If you have any knowledge of Business Model Canvas you will know that it is a powerful tool that helps you to structure the backbone of your business, it teaches you to build solid and robust foundations for its construction to be successful. By "zooming in" on each block that makes it up, you can work on and improve them individually, but what you may not know is that the same authors who created it also developed a useful tool to design and improve a product or service by "zooming in" on two of these blocks simultaneously. In this blog we are going to talk about the Value Proposition Canvas, with which you can enhance the results of your Business Model Canvas by dedicating your efforts to generating value for your customers, which will make your business more attractive to your competition because not everyone knows of its existence.
What is it?
First of all, I recommend you review what a Business Model Canvas is, as it is composed of the nine blocks of a business model, and you will get a better idea of where the Value Proposition Canvas comes from. The latter uses as main inputs the market segment and the value proposition, with which it forms its two components:
- First there is the "Customer (Segment) Profile", which helps you to understand your customer because it describes a specific market segment of your business model in detail. For this it breaks it down into three characteristics, the Jobs, the Pains, and the Gains.
- And the "Value (Proposition) Map", where you will focus on how important your proposition should be to your customer, describing a specific value proposition of your business model in detail. This is also broken down into three characteristics: the Products or/and Services, the Pain Relievers, and the Gain Creators.
I invite you to read this blog to get a better understanding of the Business Model Canvas: Business Model Fundamentals: What do you need to know?
So, what is the Value Proposition Canvas? We are talking about a tool that will help you compare a value proposition against a market segment, with the aim of instructing you in the design of a product or service that not only works for your potential customers, but also solves their problems and generates additional benefits that make them prefer you over your competition.
The way it works is simple, first the Value Map is placed on one side and the Customer Profile on the other, then these are divided into three, then each division is completed with the respective characteristics of each component, and finally it is a matter of looking at the big picture to combine the two parts. The idea is that the product or service performs the tasks the customer requires, that the pain relievers eliminate or reduce their discomfort and that the profit generators create extra benefits that will let them know you see beyond their needs. The result is a canvas that allows you to visualize the diagram in a simple and orderly way.
What is it for?
The creators of the tool themselves mention its uses, which you can find in the book "Value Proposition Design". Its essence is to help you design a product or service that is functional, comfortable and with added value that attracts your potential customers. But how do you achieve this goal? Well, it's simple, through three basic functions.
- The first is that it helps you understand customer behaviour, as you must be orderly in listing the tasks, pains and gains they have or expect. In this sense, it serves to gain clarity.
- As a second point, gather your collaborators in a single working team, where they can have discussions that generate a richer content to feed the customer profile and the value map. Together you have better ideas to carry out this task. It then serves to align the team.
- Third, it allows you to design tests to check your team's assumptions or hypotheses. In addition, you will generate a methodology or process for value creation that will improve over time, so it also serves to minimize the likelihood of your project failing.
I recommend this blog to learn how to create a Value Proposition Canvas as soon as possible: How To Fill In A Value Proposition Canvas
When to use it?
The Value Proposition Canvas can be used either to create a value proposition from scratch or to improve an existing one. In fact, it is a good practice to review it periodically to keep improving and adapting it, as customers' consumption habits tend to change over time.
The creators of the tool also mention situations in which it will be useful for you. Below, I summarize some of them so that you can decide for yourself if it is a good idea to implement it in your business model.
- When just thinking about how to generate value gives you headaches.
- When you don't have any methodology to generate value for your products or services, or if you think the one you have is not working.
- When you are unsure of what steps to take to generate value.
- When you find it difficult to identify the needs of your customers or you have so much information that you don't know how to use it.
- When you feel that your team is not aligned, and meetings are not productive.
- When the focus of the value generation process does not involve the customer as its focus.
- When you think the value proposition ideas were good but did not bear fruit.
- When you need to refine the ideas.
- When you usually take a long time to discuss and develop ideas.
- When you have no idea how to reduce the risks so that your proposal does not fail.
As you can see more than a complement to your business, it could even serve you as a tool for prevention, which also helps you to start off on the right foot. For that reason, there are few and specific occasions in which it will be of little use to you, perhaps in those products or services that are black holes, that is, that are produced or provided by so many companies that it is difficult for any differentiator to make them stand out from the rest (such as a new toilet paper, toothbrushes, mobile phones, pens, room cleaning or haircuts). In these cases, it might be worth trying other tools such as Blue Ocean or TRIZ to identify how an innovative idea could make an impact in these markets.
What are the benefits?
I think that, once you have reached this point, you already have an idea of the benefits for your team, for your product or service or for your customers that the simple fact of implementing this tool can bring you. However, here are three benefits that you may not have thought of and are important to take into consideration.
- It helps you focus on the customer. As we have mentioned in other blogs, the success of your business depends on customers, and it is therefore vital that they are at the heart of your operations. Using the Value Proposition Canvas forces, you to analyze it, so it can be a first step to transform your customer-centric strategy if you are not already doing so.
- It will help you conduct more robust market research. This is an important activity when designing a product or service, because you must consider the competition, their strengths, weaknesses, prices and so on, before putting your offer on the market, so you can not only compare yourself but also take advantage of the knowledge to make a better design. The Value Proposition Canvas already gives you certain characteristics to focus on for this analysis, so you can gain a competitive advantage if you can identify unique profit generators or improve existing pain relievers, as well as identify which ones do not exist in the market and can guide you to innovate.
- It will help you develop better marketing and sales strategies. The simple fact of having to analyze the pains, expectations and tasks of your customers, as well as designing a functional product, which generates extra benefits and also diminishes the discomfort of its users, can give your ideas on how to generate content to reach your customers.