Value proposition: What problem do you solve for your customers?

The central field of the Business Model Canvas is the value proposition (or value proposition). It is the heart of your business model, the reason why your company exists in the first place. It describes the benefit that a product or service offers to customers and why this benefit is important to customers. This article aims to give a deeper insight about this field.

What exactly are value propositions?

The value proposition field is the heart of your business model. It describes the added value that your product or service delivers. It represents a solution to a problem your customers face and should ideally be unique or different from your competitors’.

For example, it can refer to an improvement of an existing product, such as being faster, cheaper or easier to use. But it can also satisfy a new, previously unknown need, for example, by offering a new solution to a problem that customers didn’t have before.

A value proposition can also consist of several parts that are combined. For example, a value proposition for a fitness app could read:

“Our app offers personalized training plans,
that are tailored to the individual needs and goals of the user,
and helps them achieve their fitness goals faster and easier.”

What should be in this field?

TLDR:
In the “Value proposition” field, you should enter a prioritized list of matching value propositions for each customer segment.

For example, on Twitter, value propositions associated with customer segments might look like this:

Link the customer segments to the value propositions

The value proposition is linked to the customer segments, which by now you should already have defined! Find out which customer group the value proposition should appeal to. If the value proposition is “Our product is the most affordable on the market,” then it is linked to the customer segments that are price conscious and looking for a low-cost solution. In our online editor you can achieve that by using the same background-color for the value proposition and customer segment.

Once you have linked the value proposition to the relevant customer segments, you can further refine it to better target and reach those segments. You could do some market research in order to get a better understanding of the needs of exactly those customers and then you can use that information to improve your original value proposition.

In addition to linking the value proposition to the customer segments, it is also important to link it to the other elements of the business model, such as the revenue streams and the cost structure. In this way, it can be ensured that the value proposition is in line with the overall business strategy and is able to create value for the company. Again, you can just color-code the post-its in the online editor. That way you can immediately see which items belong together!

What is a “good value proposition”?

It should be unique, clearly formulated, and relevant to the target audience. Of course it should solve a specific problem or address a specific need of the target audience and stand out from the competition. A good value proposition should also be “credible and supported by evidence or proof and it should be concise and easy to understand”.

It is important to have a good value proposition because that’s the reason why your customers want to buy or use your product in the first place. When you offer a new product, then make sure that it is innovative. When you want to offer a product that already exists in the market, then make sure that it has has something new. (new features, a new design, new characteristics).