What do your customers really want — and how can you better deliver it? Business model expert and Strategyzer.com co-founder Alex Osterwalder has created a tool to help you find out. The Value Proposition Canvas “allows you to sketch a profile of how your products and services will create value for a specific customer,” he writes in the Wall Street Journal. “Once you’ve made these clear, you can test them.”
Osterwalder provides this three-step approach to using the tool, which aims to help you “avoid making stuff nobody wants.” (Tip: In a follow-up interview with Build, Osterwalder urged template users to write in pencil and to collaborate, because this yields more strategic conversations than typing and working individually do.) Each step corresponds to one third of the canvas:
1. Customer Job(s).
“First, you want to outline what jobs you believe your (potential) customers are trying to get done that lead them to purchase your products and services,” he notes.
“First, you want to outline what jobs you believe your (potential) customers are trying to get done that lead them to purchase your products and services,” he notes.
“Jobs,” of course, is a very general term. Osterwalder’s canvas prompts you to assess the specific types of jobs that your product or services can help with. For example, ask yourself: What functional jobs are you helping your customer get done (e.g., perform or complete a specific task, solve a specific problem)? What social jobs (e.g., trying to look good, gain power or status)? What emotional jobs (e.g., aesthetics, feel good, security)?
- What basic needs are you helping your customer satisfy?
2. Pains.
“Second, describe all the pains you believe your customers might have or might fear related to those jobs — negative emotions, undesired costs or risks.”
Here, Osterwalder’s questions help you to specify the pains — fiscal, emotional, or performance-based — that your customers are concerned about. For example: What do your customers find too costly (e.g., takes a lot of time, costs too much money, requires substantial efforts)? What makes your customers feel bad (e.g., frustrations, annoyances, things that give them a headache)? How are current solutions underperforming for your customers (e.g., lack of features, performance, malfunctioning)?
- What’s keeping your customer awake at night?
- What risks does your customer fear?
- How are current solutions underperforming for your customer?
3. Gains.
“Third, describe all the gains you believe your customer expects or desires as an outcome of that job. This could be benefits like functional utility, social gains, positive emotions, or cost savings.”
Osterwalder’s cues for “gains” are also category-specific: Which savings would make your customers happy (e.g., in terms of time, money, and effort)? What outcomes do your customers expect, and what would go beyond their expectations (e.g., quality level, more of something, less of something)? How do current solutions delight your customers?
- What would make your customer’s job or life easier?
- What positive social consequences does your customer desire?
- How does your customer measure success or failure?
The Value Proposition Canvas is part of Osterwalder’s wider Business Model Canvas, which we wrote about last year. He stresses that, even if you master your value proposition, it can only be effective if your wider business model makes sense.
After all, answering these questions is just the beginning of your quest to understand your customers’ needs. Your answers, after all, are only your answers: The point of this exercise is to learn “which core beliefs you need to test with customers,” Osterwalder concludes.
That’s why the most important part of the Value Proposition Canvas may very well be the iteration number. The first time you ask yourselves these questions should not be the only time.
In other words: Ask the questions. Fill out the canvas. Test your answers with your customers. Then repeat the process — in pencil, every six months.
