map (square on the left).
  • The more matches you have between the components specified in the right and left parts, the more chances you have to deliver a much-in-demand product.
  • The tool will be useful for both startupers and current entrepreneurs willing to improve their business.

From our side, we recommend you to give a shot and experience the canvas in action. It’s most likely that you’ll enjoy its effect and find it useful for future projects.