What is the Value Proposition Canvas (VPC)?

Focusing on the most critical aspects of a product and, most importantly, on the needs of customers is crucial for achieving market success. The Value Proposition Canvas (VPC) can be very helpful in this regard due to its simplicity, which makes it easier to extract the most important elements from a large amount of features and information. How does it work?

VPC, or customer-centric approach

Many companies believe that the most important thing is WHAT PRODUCT they sell. They focus on its technical features, rightly realizing that it should be as refined as possible. The idea behind VPC is that customers do not buy the product itself. They buy value that is significant to them.

Value is the benefit generated from a particular product. It's about solving their problems and meeting their needs. By focusing on these aspects, we can create a product that will be successful. Neglecting them or failing to articulate them exposes us to failure.

Unfortunately, a significant portion of new businesses experience failure: 90% of startups fail. This is often directly related to a flawed understanding of consumer needs. The most important product features in the context of satisfying these needs are also frequently misjudged.

VPC allows us to pinpoint these needs precisely and does so with a simple and clear framework. Its simplicity enables us to focus on the most critical aspects of the product, sales, and marketing, setting brand priorities.

The VPC framework is straightforward and looks like this:

Why is it worthwhile to create a VPC?

• Specifying the direction of actions

  When working on a new product, we can become too focused on the product itself and the process of its creation. This can cause us to lose sight of the most important features that it should have to satisfy customer needs. There's a risk that we might concentrate on additional functionalities or "value-added" features that may not be as essential, neglecting the core ones.

• Increased customer engagement

  Customers whose needs we meet are more interested in the product. They feel as though we're reading their minds and responding precisely to their concerns or tasks they need to accomplish.

• Effective marketing

  For startups or less recognized companies, it's challenging to rely solely on the brand logo to evoke positive associations and entice customers to make a purchase. The product itself is crucial.

  VPC aids in effectively directing marketing efforts towards values that are most important to customers. This helps avoid "over-talked" messages and excessive focus on product features. It also makes it easier to create effective advertisements that inherently require content based on the most critical aspects of the offering.

Creating a Value Proposition Canvas (VPC) step by step

When constructing a VPC, you should start with the customer profile because their needs are paramount. At the same time, it's crucial to establish priorities for all sections of the VPC, both related to the customer profile and value propositions (e.g., tasks, benefits, problems).

• 1. Customer profile

  • a) Jobs to be done:

    This part of the VPC focuses on the tasks the customer wants or needs to accomplish, and how the product should assist with these tasks. The type of tasks will depend on the area your product addresses (without diving into specific functionalities or features yet). These tasks can be categorized as:

    • Functional tasks

      These are everyday tasks that are essential to complete. They might include getting from point A to point B or washing one's clothes using a washing machine. Questions to consider about the persona include: What does a typical workday look like for your potential user? How do they commute to work? How do they use their smartphone? What activities must they perform while managing their household?

    • Social tasks:

      These are tasks related to the social role the customer plays, such as being an employee or a member of a local or broader community. Examples might include buying a luxury car to enhance social status, going to a cozy restaurant for quality time with friends, or taking an online course to improve professional qualifications.

    • Emotional tasks

      These are actions taken by a person to maintain or change their emotional state. This could involve seeking a sense of fulfillment, security, or well-being. Examples might include going to the gym to feel a sense of accomplishment, indulging in something tasty to boost their mood, or wearing stylish clothing to boost self-confidence.

      Remember, the goal of the VPC is to align these customer tasks with the value propositions your product offers. This alignment helps you better understand the customer's needs and how your product can fulfill them effectively.

  • b) Problems:

    In this section of the VPC, you focus on the obstacles that customers face, what troubles them, and what problems your product should solve. Problems should be classified as either significant or less significant. This helps in setting priorities, making it easier to determine the most important product features.

    Problems may include the inability to satisfy a particular need, negative emotions (e.g., frustration), discomfort, or excessive effort when using an existing solution, fears, and concerns, and more.

    Examples of problems might include:

    • "I didn't have the time and energy to regularly vacuum my apartment. A solution to this problem could be a product that does it for me."
    • "My team and I spent too much time sending marketing emails to customers of our online store. A potential solution to this problem could be an email sending tool or a feature that addresses our issue."
    • "I was afraid my home would become a target for burglars when I went away for an extended period. A solution to this problem could be a system that regularly turns on lights to simulate my presence."

  • c) Benefits

    These are the advantages that a customer would like to enjoy in life, specific situations, or work. Here, you should consider what positive emotions will be brought to your potential user. These benefits can be categorized as required, expected, desired, and unexpected.

    Required Benefits pertain to fundamental desires, the satisfaction of which may go unnoticed, but their absence could cause frustration. Expected Benefits are what the customer anticipates and may already be receiving through alternative solutions (not necessarily software or technological products). Desired Benefits address additional needs. Unexpected Benefits are positive surprises that the customer might not have even thought of.

    Examples of benefits might include:

    • "When using Gmail, I expect all features to work correctly (a required benefit). If there's an error during email sending, it frustrates me – the basic benefit remains unmet and becomes a pain point."
    • "I expect to grow professionally while performing my job duties, as it's necessary for my career progression."
    • "I'd like to avoid repetitive tasks that bore me and focus on real challenges (a desired benefit)."
    • "I didn't expect using the company's CRM to be this convenient! (an unexpected benefit)."

    It's essential to create separate schemes for each type of product user because the aspects mentioned above can vary. Avoid general descriptions, as filling out the scheme as specifically and clearly as possible will make it easier to address customer needs during product development and marketing.

  

• 2. Value Proposition

  This part of the scheme is, in a way, a response to everything we've discussed in the customer/user-related section.

  • a) customer gains:

    Here, you need to assess the values that can translate into benefits for the customer. It's also essential to determine aspects like prioritizing these values (whether they solve very significant or less significant problems/meet needs) and whether they genuinely assist the customer in performing a specific task.

    Customer gains may include:

    • The ability to report an error and ensure that efforts are initiated to fix it.
    • Receiving interesting tasks and projects to work on.
    • Spending less time on routine tasks.
    • Having an intuitive CRM that makes work easier.

    In this section, you articulate the concrete benefits your product offers to the customer, aligning them with the problems or needs identified in the customer profile. This helps create a clear picture of how your product addresses the customer's needs and adds value to their life or work.

  • b) solving problems

    In this section, we refer to the analogous part of the customer profile, focusing on what value can alleviate the customer's problems. In this area, we aim to capture the essence of the problem and what real value it holds for the customer, as only then can we design functionality.

    Questions to consider include: What are the possible ways to solve this problem? What value unites all these possibilities? What is the crux of the problem? At this point, we should refrain from imagining a solution we already know and try to focus on a universal value proposition.

    Examples (based on the previous sample problems):

    • Automating vacuuming tasks
    • Automating email sending
    • Simple home security for extended trips

  • c) products and services

    In this section, we list the elements of our products and services that carry the value proposition and have practical dimensions. It's also important to consider how often the customer will use the product and how significant it will be for them.

    Unfortunately, when comparing the Customer Profile to the Value Proposition, achieving 100% alignment can be challenging. Therefore, it's essential to establish customer needs' priorities, allowing us to focus on the most critical product features.

Common Mistakes in Creating a VPC

• Too many user personas

  It's essential to focus on the primary users because there may often be minor variations in tasks or behaviors among them and the secondary users. Otherwise, your VPC will contain too many elements and won't allow you to concentrate on the core product values.

• Attempting to address all benefits and needs

  You should concentrate on the most crucial benefits and customer needs, those that are vital to them. Otherwise, you'll overload the scheme and lose sight of the most important aspects. It's also helpful to assign priorities to problems and needs. This way, you can easily formulate the core product scope that will be most important to the customer.

• Treating parts of value proposition and customer profile as a whole

  The scheme consists of two separate parts that are independent of each other (although ultimately, you aim to align them). You should begin with the customer-related section and then move on to the Value Proposition, not filling them out simultaneously. This approach allows you to identify flaws in your existing product or solution and find room for improvements. Additionally, product features are the final stage, coming after formulating all values.

• Insufficient market research

  TIt's challenging to fill out the Customer Profile section without a deep understanding of your target market. Relying solely on your assumptions and experiences is not enough. Surveys and tools for monitoring the internet, as well as observing blog posts and comments on forums and social media, can be helpful. This way, you'll learn about customer pain points, desires, and the tasks they need to accomplish.

VPC as a Useful Tool

The Value Proposition Canvas will be beneficial for any company working on new products and services. Startups and companies with low brand recognition, in particular, will derive special advantages from using VPC. It's also valuable when entering a new market, targeting a different customer segment, or adding additional features to an existing product.

By using the Value Proposition Canvas, you can also easily develop an MVP MVP (Minimum Viable Product). This is a product version that includes essential user functionalities but is simplified compared to the original plans. Releasing it to the market gives you a chance to test the product through user interaction and assess whether there's demand for it.

However, creating a VPC is just the beginning of product development. Product testing is essential because whether it truly satisfies customer needs is a significant unknown. Until tests are conducted (e.g., in the case of software, allowing a user group representing our target audience to test a prototype), we won't know if we have a chance for success in the market.

A well-executed and utilized VPC will help us focus on customers by adopting their perspective. It enables us to attempt aligning our product with their needs. Therefore, it's valuable to use the scheme as an action plan when working on a product, allowing us to concentrate on what matters most.