Product-Market Fit Creation with Value Proposition Canvas

 

By Omodiaogbe Samuel

Last Updated: December 11, 2023

Introduction

The Value Proposition Canvas is a strategic business tool that can help organizations and teams to systematically create solutions that meet the real needs of their customers. The framework was originally created by a business management theorist, Alexander Osterwalder to help in maximizing the chances of new product development success. That is achieved by ensuring that the value proposition that is created is centered on the alignment between the physical and emotional needs of the customer. It is that alignment that enables the organization to sell solutions, rather than simply products/services. Essentially, it is a chart that consists of a square on the left and a circle on the right, and both are divided into three sections. The circle is about the Customer Profile―details the customers’ needs, desires, and obstacles. While on the other hand, the square is the Value Map― identifies the various benefits of the product/service and how it addresses the customers’ needs. The goal of the Value Proposition Canvas is to craft a strategy that ensures the value proposition of an organization addresses the real needs of the customers. 

 

How To Fill the Value Proposition Canvas?

  • Choose a customer segment.
  • Identify their jobs and prioritize them according to how important they are to your customer.
  • Identify pains and prioritize them.
  • Identify their gains and prioritize them.
  • Pick the top 3-5 most important pains and gains that relate to the most important jobs.
  • List all the benefits of your product or service.
  • List all pain relievers.
  • List of gain creators.
  • Pick 3-5 of the gain creators and pain relievers, that make the biggest difference to your customer.
  • Link the pain relievers, gain creators and product benefits to the pains, gains and jobs they solve.
  • Define how you’re better than the competition.
  • Create value propositions that centers on product-market fit
  • Test the hypothesis of the value proposition(s) with your customers.
  • Use the customer’s feedback to refine the value proposition

                                 The Customer Profile and the Value Map

                                                                Customer Profile

 

The Customer Profile describes a specific customer segment in your business model in a more structured and detailed way. It breaks the customer down into its jobs, pains, and gains. To get started with the Value Proposition Canvas, you need to start with the customer profile before moving to the value map. And the customer profile should be created for each customer segment, as each segment has distinct gains, pains and jobs.

The customer profile has three parts: jobs, gains and pains

Jobs:

Jobs include all the tasks that customers are trying to solve. These jobs can include anything that a customer is trying to do. It can include a problem being solved, a task being achieved, or any other need they want to satisfy. 

These jobs fall into the following categories:

  1. Social jobs: how an individual wants to be perceived by others. Social jobs are motivated by our societal duty, optimism, fear, or aspiration – the things we feel we have to do as part of our role in relationships and society
  2. Emotional jobs: this is based on wanting to feel a specific feeling. Emotional jobs come from our preferences, likes, dislikes, or insecurities.
  3. Functional jobs: this is fulfilling a specific task or a project

It is important to acknowledge that not all jobs have the same importance to your customer. Some matter more in a customer’s work or life because failing to get them done could have serious ramifications. Some are insignificant because the customer cares about other things more

Here are some questions to help you define customer jobs:

  • What functions does your customer try to perform?
  • What social goals does your customer try to accomplish?
  • What are your client’s emotional goals?
  • What jobs make them feel satisfied?
  • How does your customers want to be perceived by others? What can they do to achieve this?
  • How does your customer want to feel? What does he/she need to do to get this?

Gains:

Customer gains are the things that a customer gets excited about as they try to accomplish their goals and get their job done. They’re benefits, delights, things that make it easier to adopt the product or service. It should be noted that pains and gains are not polar notions i.e., gains should include the things that make customers satisfied or even happy rather than simply being a converse of the pains.

Here are some questions to help you define customer gains:

  • What kinds of savings would make my customer happy? (Time, money, energy, etc.)
  • What results does my customer expect? Which ones can mesmerize them
  • What current solutions enchant my customer? (Functionalities, performance, quality, etc.)
  • What can make my customer’s tasks easier?
  • What positive consequences does my customers want? (Power, status, acknowledgment, satisfaction, motivation, etc.)
  • What is my customer looking for? (Design, guarantees, specific features, functionality, etc.)
  • How does my customer measure success and failure? (Cost, performance, speed, quality, beauty, likes on social networks, etc.)

Pains:

All factors which stop customers from completing a job are called pains. Pains could be frustrations with the current solutions, or unknown barriers. They could be what keeps your customers awake at night. A customer pain can be extreme or moderate, similar to how jobs can be important or insignificant to the customer. For each job, you need to address the negative experiences, risks or undesired costs associated with getting that job done in the current situation. You need to find out what gets in the way or impedes the customer. Note, several jobs may share similar pains, so it’s okay to group these. It’s a good idea to sort these in order of intensity or mark them with numbers or colors to indicate if it’s a mild or an intense pain.

Here are some questions to help you define customer pains:

  • What is expensive for my customer? (Regarding time, cost, effort, etc.)
  • What makes my customer feel bad? (Frustrations, disappointments, failures, physical pain, etc.)
  • What are the main difficulties and challenges of my customers?
  • What are the negative consequences for my customer? (Losses of power, status, money, time, trust, etc.)
  • What risks is my customer afraid of? (Financial, social, technical, etc.)
  • What is keeping my customer awake at night? (Concerns, challenges, debts, bad health, etc.)
  • What is preventing my customer from adopting solutions? (Investment, learning curve, resistance to changes, etc.)
                                                                               Value Map

Now it’s time to work out how to address the customer needs – the jobs they need done, the pains they want soothing and the gains they’re hoping for. Now, we shift to the left side of the canvas. The square on the canvas represents the value proposition map. Like the circle, this is also divided into three parts. The focus here is to map out the product features, functionality and benefits that attract customers and fulfill their needs from the circle.

The value proposition has three parts: products and services, pain relivers, and gain creators

Products and Services:

To begin with, list the products you make or the services you provide that help your customer get their functional, social or emotional jobs done. A value proposition is called that because it’s a claim you’re making that you can create value for a specific kind of customer. A product or service creates value by getting jobs done while relieving pains and creating gains. This is an all-encompassing list of the product and service features that help your customers get their jobs done, overcome their pain, and meet their expectations. Your list should include everything from essential product features to small side benefits that could impact your customer. 

 

To properly address this, you need to ask these questions

  • Can the product/service help to accomplish any job-to-be-done, whether functional, social, emotional, needs, wishes, roles, etc.?
  • Is the product/service tangible, digital/virtual, or financial?
  • Is the product/service crucial or trivial? How relevant is it?
  • How often is the product/service used by my customer?

Pain Relievers:

Pain relievers describe how exactly your products and services alleviate specific customer pains. They explicitly outline how you intend to eliminate or reduce some of the things that annoy your customers before, during, or after they are trying to complete a job or that prevent them from doing so. Great value propositions focus on pains that matter to customers. You don’t need to come up with a pain reliever for every pain you’ve identified in the customer profile—no value proposition can do this. Great value propositions often focus only on few pains that they can alleviate extremely well

 Here are some questions to help you define customer pain relievers:

  • Does your product/ service provide savings? (Regarding time, money, efforts, etc.)
  • Does it improve the emotional state of your customer?
  • Does it remove the difficulties or problems that your customer faces?
  • Does it reduce the risks that your clients are afraid of?
  • Does it help your customers sleep better at night? 
  • Does it limit or eradicate common mistakes that customers allow?
  • Does it eliminate barriers that keep your customers from implementing the specific solution?

Gain Creators:

Gain creators describe how your products and services create customer gains. They explicitly outline how you intend to produce outcomes and benefits that your customer expects, desires, or would be surprised by. These includes functional utility, social gains, positive emotions, and cost savings. As with pain relievers, on gain creators, you don’t need to address every gain identified in the customer profile. Focus on those that are relevant to customers and where your products and services can make a difference.

 Here are some questions to help you define customer gains creators:

  • Does your product provide savings that make your client happy?
  • Does it ensure the results that the customer expects? 
  • Does it simplify the work or life of the customer?
  • Does it give something that your customer wants to get? 
  • Does your product/ service reflect some of the dreams of your customer? 
  • Does it give positive results that meet the criteria for success and failure of the customer?

Case Study: Footprint Institute

Addressing Graduate Unemployment Crisis in Nigeria

There is a great crisis of graduate unemployment in Nigeria. Every year, out of over 200,000 that graduate from our tertiary institutions, only about 10% end up securing gainful employment, and the rest join the unending unemployment crew. Most have stayed at home doing nothing for more than ten years, and the sad news is that the prospect of ever getting employed is remote, due to skill-gap between job openings and skill level. Besides, most of them would have liked to setup their businesses, but the skills of setting up and running businesses were never taught in schools

This is where Footprint Institute comes in. We’re a Social Venture that was setup to provide solution to the graduate unemployment crises in Nigeria through innovative entrepreneurial training.  The business model is centered around partnering with professionals, existing successful entrepreneurs, and industry players to equip the graduate students on the best approach to setting up and running successful businesses. It’s a nine months hands-on entrepreneurial program that focus only on graduates that have passion for entrepreneurship. The mission of the institute is “turning job seekers into job creators”

Here is the Value Proposition Canvas of Footprint Institute

Ranking

 Ranking the customer profile and value map are essential in order to design value propositions that address things customers really care about. Of course, it’s difficult to unearth what really matters to customers, but your understanding will improve with every customer interaction and experiment. It doesn’t matter if you start out with a ranking that is based on what you think is important to your potential customers as long as you strive to test that ranking until it truly reflects the priorities from the customer’s perspective. As a result, Footprint Institute need to rank the Customer Profile and the Value Map on the scale of 1-10. Where 1 indicates, not important, and 10 implies very important. In that regard, we have decided to focus on the top three ranks on both dimensions as we don’t have the capacity to address all the customer concerns

Top 3 Ranking of the Customer Profile and Value Map of Footprint Institute

Customer Profile

Jobs

Pains

Gains

1: Improve or build a business

1: Being unemployed for years

1: Solution to unemployment

2: Getting Employed

 

2: Lack of entrepreneurial skills

2: Ability to make money

3: Acquire job-creating skillset

3: Inability to make money

3: Job creation

 

                                                              Value Map

Products &Services

Pain Relivers

Gain Creators

1: Entrepreneurial training

1: Solution to unemployment

 

1: Practical approach to teaching

2: Hands-on skill acquisition

2: From job seeker to job creator

 

2: Hands-on learning experience

 

3: Internship

3: Creating a new career path

 

3: Taught by practicing entrepreneurs and consultants

Testing the Value Proposition Canvas
Now that Footprint Institute has created a value proposition canvas that looks promising, it needs to tested it at an early stage so that the company can make the necessary adjustments on time. It may happen that the requirements of customer profile and value map have been misunderstood. There could also be a problem with the assumptions made in the process. Therefore, the canvas must be translated into practice. In a Value Proposition Canvas, it is important to always test the assumptions with the customer so that it can be established that the proposal added value to the customer. The customer will guide the client through the step-by-step process to assess whether the assumptions and interpretations are correct. After all, it is the customer who determines whether the value proposition will produce results or not.

Creating A Product-Market Fit

The objective of the Value Proposition Canvas is to create a Fit between what the company offers and what the customer values. That happens when you address important jobs, alleviate extreme pains, and create essential gains that customers care about. The fact is that customers expect and desire a lot from products and services, yet they also know they can’t have it all. Therefore, focus on those gains that matter most to customers and make a difference. Remember that the fit is initially evaluated by the business, but that it is the customer who has the last word. As a result, to create the desired fit, you need to test your value proposition at an early stage so you can make adjustments on time. Essentially, the search for value propositions that meet customer jobs, pains, and gains is a continuous back and forth between designing prototypes and testing them. The process is iterative rather than sequential. The right approach to Value Proposition design is to test ideas as quickly as possible in order to learn, create better designs, and test again. After all, it is the customer who determines the viability of a value proposition

 

Fit happens in three stages. The first occurs when you identify relevant customer jobs, pains, and gains you believe you can address with your value proposition. The second occurs when customers positively react to your value proposition and it gets traction in the market. The startup movement calls these problem-solution fit and product-market fit, respectively. The third occurs when you find a business model that is scalable and profitable.

  • Problem-solution fit: Evidence that customers care about the jobs, pains, and gains you intend to address with your value proposition.
  • Product-market fit: Evidence that customers want your value proposition.
  • Business model fit: Evidence that the business model for your value proposition is scalable and profitable.

                                 Strategic Approach to Developing the Canvas

A customer exists independently of your value proposition. When you sketch out your customer’s profile, don’t just focus on jobs, pains, and gains related to your value proposition. Keep it broad to understand what really drives your customer. In today’s hypercompetitive world, customers are surrounded by an ocean of tempting value propositions that all compete for the same limited slots of attention. Therefore, you need to strive to understand what your customers really care about. Investigate the jobs, pains, and gains beyond what your own value proposition directly address. You need to imagine a totally new innovative way to provide solutions that address the unmet needs of the customer. You need to understand your customers beyond your solution. Unearth the jobs, pains, and gains that matter to them in order to understand how to improve your value proposition or invent new ones. Successful companies create value propositions that sells business model that works. Outstanding companies do so continuously. They create new value propositions and business models while they are successful. Use customer experiments as a yardstick to judge new ideas and opportunities rather than the opinions of managers, strategists, or experts

Components of Value Proposition Canvas are unique yet correlated. Customer Profile is about observing the customer needs and wants. The Value Map is integrating those key findings to improve product quality. You need to deal with every customer segment uniquely. In fact, this is the most common error made by businesses. Each customer segment is distinct in its jobs, pain, and gains. It is a mistake to squeeze all of them together into one Customer Profile.

Moreover, you should think like the customer. Most businesses draft customer profiles inefficiently. They fail to focus on what customers expect from a given product. They tend to only see what their product (or service) is set to resolve when launched into the market. Once you start thinking like a customer, you will be able to see where your product is lacking. Try to figure out what drives a customer to buy a product. Provide solution that centers on the essential customer needs that must be satisfied

You need to evaluate the Jobs-to-be-done. This factor differentiates on how deeply a product is desired compared to another. While functional jobs tend to be the most obvious reason to buy, their level of satisfaction is low. On the other hand, emotional and social jobs give more personal satisfaction. Therefore, you need to focus on what customers need the most. Before developing the Value Proposition Map, you must keep in mind the following: Not all customer pains and gains can be addressed. The best approach is to target key factors that customers consider as the topmost priority. This will help your team concentrate on the goal of developing products/services that really matters to the customers

 

Essentially, you need approach the Canvas with these mindset:

  • Take the exploration of new value propositions just as seriously as execution of existing ones.
  • Invest in continuously experimenting with new canvas rather than making big bold uncertain bets. ·
  • Reinvent yourself while you are successful, and don’t wait for a crisis to happen before doing that
  • See new ideas and opportunities as a means to innovate and experiment, rather than a risky endeavor. ·
  • Align your success criteria of the value proposition with the criteria of customer success.
  • Make your value proposition difficult to copy
  • Be sure to beat the competition substantially in at least one dimension

Common Mistakes of the Canvas Design

  • Mixing several customer segments into one profile.
  • Mixing jobs and outcomes
  • Focusing on functional jobs only and forgetting the social and emotional jobs
  • Listing jobs, pains, and gains with your value proposition in mind, without been customer-centric
  • Identifying too few jobs, pains, and gains.
  • Being too vague in descriptions of the pains and gains

Best Practices

  • Make a Value Proposition Canvas for every different customer segment
  • Jobs are the tasks customers are trying to perform, the problems they are trying to solve, or the needs they are trying to satisfy. Whereas gains are the concrete outcomes they want to achieve—or avoid and eliminate in the case of pains
  • Sometimes social or emotional jobs are even more important than the “visible” functional jobs.
  • When you map your customer, you should approach it with design thinking perspective by always looking at things from the angle of the customers
  • Map out all your customers’ important jobs, extreme pains, and essential gains
  • Make pains and gains tangible and concrete. For example, rather than just writing “customer satisfaction” in gains, specify how the customer will be satisfied by your offering
  • Developing deeper insights on what really matters to the customers. Another issue when you get started with the customer profile is that you might settle with a superficial understanding of your customer’s jobs. To avoid this, you need to ask yourself why a customer wants to perform a certain job and dig deeper toward the real motivations.

                                                      Advantages And Disadvantages

Advantages

These are the advantages of using the Value Proposition Canvas

  • Understanding the customer, with their needs and expectations;
  • Developing a product in accordance with what your customer need and want;
  • It helps in finding your product-market fit;
  • It helps in avoiding producing something nobody wants,
  • Saving time and money
  • The tool acts as fundamental guidance to stay focused and keep the track

Disadvantages

Actually, the tool does not reveal any substantial features that one might consider a disadvantage. That means the canvas can only bring harm only if used improperly. And here are some cases of wrongful ways of using the canvas:

  • Loss of canvas distinction: The tool consists of two parts, and despite their interrelation, each part is a separate unit. Components to specify in both the circle and the square are different. Those on the right are beyond your control, while the left ones are within your control
  • Overloading with customer segments: you need to fill in separate canvases for each category of users and not load all the segments on a single canvas. By mixing all of them up, you make it more difficult to identify the highest priority jobs, pains, and gains.
  • Improper way of filling: The filling order does matter. When you fill it from right to left, you define what values your product should have to be in demand. If you go the opposite direction, you’re likely to fail to understand what customers really need.
  • Trying to meet every single need: you should prioritize the needs and think about which ones are most important to the customer, as well as your product’s strengths and weaknesses.
  • Including too many customer segments: Since one of the strengths of the Canvas is helping you take a closer look at your customer’s needs, it’s a good idea to focus on a particular customer segment

                                                       Conclusion

The Value Proposition Canvas is a strategic business tool that can help you unearth the actual needs of your customers. Basically, it is a chart that consists of a square on the left and a circle on the right, and both are divided into three sections. The circle is about the Customer Profile, which details the customers’ needs, desires, and obstacles. While on the other hand, the square is the Value Map identifies the various benefits of the product/service and how it addresses the customers’ needs. The model helps you to understand your market and product, and encourages you to ask questions you normally don’tEssentially, the Canvas allows you differentiate your offering from competition by delivering solutions your customers truly care about

 Key Takeaways

  • The value proposition canvas is a graphical expression of the actual needs of your customers, and what a product/service can offers to address those needs
  • The tool originates from the business model canvas, but focused only on the customer and value proposition parts
  • The canvas consists of two parts – customer segments (circle on the right) and value map (square on the left).
  • Combining the two dimensions gives a powerful approach to analyze your business and to discover ways of improvement.
  • The more matches you have between the components specified in the right and left parts; the more chances you have to create a product-market fit
  • The tool can be used by both entrepreneurs and intrapreneurs to analyze a startup or established companies 

Omodiaogbe Samuel, MSc. CMC, ChMC, FIMC

Omodiaogbe is a Strategic Management Consultant, and he the Principal Consultant/CEO at Vast Thinking Consults Ltd where he help organizations and business leaders to create superior value. Omodiaogbe holds BSc. and MSc. in Economics. Also, he is a Certified Management Consultant (CMC), a Chartered Management Consultant (ChMC), and a Fellow, Institute of Management Consultants, Nigeria. He is an Instructor on Coursera, where he teaches 25 courses in Strategic Management. Omodiaogbe is one of the world’s leading learners on Coursera and Edx with over 500 Certificates from top-ranked Universities, Business Schools, and Organizations 

Contact him:
Email; somodiaogbe@vastthinking.com.ng
Visit: www.vastthinking.com.ng

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