Value Proposition Design for Startups

You have an idea of a product or service you want to bring to life? It is important to first establish your core value proposition prior to diving into requirements and design. To do that we recommend using The Value Proposition Canvas created by Alex Osterwalder (the creator of the Business Model Canvas). The Value Proposition Canvas is a framework to help you design products that customers want. Read our in depth guide to using the Value Proposition Canvas here.

 Why is The Value Proposition Canvas Important

72% of all new product innovations fail to deliver on expectations (a study done by pricing firm – Simon Kucher). That means 7 out of 10 products will fail! The reason for this is not because people are not smart. It’s because the processes & tools are often broken. They don’t focus on building products that customers want. This is why you need the Value Proposition Canvas. 

The Value Proposition Canvas is composed of two parts. The Customer Profile & The Value Map

The Customer Profile

We use the customer profile to visualise track and understand what your customers want. It’s a MAP that becomes clearer the more you learn about your customers. When you are able to describe jobs pains and gains of your customer you have a good understanding of your customers and a clear way of asking yourself, “Are you creating value for customers?”

The first element of the Customer Profile on the right hand side are Customer Jobs. Here you describe the jobs that your customer are trying to get done in their work or personal lives. Jobs can be

  • Functional – Tasks that you want to perform. i.e. Getting from A to B
  • Social – How you want to be perceived by others. i.e. Impress friends & Colleagues
  • Emotional – How you wish to feel. i.e. Like gaining peace of mind
The second element of the canvas is Customer Pains. These are pains Customers have in achieving those jobs. Pains are negative outcomes that customers hope to avoid. These can be:
 
  • Obstacles or Frustrations – things that prevent you from getting started or performing a job well
  • Risks – Undesired potential outcomes
  • Frustrations with existing solutions
The third element of the canvas is Customer Gains. Gains are positive outcomes that the customer wants to achieve. These can be:
 
  • Required Gains – without a solution wouldn’t work
  • Expected – these are what we expect (even if not critical)
  • Desired Gains – These go beyond expectations but we would love to have
  • Unexpected Gains – Go beyond customers expectations 

The Value Map

The second part of the canvas is the value Map. The Value Map acts as a bridge to the right hand side and describes three things. The value map makes it explicit how your product relieves pains and creates gains

Firstly the products & services you provide that you think will create value for your customers.These could be:

  • Physical
  • Intangible
    • Certificates or Services
    • Digital – Music Downloads
    • Financial – investments
On the bottom we define Pain relievers and ask how our products eliminates the pains of customers. Think of them as pain relievers like headache pills. These are the problems solvers. How do your products & services minimise or eliminate the pains of your customers
At the top we outline Gain Creators. How your products maximise or increase gains that your customers expect or would be surprised by.

Prioritise

Prioritise across your Customer Profile and Value Map to focus on the things you want to solve.

Value Proposition Fit

So here we have it the Value Proposition Canvas. You achieve fit by creating a clear connection between what matters to customers and your products and services ease pains and create gains. SOUNDS LIKE COMMON SENSE BUT NOT COMMON PRACTICE. If you don’t map this you won’t be focussed on creating value for your customer.

What you have just achieved by filling out the canvas prior to launching your product is Problem Solution Fit NOT Product Market Fit. Product Solution fit is when you create a solution that you THINK creates value for your customers. Product Market fit is when you create a solution that you Know creates value for your customers which validated by customers using your product.

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