What is Value Proposition Canvas?
To explain what Value Proposition Canvas (VPC) is, I think it is important to first mention what Business Model Canvas (BMC) is. Both tools were created by Alexander Osterwalder and his team at Strategyzer - a company he co-founded - with the purpose of creating value for businesses and customers.
- What is Value Proposition Canvas?
- Parts of the canvas
- When to use it?
In 2010 they published the book "Business Model Generation" as a practical guide to designing a business model, which, in short, can be defined as the way in which a company creates, delivers, and captures value. To do this, it is necessary to identify a series of factors that make it possible to generate profits. The book proposes 9 important building blocks, which are:
If you want to understand more about business models and the canvas for their design, I invite you to read the following blogs:
- Business model: What is it and why is it important?
- Business Model Canvas: Osterwalder-Pigneur and alternatives
- Build a Business Model Canvas Step by Step
Now, going back to the explanation of Value Proposition Canvas, this tool was created as a complement to the BMC, because, while the Business Model Canvas helps you create value for your business, the Value Proposition Canvas helps you visualize, design and test how you will create value for your customers. I say complement because the VPC takes two blocks of the Business Model Canvas and analyses them in a comprehensive way, namely the market segments and the value proposition.
Why consider these two blocks? The aim of the VPC tool is to ensure that the product or service you offer best matches the needs of the market. Sometimes it can be difficult to achieve this harmony, especially if you are not clear about the problems your customers are experiencing and how your company can solve them. That is why Value Proposition Canvas is the tool you need to ensure that your value proposition responds to and satisfies customer needs, with a message that is concrete, clear, and aligned with the consumer's thinking.
Parts of the Canvas
As you can see in the image above, the Value Proposition Canvas consists of 2 parts: value map and customer profile.
- Description of the jobs and tasks your customers are trying to complete, which may be functional (getting from point A to B), social (impressing friends) or emotional (feeling happy).
- Identification of the client's pains and frustrations in trying to complete their work, you can include impediments or negative consequences that your client would have if they do not complete their tasks, which they will try to avoid in order not to feel dissatisfied.
- Identification of the benefits your client is looking for and how they will measure success in completing a job, this includes the positive outcomes they expect to achieve.
- Description of the products and services your company offers, on which the value proposition is based.
- Description of how these products and services alleviate customers' pain and frustrations by reducing or eliminating them, making their lives easier.
- Description of how your value proposition maximizes the benefits expected or desired by the customer.
By understanding that the tool helps you to synchronize the market segments of your business with the products and services you offer, it is easier to understand when you should use it. Some tools are specially designed to help start-ups, ideas and new businesses, others are especially for mature products or established companies, i.e., sometimes the tools are not suitable for your business because you do not meet the characteristics for which they were designed.
In the case of Value Proposition Canvas, you should not worry too much about this, the tool is suitable for any type of business, no matter what stage it is in. Whether you are a start-up or an established company, Value Proposition Canvas will help you understand how to offer a solution to your customers' problems with your product or service.
VPC is often referred to as a tool for creating new products and making them fit the market from the start, and this is true, but existing, mature products should not be left behind. Continuous improvement is important, you should always look for opportunities to evolve your business, and if that means having to assemble a team to design the value proposition canvas, so be it!
I leave you with the following blog on 10 signs that it's time to update your business model.
If at this point, I have not convinced you of the importance of the tool and why you should use it, here are the advantages of applying the Value Proposition Canvas.
- VPC helps you to understand the real needs of your potential customers and thus also to understand the value that your products and services bring to the market, thus achieving synchronization between the market and your proposition, as you adjust your value proposition to the customer profile.
- By identifying the Jobs to be done of the different market segments, as well as their frustrations and joys, you will be able to correctly define the profile of your ideal customer.
- Once you have defined the components of the VPC, you should rank the elements according to their level of importance, which will allow you to focus your efforts on the most significant problems for the client and on the value proposition that contributes the most.
- If what you have is an idea, the tool will help you form it in a clearer way, seeking success from the beginning, as it urges you to carry out tests once you have the canvas to minimize the risks of failure, with these tests you can perfect the value proposition.
- If you have a product or service that is already under development, it is also useful, as it facilitates the improvement and management of the value proposition, providing a competitive advantage to your business.
- VPC is a very visual tool with a practical format, it is easy to organize information about customer characteristics, desires, and pains, as well as the elements of your value proposition, making it easy to visualize patterns.
By way of conclusion, remember that the value proposition can always fail if you have not correctly established your business model, which is why these two tools (VPC and BMC) are complementary to each other. You must design a value map that fits the customer profile, but not only that, but it must also fit your business model.