Value Proposition Design: How-To & Example (+ Template) - Gust de Backer (2022)

This is a summary of the book Value Proposition Design by Alexander Osterwalder, Alan Smith, Yves Pigneur, Greg Bernarda & Trish Papadakos.

Do you find that you:

  • Get frustrated with unproductive meetings and misaligned teams?
  • Find it difficult to create real value in your product or service?
  • Get involved in hip projects that ultimately turn out to be nothing?
  • Get disappointed by the failure of a good idea?

In this article, you’ll learn how to create value for your customers, bring out the best in your team, and how to work on an idea without wasting time.

Let’s start…

Value Proposition Canvas

The Value Proposition Canvas is used to look at who your customer is, what they want to achieve and how your product will help them achieve this:

Value Proposition Design: How-To & Example (+ Template) - Gust de Backer (1)

Don’t feel like reading? This video gives a brief explanation:

We start with the customer…

1. Customer Profile

The Customer (Segment) Profile describes a specific customer segment in your business model, this is broken down into:

Value Proposition Design: How-To & Example (+ Template) - Gust de Backer (2)
  • Jobs: what your client is trying to accomplish (‘getting the job done’).
  • Pains: describes bad outcomes, risks and obstacles for your customer in getting a ‘job done’.
  • Gains: the outcome of what your customer is trying to achieve in concrete benefits.

1.1 Customer Jobs

A ‘Customer Job’ is something your customer is trying to achieve in work or in his life, Jobs are divided into:

  • Functional Jobs: the customer is trying to find a solution to a specific problem, such as an air conditioner for the heat, a washing machine for the laundry or a heater for the cold.
  • Social Jobs: the customer wants more status or prestige, such as buying branded clothing or purchasing a luxury car.
  • Personal/Emotional Jobs: the customer is looking for a certain feeling, such as the feeling of security, joy or safety.
  • Supporting Jobs: this helps the customer accomplish a task, such as comparing different products.

It is important to make sure that the different Customer Jobs are broken down by degree of how important they are to the customer.

1.2 Customer Pains

The ‘Customer Pains’ describe what gets in the way of your customer before, during and after getting a ‘Job done’:

  1. Undesired outcomes, problems and characteristics: functional pains, such as that the solution doesn’t work, that the customer’s status is down or it’s not fun to do.
  2. Obstacles: things that stop the customer from getting their ‘job done’, such as lack of time or the price of a solution.
  3. Risks (undesired potential outcomes): what can go wrong, such as losing prestige or getting fired.

Also with the Customer Pains, it is important to subdivide them according to how important they are to the customer.

It is helpful to know exactly how extreme the pain is. The customer may indicate that she does not want to wait for a solution, but then it is up to you to find out the maximum amount of time the customer is willing to wait.

1.3 Customer Gains

With the Customer Gains the outcome and end result is described, these can be divided into 4 different types:

(Video) A Value Proposition Canvas Example

  1. Required Gains: without this type of gains the solution you offer will not work, a washing machine needs to get your clothes clean.
  2. Expected Gains: this type of gains is what the customer expects at the very least, even if the solution works without them. For example, a washing machine must be able to run different programs.
  3. Desired Gains: these are the gains that customers would like and which they could think of themselves. Think for example of the installation of the washing machine in the house.
  4. Unexpected Gains: these are the gains that go beyond the expectations of the customer, customers would not initially think of. Like not needing detergent in a washing machine.

The gains should also be as concrete as possible, try to express them in numbers. In addition, it is also important to subdivide the gains according to how important they are to the customer.

Common mistakes

The Value Proposition Canvas is not the easiest model to fill out, therefore some common mistakes in the Customer Profile:

  1. Different customer segments in one profile: create a different Value Proposition Canvas for each type of customer.
  2. Merge Jobs and Outcomes: jobs are the tasks that a customer tries to achieve and gains are the end results.
  3. Only focus on functional jobs: obtaining status with a product can be more important than finding the right practical solution.
  4. Start with a certain bias: you should not be in your head with the solution you want to offer, but go in blank.
  5. Finding too few jobs, pains and gains: it is important to write down as much as possible and then prioritize it.
  6. Too vague descriptions: the jobs, pains and gains should be as concrete and clear as possible.

Keep asking as often as possible why your customer gives a certain answer.

Example

Value Proposition Design: How-To & Example (+ Template) - Gust de Backer (3)

2. Value Map

In the Value Map, you’re going to describe exactly what you offer and how it helps the customer with their ‘Job to be done’:

Value Proposition Design: How-To & Example (+ Template) - Gust de Backer (4)

2.1 Product and Services

This is a listing of everything you offer to the customer, everything the customer might find in your store. There are 4 types of products and services:

  1. Physical/tangible: physical products.
  2. Intangible: copyrights or services.
  3. Digital: music, SaaS or perhaps a platform.
  4. Financial: such as investments or insurance.

It is important to subdivide your Products and Services based on how important they are to the customer.

2.2 Pain Relievers

The Pain Relievers describe how your product or service is going to take away the customer pain…

It is not necessary to have a specific pain reliever for every pain, but the most important pains should be taken away.

As with all the previous components, it is important to subdivide them based on how important they are to the customer.

2.3 Gain Creators

The Gain Creators describe how your product or service will ensure that the Customer Gains are achieved…

Again, the Gain Creators don’t have to achieve every gain, but they do have to achieve the most important gains.

Make a subdivision based on how important it is to the customer.

Common mistakes

Some common mistakes to watch out for:

  • Writing down all your products and services: make sure you only write down the products and services that apply to that specific customer segment.
  • Adding products and services to the pain reliever and gain creator fields: the pain relievers and gain creators offer explanations and can be properties of your products and services.
  • Offer pain relievers and gain creators that don’t match the pains and gains: the pain relievers and gain creators must match the pains and gains of customer jobs.
  • Want to address all pains and gains: it is really not necessary to address all pains and gains in your gain creators and pain relievers.

Example

Download the Value Proposition Canvas:

See an example:

(Video) How to Create a Winning Value Proposition for Your Product by Dan Olsen

Value Proposition Design: How-To & Example (+ Template) - Gust de Backer (5)

3. Fit

You achieve a fit between your customer profile and the value map when your customer is (almost) ready with his wallet after hearing your value proposition…

Value Proposition Design: How-To & Example (+ Template) - Gust de Backer (6)

There are 3 types of fits:

  1. Problem-Solution Fit: you have evidence that you have the right jobs, pains and gains and your value proposition aligns with them.
  2. Product-Market Fit: you have evidence that your products, services, pain relievers and gain creators have traction in the market.
  3. Business Model Fit: you have proof that your value proposition can be poured into a scalable and profitable business model.

Here, especially in B2B, it is important to include the entire Decision-Making Unit.

10 characteristics of a good Value Proposition

There are several characteristics that a good value proposition meets:

  1. Fits into a business model.
  2. Is focused on the most important jobs, pains and gains of the customer.
  3. Focuses on jobs, pains and gains not (yet) addressed.
  4. Are not only functional, but also emotional and social.
  5. Becomes focused on few jobs, pains and gains, but solves them extremely well.
  6. Are aligned with how the customer measures success.
  7. Are different from what the competition is already responding to directly.
  8. The value proposition is better than the competition on at least one dimension.
  9. Are focused on jobs, pains and gains that many people have or that people are willing to pay money for.
  10. Is difficult to copy.

How do you validate the Value Proposition?

Create an Ad-Lib:

Our [Product or Service] helps [Customer Segment] with the [Jobs to be done] by [verb] and [verb]. (+ , but not like [competitive value proposition])

It is hugely important not to waste a lot of time, energy and money building a complete solution. It is better to create a prototype or MVP, where it is important that:

  1. You look at the market with fresh eyes, rather than already assuming what can’t be done.
  2. It’s visual and tangible.
  3. You don’t fall in love with the first ideas.
  4. Things are not fixed immediately, there needs to be chaos.
  5. Work in iterations, the first draft is not perfect.
  6. Ask for lots of feedback from everyone, criticism is good.
  7. Make sure you fail fast, learn and iterate.
  8. Enough creativity is applied.
  9. Use ‘Shrek Models’, extreme prototypes that you will never build, but can have discussions about.
  10. Keep track of learnings, insights and progress.

Type of market

If you’re entering a market with a niche/unknown product:

  • Challenges:
    • Low customer awareness
    • Lack customers to get messaging guidance from

Brainstorm internally to find a value proposition:

  • List your product’s key features
  • Pinpoint those that are unique
  • List customer pain points for each feature
  • Define desirable outcomes for each pain
  • Score pains/outcomes by severity & frequency
  • Edit top-scored pain/outcomes into UVPs
  • Score the UVPs (and go with the best one)

If you’re entering an existing market you can perform voice of customer research.

Techniques for gaining insights

There are 6 techniques that offer you insights into your customer:

  1. Data Detective: data that is already available, such as reports, Google Trends, search volume, market research.
  2. Journalist: talk to customers, conduct interviews and look for patterns in them. It is important that you are open, that you listen more than you talk, that you look for facts instead of opinions and that you ask questions to find the actual motivation.
  3. Anthropologist: in a B2C case, you could spend a day walking with the customer or observing their buying behavior. In B2B, you could work alongside the customer or consultant.
  4. Impersonator: use your product or service as your customer would.
  5. Co-creator: get customers to help create your product or service and basically become co-creators.
  6. Scientist: get customers to participate in an experiment and learn from those outcomes.

To get started with your Value Proposition Canvas, it is useful to look for your earlyvangelists, or people who:

Value Proposition Design: How-To & Example (+ Template) - Gust de Backer (7)

You could gain insight into competitors with the Strategy Canvas:

Value Proposition Design: How-To & Example (+ Template) - Gust de Backer (8)

Presenting Effectively

If you are going to present MVPs, make sure you pay attention to the following points:

Do’sDon’ts
SimpleComplex
TangibleAbstract
Present what is necessaryPresent everything you know
Customer-centricFeature-centric
Share information piece by pieceShare all information at once
Supporting mediaNo supporting visuals
StorylineRandom order of information

When presenting, it is also important not to pass judgment on the criticism, because then people will not dare to criticize.

(Video) How to build an effective persona

If necessary, you can apply Bono’s Thinking Hats principle:

  1. First you have people wearing a white hat to give feedback, in doing so they are neutral and give objective feedback.
  2. Then, wearing a black hat, they can give feedback in which difficulties, weaknesses, dangers and risks can be discussed.
  3. If the risks are clear, a yellow hat is used to give feedback, in which plus points and positive elements are discussed.
  4. Finally, the green hat is put on in which ideas, alternatives and possibilities are discussed on the problems from the black hat phase.

Dotmocracy

To prioritize different criteria among individuals, you can put red stickers on a multi-criteria table or give them numbers:

Value Proposition Design: How-To & Example (+ Template) - Gust de Backer (9)

Validate, validate, validate….

So, now you can start validating your assumptions.

Now I’m curious, what else do you need to get a Problem-Solution Fit?

Let me know in a comment.

P.S. if you need any additional help, let me know at [emailprotected]

What are 6 components of the Value Proposition Canvas?

The 6 components that are highlighted in the Value Proposition Canvas are the customer jobs, customer pains, customer gains, your products & services, pain relievers and the gain creators.

How to fill in the Value Proposition Canvas?

You fill in the Value Proposition Canvas together with people from your company who know the market and the customer. It is important to have sufficient insight into the market and your customer.

What is a Value Proposition?

(Video) Harvard i-lab | Startup Secrets: Value Proposition

A Value Proposition is a promise of value that you deliver to the customer.

What is the Value Proposition Canvas?

The Value Proposition Canvas is used to look at who your customer is, what they want to achieve and how your product will help them achieve this.

FAQs

How do you write a value proposition example? ›

How do you answer a value proposition? ›

To develop a good value proposition, think deeply about the value that your product offers to potential customers (especially the values they care most about) and how your product or service meets the needs of potential customers in a way that they would find valuable. This is even more crucial for new businesses.

What are the 4 questions of a value proposition? ›

We've put together five questions that'll help you arrive at a value proposition you can be proud of.
  • What product or service do you offer? ...
  • Who is your target customer? ...
  • What problem does your product solve for your customer? ...
  • How does your product or service benefit your customer?
Apr 28, 2016

What are some examples of proposition? ›

For example, "Grass is green", and "2 + 5 = 5" are propositions. The first proposition has the truth value of "true" and the second "false". But "Close the door", and "Is it hot outside ?"are not propositions.

What is a value statement example? ›

Example value statement:

"Our work will be guided and informed by our beliefs and commitments to: Inclusiveness - we respect people, value diversity and are committed to equality.

What is a basic value proposition? ›

A value proposition is a simple statement that summarizes why a customer would choose your product or service. It communicates the clearest benefit that customers receive by giving you their business.

What makes a good value proposition? ›

Your business's value proposition is arguably the most important element of your overall marketing messaging. A value proposition tells prospects why they should do business with you rather than your competitors, and makes the benefits of your products or services crystal clear from the outset.

What is your personal value proposition example? ›

For example, you can say, “I am confident that I can increase brand awareness while cutting your marketing budget by at least 10%, as I did at Company X.” Emphasize value. Employers want to know what tangible results they will get by hiring you.

What is value proposition model? ›

A value proposition is part of a company's overall marketing strategy. The value proposition provides a declaration of intent or a statement that introduces a company's brand to consumers by telling them what the company stands for, how it operates, and why it deserves their business.

What value do we deliver to the customer examples? ›

What Value do we deliver to our customer?
  • Newness. Some Value Propositions satisfy an entirely new set of needs that customers previously didn't perceive because there was no similar offering. ...
  • Performance. ...
  • Customization. ...
  • Getting the job done. ...
  • Design. ...
  • Brand/Status. ...
  • Price. ...
  • Cost reduction.
Sep 27, 2019

What three component parts are essential to a value proposition? ›

3 Components of a Strong Value Proposition
  • Identify a specific problem being dealt with by a specific audience.
  • Articulates how the product/service being sold solves this specific problem.
  • Communicate the audience-specific intangible and quantifiable benefits of the solution.
Jan 15, 2019

What are the types of value proposition? ›

There are four distinct types of value propositions you should know about when optimizing your store.
  • Your company value proposition. ...
  • Your homepage value proposition. ...
  • Your category value propositions. ...
  • Your product value propositions.
May 18, 2022

What is your value proposition interview question? ›

In other words, what is your value proposition? Sometimes interviewers ask, “What do you know about our organization (or industry)?” or some variation of this question. Such a question evaluates your interest. Sometimes they will want to know why you are interviewing for their organization and not their competitor's.

What is proposition in simple words? ›

Definition of proposition

(Entry 1 of 2) 1a(1) : something offered for consideration or acceptance : proposal. (2) : a request for sexual intercourse. b : the point to be discussed or maintained in argument usually stated in sentence form near the outset.

Which of the following statement is an example of a proposition? ›

A proposition is a declarative sentence that is either true or false (but not both). For instance, the following are propositions: “Paris is in France” (true), “London is in Denmark” (false), “2 < 4” (true), “4 = 7 (false)”.

What is another word for value proposition? ›

Value proposition synonyms include: Unique selling proposition (USP) Unique value proposition (UVP) Value proposition (VP)

What is your personal value proposition example? ›

For example, you can say, “I am confident that I can increase brand awareness while cutting your marketing budget by at least 10%, as I did at Company X.” Emphasize value. Employers want to know what tangible results they will get by hiring you.

What is Nike's value proposition? ›

Nike's Value Propositions

Nike offers products to inspire anyone to become an athlete. Their products heavily rely on the quality, innovation, and status of the brand. This is the foundation of the brand, and it is exactly what the customers seek when they buy a Nike.

Which statement is the best description of value proposition? ›

Which statement is the best description of a Value Proposition? The features and benefits that make the product or business unique.

What should a value proposition include? ›

A value proposition should clearly explain how a product fills a need, communicate the specifics of its added benefit, and state the reason why it's better than similar products on the market. The ideal value proposition is to-the-point and appeals to a customer's strongest decision-making drivers.

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