Value Proposition
A value proposition provides the answer to why a customer should buy or use a product. It needs to convince a potential user why it is superior to existing solutions.
Value Proposition Statement
The value proposition statement is a tool to catch a product vision in, well, a simple statement. The typical template looks like this:
The idea of that very simple template is to provide a short, crisp, easy-to-understand description of what benefit the product shall provide for which customers in which circumstances, and how that differs from the other solutions.
To illustrate, the following is how the value proposition statement might have looked like for Nespresso when they launched their capsule machine business:
For coffee drinkers
Who want the authentic taste of a great espresso at home without the hassle
The Nespresso coffee maker
Is a capsule machine
That offers consistent high-quality drinks
Unlike traditional coffee machines, there is no mess and no clean up
Our product brings the quality of your favorite coffee shop into your kitchen
Value Proposition Canvas
While the value proposition statement is a nice way to summarize the benefits, it doesn’t give any hints on how actually to arrive at that state. This is where a value proposition canvas comes in nicely. Initially developed by Alexander Osterwalder et al, the value proposition canvas is a tool helping to ensure product-market fit, so that a product that shall be developed will actually help customers with their pains and gains during their daily job:
The right-hand part describes the customer, their jobs-to-be-done, and how they are struggling in that. The left-hand part briefly describes the product, its features, and how these features help to relieve pains or create gains. Obviously, both sides need to match.
For creating a value proposition canvas, we typically fill it in from right to left:
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Imagine the target user and list their jobs-to-be-done in customer jobs
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Based on research, add what we know about where they struggle or what might make them happy – the pains and gains
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Think about how to relieve these pains or create additional gains, respectively
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List the product features or service offerings that are needed to deliver these benefits
When all the information is essentially available, this tool is quick and easy to use for structuring a product idea. Other than the value proposition statement above, it can also be applied on the feature level, i.e. when an existing product shall be extended.
When there are gaps, this clearly indicates the need for more user research.
Further Reading
Value Proposition Design
How to create products and services customers want
— Alex Osterwalder & Yves Pigneur & Greg Bernarda & Alan Smith
The Value Proposition Canvas
This method from the bestselling innovation book Value Proposition Design is applied in leading organizations and start-ups worldwide.