When we develop a business idea, and long before we start thinking about how to patent that idea and what it costs, we need the best tools available to help us get an excellent result.
One of the most useful tools for entrepreneurs is the Value Proposition Canvas, which helps us design, analyze, and present our business model with a high degree of rigor.
It pays to learn how to use this method so we can build our business in a way that fits the market as closely as possible.
Value Proposition Canvas: What Is It?
The Value Proposition Canvas is a method developed by Alexander Osterwalder whose purpose is to define the value proposition of our business.
It is a visual representation in which we compare the needs of our customers against the product or service we offer them.
In other words, the customer sits at the center of the analysis, so we need to make sure that whatever we plan to offer makes sense and covers a specific need.
The Value Proposition Canvas is divided into two main blocks: the customer block and the product block. By working through both, we can validate whether our value proposition is likely to succeed or whether we need to rethink it.
The Customer Block
Our goal is to design a product or service that is built around the customer’s needs, so that it can succeed in the market.
That is why, to develop our Value Proposition Canvas, we need to start by getting to know our customer better. We need to understand their problems, behaviors, and requirements in order to see what they really need and how we can help them.
This block is divided into three sections: Customer Jobs, Pains, and Gains. Our main objective when completing this block is to find a problem the customer has that is genuinely worth solving. To do that, we need to ask ourselves a range of questions to get to know our audience better.
Customer Jobs
The first section of this block is “Customer Jobs,” which refers to the activities customers carry out to resolve a particular work or personal situation. To define this section properly, we need to ask ourselves certain questions about our customers.
For example, we can ask ourselves what contexts our customers operate in, what tasks they are trying to complete, what problems they are trying to solve, or what needs they want to satisfy.
What should you pay attention to when developing this section? Let’s take a look:
- The customer’s problems when carrying out a particular activity or task
- Their motivations for carrying out that activity or task
- Their needs, meaning why they want to carry out that activity or task
Pains
The next section of the customer block is “Pains,” which refers to the unwanted situations customers run into while trying to carry out the activities identified under “Customer Jobs.” These are the customer’s pain points, annoyances, and frustrations.
In this step, we evaluate the main challenges and difficulties our customers face when trying to complete the tasks they want to accomplish in their personal or professional lives. We want to understand what bothers or irritates them about those tasks and what makes them feel bad.
In this section, we try to understand the obstacles and negative effects the customer may experience:
- Unwanted aspects of the possible solution to the task or activity
- Obstacles to carrying out the desired task or activity
- Risks involved in carrying out that task or activity
Gains
Finally, we analyze the benefits customers obtain when they are able to resolve the situation we have been evaluating in the two previous sections.
This refers to the satisfaction, benefits, and positive outcomes the customer gets when they can use the product or service you offer and it solves their specific need.
We need to analyze what would make them choose your solution for that particular task. The gains a customer obtains can be grouped into four categories:
- Required gains: if you only deliver these, your proposition is not meeting its objective
- Expected gains: these go beyond the minimum the customer expects
- Desired gains: the benefits the customer would like to obtain when using your product or service
- Unexpected gains: benefits the customer would never have anticipated but that come as a pleasant surprise.
The Product Block
The other block of the Value Proposition Canvas is the product block. Once you have structured the customer block and organized all of that information, you will be able to shape your product much more effectively.
The goal is to provide a product or service that can offer a solution to the customer’s specific task or activity, relieve their annoyances and frustrations, and deliver satisfaction and benefits.
This is why the Value Proposition Canvas is such an effective method for developing a business idea. Instead of building something first and then evaluating how it might serve the customer, the approach is exactly the opposite. First we evaluate the customer’s needs, and then we design a product or service built to solve the problem.
Pain Relievers
The first step is to determine how our product or service can relieve our customer’s pain points.
This is why we need to analyze the “Pains” section of the customer block very carefully, since only then can we deliver a solution that is truly effective in terms of convenience, ease of access, time savings, and so on.
Products & Services
The next step is to define each aspect of your product or service, since every one of them should be aimed at resolving the customer’s pain points.
Focus on describing the features and characteristics of your product or service, and make sure each one is aimed at solving a specific pain point.
Gain Creators
Finally, there is the gain creators section, which matters a great deal because you need to clearly explain the benefits your product or service brings to your customers. In this step you need a very clear picture of your customer’s expectations, because the idea is to develop something that generates excellent benefits and results.
Remember that gains fall into different categories, and your goal is to give your customers even more than they expect.
Phases for Developing the Value Proposition Canvas
To develop a Value Proposition Canvas, you need to follow four phases that will help you achieve the best possible result.
The first phase is observation, where you should focus on understanding your customer’s real needs. This will help you identify their motivations more accurately, rather than stopping at their needs alone.
Next comes the design phase, whose objective is to establish how your product can help your customer relieve their frustrations and be happier.
The next step is to validate both your hypothesis about the customer’s needs and your hypothesis about your value proposition. To do this, you will need to survey your customers and analyze the results to see whether what you have proposed so far holds up against the market.
Finally, there is the adjustment phase, which you carry out using the validations from the previous step. These will help you update your proposition until it is aimed precisely at your customer’s needs.
