Insights - How to Create your Value Proposition Canvas.
How to Create your Value Proposition Canvas.
A value proposition is the place where your company's product intersects with your customer's desires. It's the magic fit between what you make and why people buy it. -- Peter J Thomson. In this step-by-step guide, we will share with you a proven process to follow to define a customer-centric, human-experience-focused value proposition, as well as questions and checklists to help you avoid common pitfalls. We will be using the Value Proposition Canvas by Peter J Thomson as our tool, which you can download from our Template Library. Let's get started!
CHOOSE A PRODUCT OR SERVICE
As a first step, choose and name the product or service you will be focusing on. Fill this in the corresponding field at the bottom of the Value Proposition Canvas.
NAME YOUR IDEAL CUSTOMER
As a next step, you should name the ideal customer profile for the product or service you are building the value proposition for. It is good practice to use a Customer Personas Canvas to capture the characteristics of an ideal customer: their demographics, psychographics, sources of knowledge, places the congregate, a typical day, etc. You can then create a tagline like
First name + Personal Qualifier + Segment Qualifier + Role
for the Ideal Customer section. For example, of you ideal profile is supposed to use project management software in the IT industry, you might use John, the Ambitious IT Project Manager.
LIST THE CUSTOMER NEEDS
Needs are the essential requirements of your target customers. They are non-negotiable, rational and functional tasks that the customer must perform to navigate a typical day in their life. It is good practice to conduct job immersion/observation, customer interviews, surveys, and market research to identify customer needs. You can then list them using the following format:
Verb + Object
For example, a project manager's needs might be: plan/replan project, track progress, evaluate risks, assign tasks, mark milestones, .... Capture the list of all needs in the Needs section.
IDENTIFY THE CUSTOMER WANTS
Wants delve into the desires and aspirations of your customers. Unlike needs which are rational, wants represent emotional and social drivers, that important to customers, even if they are not essential. Sometimes, customers are not consciously aware of such wants (designers call them latent needs). Having a deep understanding of customer wants can often differentiate your offering from competitors. It is good practice to seek deeper customer engagement and empathetic interactions to uncover customer wants. Once identified, group wants into three (3) categories reflecting what the customers want to
Be: ... Do: ... Have: ...
For example, a project manager might want to Be: innovative, Do: create a high-performing team, and Have: a reputation of always delivering on time and under budget. Capture the list of all wants in the Wants section.
UNCOVER CUSTOMER FEARS
Fears are the sum of doubts, anxieties, and concerns a customer might have while making a decision about your product or service. They can be functional (will it work, is it too expensive), emotional (am I making a mistake) or social in nature (what would others say if I take this decision). Often, the strongest fear is associate to the costs of switching. It is paramount you understand how big enough improvement you need to offer to overcome the fear of switching costs. It is good practice to actively listen to customer feedback, read online reviews of similar products, and engage in honest conversations with potential customers. Consider what might prevent them from using your product or service and what concerns they have with existing solutions.
A customer deciding whether to purchase a new project management software might be fearful of paying too much, disrupting a working process, making a career impacting choice, ... Capture all uncovered fears in the Fears section.
ITEMISE SUBSTITUTES
The Substitutes are alternative solutions that customers might consider using, instead of your product or service. Understanding substitutes helps in highlighting your unique value proposition and differentiating your offering from potential competitors. It is good practice to investigate the current alternatives your target customers are using to meet their needs and wants, and alleviate their fears. These can range from direct competitors to indirect solutions, including doing nothing or using a DIY approach.
Substitutes for project management software may include in-house software, pen and paper, Excel, checklists, ad-hoc planning, no planning, ... Capture all uncovered substitutes in the Substitutes section.
DETAIL PRODUCT FEATURES
Features are the tangible attributes and functionalities of your product or service that address the needs, wants, and fears of your customers. They are the practical components that make up your offering. They are binary in nature: they either exist or not. It is good practice to outline the key features your product or service must have to meet customer requirements effectively. Prioritize features based on their ability to deliver value to your customers.
For a project management software, a feature list might include drag and drop task creation, integrated time tracking for tasks, automatic reminder notifications for upcoming deadlines, ... Capture all features of your product or service in the Features section.
HIGHLIGHT PRODUCT BENEFITS
Benefits translate how the features of your product or service improve your customers' lives or solve their problems. They represent the value your customers gain from using your offering. It is good practice to identify and articulate the direct benefit each feature you have listed offers to the customer in terms of outcomes and improvements in the customer's situation or experience. You can list benefits using the following format:
More of something positive, ... Less of something negative
For example, a project management software may offer the following benefits: faster planning, better monitoring, less risk.
SHARE PRODUCT EXPERIENCES
The Experience section encompasses the feelings, emotions, and perceptions that arise while the customer uses your offering. It is good practice to map out the customer journey from discovery to post-purchase support, considering all touchpoints with your product or service and design an experience that is not only user-friendly but also delightful and memorable. You can list experiences using the following formats:
Positive adjective 1..n, Positive comparable product (analogy)
A project management software could provide a set of Efficient, Serious, Extensible, Reliable, Analytical,... experiences.
IN SUMMARY
In this step-by-step guide, we shared with you a proven process to follow to create your value proposition with Peter J Thomson's Value Proposition Canvas. Adopting our recommendations will help you avoid common pitfalls and progress faster on your entrepreneurial journey.
Good luck!
CREDITS & REFERENCES
For the avoidance of doubt, Neos Chronos is not affiliated with and has no financial interest in any of the companies mentioned in this article. All names and trademarks mentioned herein are the property of their respective owners. Please observe the Neos Chronos Terms of Use.
- Peter J Thomson's Official Website
- Neos Chronos Value Proposition Canvas Workshop
- Neos Chronos Lean Canvas Workshop
- Neos Chronos Business Model Canvas Workshop
- Neos Chronos Template Library
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