Value Proposition Design Best Practices

Steve Forbes

Design products that customers want and come up with a rock-solid value proposition by focusing on their objectives, pains and gains.

With around 90% of tech startup failure being due to a lack of product-market fit, the stakes are high when it comes to understanding your customer.

For this reason, your value proposition is an essential element of your product creation process. This ‘prop’ should be long-lasting and act as the core promise to your customer.

With a good value proposition for each of your customer segments, you’ll have a well-rounded Product that stands apart from the competition. Your marketing team will also be able to use your value proposition to create stronger, more customer-focused messages.

At a recent Brainmates Product Talk, Strategyzer’s Product Strategy and Innovation expert Frederic Etiemble shared his insights on the best practices for designing a value proposition and explained the importance of understanding your customers’ pains, gains and jobs to be done as part of this process.

 

Designing a value proposition: start with your customer
Clayton Christensen predicted that as many as 95% of the 30,000 consumer products created a year fail. One of the reasons for this failure is the development of products in a vacuum, with little or no validation of customer desirability. Value proposition design is a process which instead starts with the customer.

Strategyzer’s Alex Osterwalder and Yves Pigneur developed the Business Model Canvas to help entrepreneurs summarise the story of how their business will create value. This canvas captures key activities, resources, cost structure, partners and revenue streams. They realised however, that the Business Model Canvas did not give enough detail on the customer segments and value created by the solution. To resolve this gap, they created the Value Proposition Canvas to zoom in on these critical elements.

Here’s a quick description of what each will include:

  • Your Customer Segment/Profile includes your target user’s gains, pains and the jobs they need done.
  • Your Value Proposition/Map describes gain creators, pain relievers and Products/services you offer.

When you’re creating a value proposition, the first step is usually to identify your target customer and clarify their pains, gains, their expectations and the jobs they need to complete.

Pains, gains and expectations
Consider a customer who has the ‘job’ of paying for a meal. The initial solution is to use their credit card. An example of a pain may be that their card is not working.

As Frederic explains, in between pains and gains is ‘expectations’. These days, customers expect that their credit card will work. So it’s not as simple as a straightforward ‘gains are the opposite of pains’. In this situation, a ‘gain’ may actually be collecting rewards points, rather than simply using the card.

Frederic shares another example:
“You’re queuing at Starbucks, with an expectation of how long it will take to get your coffee. A ‘pain’ is if it takes longer than ten minutes. A ‘gain’ is it taking less than five minutes. The expectation is somewhere between the two.”

Frederic explains that, “These expectations may change. Your coffee stand may be performing so well that the expectation moves to your coffee being ready in under five minutes. The ‘gain’ is having it ready in two minutes. Additionally, two customers may have different expectations. For one person, 2 minutes may be their absolute maximum. For another, five minutes may be acceptable.

Three simple hacks for clarifying customer pains/gains are:

  • Define the expectations bar
  • Look for continuums that pains and gains can ‘live’ on
  • Clarify the boundaries of those continuums

The Product-first approach
Whilst it is recommended to start with customer pains, gains and expectations, there are occasions when starting with the solution can work.

“Sometimes, it’s a matter of starting from the Products and services section of the value map,” says Frederic. “There might be an idea, some technology or a capability that already exists in your organisation.”

Amazon web services is an example of this. “This didn’t start from a customer job to be done. It started from an idea of Amazon reusing a capability they were developing and becoming world-class at. They started with the Product and then looked for a customer who would be interested,” says Frederic.

It’s not always important where you’re starting from. However, as Frederic points out, “What’s most important is the fit, so while you might not always start with the customer, you do have to end with a solution that meets their needs.”

Value propositions: is one enough?
Frederic also highlighted the need to design multiple value propositions when you’re dealing with multiple customers.

For example, if your target buyer is a B2B business, your value proposition can’t only encompass the pains/gains and problems of the customers of that business. You also need to take into account the company decision makers, the buyers, the influencers and even the potential ‘saboteurs’ who may come into contact with your Product or sales pitch.

“Make the effort to map a value proposition for each of these profiles and you will get results that resonate with all of them,” says Frederic.

Similarly, if your Product sells using an intermediary/distributor model, such as a vendor selling via Amazon or a retailer with a physical shopfront, you need to consider the intermediary as a customer as well as the end customer when designing your value proposition(s).

“A vendor like this should treat Amazon or whichever intermediary retailer they are using as a customer segment,” Frederic explains.

For a platform like Airbnb to work, the customers are accommodation hosts as well as travellers.

“To be successful with a platform like this, you need a strong value proposition for each customer segment. You may even have three customer segments, so create a value proposition for each of them,” says Frederic.

How to uncover better insights when mapping your customer
People often take a superficial approach when mapping their customers’ pains, gains and jobs to be done.

To uncover more in-depth insights, Frederic teaches ‘going broad’. “For example, tyre company Michelin had a technology advantage when it came to fleet sales, but they noticed the market was moving towards low-cost solutions, which was an area they weren’t set up to compete in. What they did was take a customer deep-dive journey, where they tried to understand the jobs to be done by the CEO of a transport company,” says Frederic.

Michelin started mapping all the jobs, pains and gains of CEOs. They discovered that there was a lot more involved than simply buying tyres. Things like durability, budget, tyre disposal, managing safety and optimising fuel consumption all came into play for these decision-makers.

The ‘pains’ included fearing making mistakes, not understanding compliance and overcoming internal conflicts. The ‘gains’ included reducing accidents, decreasing carbon emissions and improving profitability.

Michelin could now see all the jobs required by a CEO and was able to clarify their value proposition beyond simply supplying tyres. “They were also able to prototype additional services they could offer,” says Frederic.

“Take a narrow view of your customer as a user of your Product and you won’t discover insights that lead you to design something radically transformative. Take a broader angle and you might be on your way to discovering a completely new Product or service.”

In Michelin’s case, fleet tyre sales evolved into something of a consultancy service. This helped transport companies increase their profits and helped Michelin create a reason for their customers to avoid the low-cost solutions of their competitors.

Choosing the pains, gains and jobs to focus on
When you start your exploration of your customers in order to create your value proposition, you will very quickly notice there are a lot of jobs, pains and gains.

Here are some ways to prioritise:

  • Look at what’s most valuable to the customer (e.g. it is a significant or tangible gain, or there is no existing solution out there)
  • Look at what’s most valuable to your company (e.g. you can design a solution that makes money, which will be a legitimate offering and which aligns with your organisation’s strategy)

Another suggestion is to interview customers, track responses and look for the pains, gains and jobs which are mentioned the most. This will quickly give you clarity on what can be prioritised.

Gain creators / pain relievers vs Product features
When implementing Product features, consider how they relate to pains/gains.

For example, an innovative tent for camping features two separate ‘doors’, with the ‘gain’ of better ventilation. It also has colour-coded poles for easier set up, and pockets inside which deliver the gain of being more organised.

“Think about how your features create gain and relieve pain,” says Frederic.

Essentially, your value proposition should reflect the needs of your customers. When designing this as part of your Product planning, look to do the following:

  • Understand the pains, gains, expectations and ‘jobs to do’ of your customers
  • Identify which of these are most important to your customers
  • Find the solutions your company can deliver which will help it stand out, and which align with its vision
  • Create more than one value proposition for the different customers who interact with your Product

Buy Frederic’s book The Invincible Company here: https://www.strategyzer.com/books/the-invincible-company

Read more about Value Proposition Design: https://www.strategyzer.com/books/value-proposition-design

Steve Forbes

Steve Forbes | Author

Steve leads our Product Talks Melbourne Meetup. He's passionate about Product management and all things digital. He helps organisations navigate through times of change like: adopting new technology, changing customer needs and disruptive business models. He loves working on challenging projects and building products that customers love.

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