Value Proposition Canvas explained: how to match your services to customer needs
Dr Timothy Mansfield
Published on 7 August 2019
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canvas , Lean Startup , value maps , startups
In my last article about the Business Model Canvas, I noted that “one of the trickiest parts to get right on the canvas is the most crucial part – the value proposition at the centre”. The value proposition is easy to explain: it’s the product or service you offer that creates value in a customer’s life. But how does it do that? How do you work out, specifically, what that product or service is and what it looks like? By using the Value Proposition Canvas.
This article explains the Value Proposition Canvas by zooming in on each component.
Value Proposition Canvas defined
The Value Proposition Canvas is another “canvas” tool created by Alex Osterwalder, inventor of the Business Model Canvas, and co-author of Business Model Generation with Yves Pigneur. Like the Business Model Canvas, it breaks the problem of identifying the value proposition down into discrete parts. This enables a person or team to address each part, step by step.
On the right, the canvas profiles the customer by asking: what jobs are they trying to accomplish, what’s hard or unpleasant (pains) about their current way of doing it, and what’s desirable or delightful (gains) in an ideal solution?
On the left, we map out the value proposition by asking: what is the product or service, and how does it create the gains the customer wants and soothe the pains they don’t?
The core of the customer profile is… the customer!
Each of the customer segments in your Business Model Canvas is likely to have a distinct customer profile, so you will probably need to go through the exercise for each customer segment. In fact, doing this lets you know if your customer segments are really as distinct as you think.
You may not be using a Business Model Canvas at all, you might just be interested in clarifying your value propositions. In that case, you may have buyer personas from your marketing team or user personas from user experience modelling, you should work through value propositions for each of those.
Jobs To Be Done
So, beginning with one type (segment, persona etc) of customer, what are the jobs they are trying to get done? Here Osterwalder is pointing towards the same idea of “jobs” as outlined in Jobs To Be Done theory.
Practically, this list should be focused on, but not restricted to the area you’re interested in. If your likely value proposition is about garden maintenance, you can probably safely avoid jobs about book-keeping or international travel. But what about finding food for the family or locating a nice place to read a book?
The key here is to think beyond functional tasks. The formal definition of the jobs in the customer profile is “functional, social and emotional tasks”. Sure, your customer is trying to get something practical done, but often there are other factors in play. Are you just acquiring food for your family? Perhaps you’re also showing love for your kids, educating them about life, caring for your partner’s chronic health issue, giving yourself some “soul time” in the kitchen etc.
This is a messy process, not a neat one. The boundaries aren’t clear. But it’s the messiness that is often generative, leading you to tweaks and pivots on your initial ideas that might lead to better ideas. Start with whatever you can come up with in the Jobs list. You can come back to it, add more, remove some or change it entirely as you refine the canvas.
For each job, what are the negative experiences, risks or undesired costs associated with getting that job done in the current situation? What gets in the way or impedes the customer?
Several jobs may share similar pains, so it’s OK to group these. It’s a good idea to sort these in order of intensity or mark them with numbers or colours to indicate if it’s a mild or an intense pain.
This is probably an easy step – we are all familiar with complaining! With a little empathy for the customer, most of us can come up with a long list of pains.
… but gains may be harder. Gains are not simply the opposite of pains, they are benefits, delights, things that make it easier to adopt the product or service. Some writers refer to gains as the hidden aspirations or ambitions of the customer.
It’s fine for these to be mundane, like “brand recognition” or “affordable”. But it’s also fine for them to be more existential, such as “feel like a great mum” or “know I’m helping the planet”.
Again, you can come back to this as you refine the canvas – just get down what you can.
Now it’s time to work out how to address the customer needs – the jobs they need done, the pains they want soothing and the gains they’re hoping for. We shift to the left side of the canvas.
Products and Services
To begin with, list the products you make or the services you provide that help your customer get their functional, social or emotional jobs done. Osterwalder suggests you rank these in order of how important they’re likely to be to the customer.
A value proposition is called that because it’s a claim you’re making that you can create value for a specific kind of customer. A product or service creates value by getting jobs done while relieving pains and creating gains.
How does your product or service alleviate the customer’s pains? How does it eliminate the negative experiences, mitigate risks or reduce undesired costs that you mapped on the right side?
Perhaps it produces savings, makes your customers feel better (by reducing annoyances or eliminating a certain persistent frustration), ends some long-standing difficulty or prevents frequent mistakes, and so on.
How does your product or service produce benefits or delights, make itself easier to adopt or address the hidden aspiration of the customer?
Maybe it fulfils something customers dream about, makes the customer’s life easier, creates positive social benefits (makes them look good or increases their status in a community), replicates and outperforms some existing solution, and so on.
For some organisations, simply mapping out the current business like this helps them see new opportunities or ways to optimise their offers.
Maybe you simply adjust the positioning of your offer to make pain relievers and gain creators clear to prospective customers. Sometimes your product or service already has these, but it isn’t obvious from your marketing or market position.
Sometimes, you realise that the customer has pains or desires gains that you don’t address, but which you could, so some adjustment to the product or service might have to be made.
You could realise that you need to create new products or go find new customers because what you’re offering is simply not a great match for the people you’re talking to.
Clarity is a beautiful thing. Even if it stings at first.
I suggested beginning with the right side – the Customer Profile. But you could begin at the left and map out your value proposition as far as you understand that and use that to imagine your ideal customer.
On the left side, I suggested starting with your product or service, but you could start with the pain relievers and gain creators and use those to brainstorm new products or services.
In other words, depending on what you know and what you need to invent, you can start almost anywhere.
You may discover there are sections of the canvas you don’t understand at all, so you may need to pause and go do some research – client interviews, surveys, online research – to gather more information before proceeding.
You can download a template of the Value Proposition Canvas from Strategyzer.
Once you’re done with filling it in, you can plug a summary of what you’ve mapped out into the Business Model Canvas to start mapping out the rest of the business model.
There are lots and lots of resources about the Value Proposition Canvas all over the web because it’s such a simple and flexible tool. If you really want to learn more about the details of using it, we recommend Osterwalder et al’s book, Value Proposition Design.
Over the past 10 years, we’ve heard a lot of value propositions and business models from our clients. Talking about how a business works and how it needs to change is one of our favourite parts of the design process. If you’d like to talk yours over, drop us a line and let’s talk about it.