Value Proposition Canvas - What Is It and How Can Your Small Business Use One
September 23, 2022
Value sits at the heart of any successful product or service. Your small business needs to provide sufficient benefits to attract clients. How do you know if your offerings are delivering enough?
A value proposition canvas helps answer this question. Small business owners can gain confidence that their products or services optimally fit the wants and needs of their target customers.
In this article, we'll explain what a value proposition canvas is and how to use one. We'll also examine how to get the most out of this useful tool.
What is a value proposition canvas?
Ultimately, the success of your small business hinges on a key connection: matching your products and services to the needs of your customers. Once you get that formula right, tasks like marketing and sales become a matter of messaging.
A value proposition canvas supplies a streamlined way to think about this core business task. Developed by business theorists Alexander Osterwalder, Yves Pigneur, and Alan Smith, this tool furnishes a structure to understand how to harmonize your offerings with the needs of your target market.
[A value proposition canvas] furnishes a structure to understand how to harmonize your offerings with the needs of your target market.
How does a value proposition canvas work?
Now that you understand the basic premise behind a value proposition canvas, it's time to dive into the way this tool can bolster your small business. To start, here is the structure of a value proposition canvas:
As you can see, the model has six parts, broken into two broad categories:
- Customer Jobs
- Products and Services
- Gain Creators
- Pain Relievers
Looking first at the people you hope will buy your offerings, the value proposition canvas starts with what's known as the "customer jobs." This term refers to the task the customer is attempting to perform.
The functions here can cover anything a customer might want to do with your offerings. Examples can vary from things like "I'm hungry and need to find something to eat" to "I need to create an integrated security platform for my multinational corporation."
The central dynamic within the value proposition canvas centers around pains and gains. Don't think of this in the workout sense of "no pain, no gain." Instead, consider this in terms of two key goals of any customer:
To increase gains: These are the benefits that a customer hopes to achieve by buying your (or a competitor's) product or service.
To reduce pains: Any transaction comes with its share of costs. These include the financial cost, of course, but also any other less-tangible downsides, like the time spent or the stress involved.
The value proposition canvas underlines the interaction of these pains and gains. What benefits do your offerings provide? What complications might prevent customers from choosing you? By answering questions like these, this seemingly simple tool can help define your competitive advantage and show you areas you can improve.
When to use a value proposition canvas
The value proposition canvas helps you organize your thought process as it applies to your customers. You can drill down the connection between your offerings and the needs of the people buying them. Through this procedure, the tool aids you on multiple fronts, such as:
- Simplifies the way you think about the value of your products and services
- Provides a template for your marketing
- Creates a structure for understanding your customers' decision-making
- Lets you see areas you can improve
- Guides your efforts to gather feedback from customers
Here are some of the use cases for leveraging a value proposition canvas:
Improve Products Over Time: Take steps to maximize your customer gains and minimize the pain required to achieve them.
New Product Development: As you build out new offerings, the value proposition canvas gives you a format to consider how any new functionality will fit into your customers' lives.
Staff Training: The value proposition canvas also serves as a teaching tool. Once you gather insights from the process, share those lessons throughout your organization.
Message Focusing: The information gleaned from a value proposition canvas lets you hone your communications with the outside world. Understanding the relationship between your products and your customers helps you tighten your message to its most efficient form.
Tips for getting the most out of a value proposition canvas
In its basic form, a value proposition canvas represents a model. It presents a way of thinking about your company's offerings and the value you provide your customers. Turning the outline into actionable insights requires additional steps.
Here are tips you can use to get the most out of the process:
Collect Useful Data
Learn as much as you can about how your offerings interact with the market. This process will let you build a deep reservoir of knowledge about your customer base.
The data gathered in this step will inform how you fill out your value proposition canvas. You'll develop a keen understanding of the gains your customers are striving to achieve and the pains they face along the way.
Empathize with Your Customers
A value proposition canvas should be an exercise in empathy. To be effective, imagine yourself in your customers' situation so that you can truly understand their pains and gains. This will let you accurately fill in the details and get the most out of the process.
A value proposition canvas should be an exercise in empathy. To be effective, imagine yourself in your customers' situation so that you can truly understand their pains and gains.
Grade Your Pains and Gains
Ideally, you'd be able to completely eliminate your customers' pains and create an infinite amount of potential gain. In the real world. Of course, that's not possible. You face resource limitations and other factors that hamper your ability to create the "perfect" offering.
As such, you'll need to make choices. That process requires that you prioritize any actions you want to perform. To do this, triage the pains and gains associated with your products and services. Enhance the biggest contributors to value and minimize the most blatant drawbacks.
Maintain Lines of Communication
Stay in contact with your customers. This will let you keep your value proposition canvas up to date over time. Avoid making assumptions and establish processes to routinely gather feedback.
Connect better with your customers with a value proposition canvas
A value proposition canvas gives a structure for understanding how you can fill your customers' needs. You can use it before launching a new product or service or as you consider refining an existing one. Through this method, you can make sure that the product or service not only plays into your business' competitive advantage but also ideally satisfies the wants and needs of your target customers.
Use the information provided here to get started with creating and using your own value proposition canvas so that you can do just that.