Value proposition: the key to winning customers and driving business growth

2. Components of a strong value proposition

We’ve seen many, many value propositions around, with some better than others. But what do strong value propositions have in common?

Here are 10 characteristics to look out for:

1. They are embedded in great business models
2. They focus on the jobs, pains, and gains that matter most to customers
3. They focus on unsatisfied jobs, unresolved pains, and unrealized gains
4. They target few jobs, pains, and gains, but do so extremely well
5. They go beyond functional jobs and address emotional and social jobs
6. They align with how customers measure success
7. They focus on jobs, pains, and gains that a lot of people have or that some will pay a lot of money for
8. They differentiate from competition on jobs, pains, and gains that customers care about
9. They outperform competition substantially on at least one dimension
10. They are difficult to copy

If you’re feeling a tad overwhelmed just from looking at the list above, we get it.

It’s not easy to elegantly encapsulate the essence of a product or service that also displays the above characteristics in a few words or short sentences.

That’s why crafting a compelling value proposition requires not only a meticulous process of designing, testing, and validating but also the right tools to help you along the way.

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4. How to create a value proposition

As mentioned above, the Value Proposition Canvas comprises two blocks from the Business Model Canvas: The Value Proposition and the corresponding Customer Profile you are targeting.

The tool's purpose is to help you sketch out both in more detail with a simple but powerful structure. This visualization will improve your strategic conversations and prepare you for testing both building blocks.

What is the biggest benefit of working on visualizing this process?

You’ll see how different elements come together—if you can’t see it, you can’t measure it. And if you can’t measure it, you won’t have a solid foundation to work with.

Systematically achieving product fit

The goal of the Value Proposition Canvas is to assist you in designing great Value Propositions that match your customers' needs and jobs to be done and help them solve their problems. 

This is also known as product-market fit or problem-solution fit. The Value Proposition Canvas helps you work towards this fit more systematically.

Let’s jump into the process of creating your value proposition.

Customer Jobs

The first step is to examine your customers more closely by sketching a Customer Profile.

Start by describing what the customers you are targeting are trying to accomplish. There are three main things to look at. This could be:

• The tasks they are trying to perform and complete
• The problems they are trying to solve
• The needs they are trying to satisfy.

Questions to help you understand your customers’ jobs to be done:

• What functional job is your customer trying get done? (e.g. perform or complete a specific task, solve a specific problem)
• What social jobs is your customer trying to get done? (e.g. trying to look good, gain power or status)
• What emotional jobs is your customer trying get done? (e.g. aesthetics, feel good, security)
• What basic needs is your customer trying to satisfy? (e.g. communication, nourishment)

The more insights you have about your customers’ jobs to be done, the better you can tailor your products or services to meet their needs.

Realistically speaking, you can't solve every customer problem. You need to strategically select which customer problems to address to maximize the value you deliver.

While jumping at every possibility is tempting, avoid spreading yourself too thin trying to be everything to everyone. Focus on the top three key pain points or opportunities that:

• Have the highest impact on customer satisfaction
• Align closely with your core competencies
• Offer the best potential for differentiation in the market
• Provide a sustainable competitive advantage

Customer Pains

Now, describe negative emotions, undesired costs and situations, and risks your customer experiences or could experience before, during, and after getting the job done.

Questions to help you understand your customers’ pain points:

• What does your customer find too costly? (e.g. takes a lot of time, costs too much money, requires substantial efforts)
• What makes your customer feel bad?(e.g. frustrations, annoyances, things that give them a headache)
• How are current solutions underperforming for your customer? (e.g. lack of features, performance, malfunctioning)
• What are the main difficulties and challenges your customer encounters? (e.g. understanding how things work, difficulties getting things done, resistance)
• What negative social consequences does your customer encounter or fear? (e.g. loss of face, power, trust, or status)
• What risks does your customer fear? (e.g. financial, social, technical risks, or what could go awfully wrong)
• What’s keeping your customer awake at night? (e.g. big issues, concerns, worries)
• What common mistakes does your customer make? (e.g. usage mistakes)
• What barriers are keeping your customer from adopting solutions? (e.g. upfront investment costs, learning curve, resistance to change)

Once you have listed their pain points, rank each pain according to the intensity it represents for your customer.

Is the pain point very intense, or is it very light?

For each pain, indicate how often it occurs.

Customer Gains

For this section, describe the benefits your customer expects, desires, or would be surprised by. This includes functional utility, social gains, positive emotions, and cost savings.

Questions to help you understand your customers’ gains:

• Which savings would make your customer happy? (e.g. in terms of time, money, and effort)
• What outcomes do your customers expect and what would go beyond his/her expectations? (e.g. quality level, more of something, less of something)
• How do current solutions delight your customer? (e.g. specific features, performance, quality)
• What would make your customer’s job or life easier? (e.g. flatten learning curve, more services, lower cost of ownership)
• What positive social consequences does your customer desire? (e.g. makes them look good, increase in power, status)
• What are customers looking for? (e.g. good design, guarantees, specific or more features)
• What do customers dream about? (e.g. big achievements, big reliefs)
• How does your customer measure success and failure? (e.g. performance, cost)
• What would increase the likelihood of adopting a solution? (e.g. lower cost, less investments, lower risk, better quality, performance, design)

Rank each gain according to its relevance to your customer.

Is the gain substantial or insignificant?

For each gain, indicate how often it occurs.

Creating a customer profile is not a one-time task. You need to constantly iterate on your customer profile and test your assumptions. Here's why:

• Markets and customer needs are constantly evolving. What was relevant yesterday may not be tomorrow. Regular updates to your customer profile ensure your understanding remains current.
• Your initial assumptions about your customers may be flawed. It's not uncommon to build your initial customer profile based on your best guesses and available data. However, real-world interactions often reveal discrepancies.
• Regular iteration of your customer profile allows you to refine your understanding so you can build better products and services over time.

There are many ways to gain customer insights—from customer interviews to A/B testing to surveys and so on—as you continuously improve your customer profile. But, the ground rule?

Start with your customer.

Products & Services

Now that you’ve sketched out an initial profile of your Customer, you’re one step closer to crafting your Value Proposition.

Remember, iterations are part of the process. While this process might feel slightly daunting, it really isn’t. Just like your customer profile, your value proposition will evolve as you learn more about your customers.

For now, it is enough to list all the products and services your value proposition is built around.

Ask yourself which products and services you offer help your customer get either a functional, social, or emotional job done, or help him/her satisfy basic needs.

Products and services may be:

• Tangible (e.g., manufactured goods, face-to-face customer service)
• Digital/virtual (e.g., downloads, online recommendations)
• Intangible (e.g., copyrights, quality assurance)
• Financial (e.g., investment funds, financing services).

Rank all products and services according to their importance to your customer. Are they crucial or trivial to your customer?

Pain Relievers

Now, we’ll outline how your products and services create value.

First, describe how your products and services alleviate customer pains.

How do they eliminate or reduce negative emotions, undesired costs and situations, and risks your customer experiences or could experience before, during, or after getting the job done?

Questions to help you understand your customers’ pain reliever:

• How might this produce savings? (e.g. in terms of time, money, or efforts)
• Could this make your customers feel better? (e.g. kills frustrations, annoyances, things that give them a headache)
• Is this a fix for underperforming solutions? (e.g. new features, better performance, better quality)
• Would this put an end to difficulties and challenges your customers encounter? (e.g. make things easier, helping them get things done, eliminate resistance)
• Could this wipe out negative social consequences your customers encounter or fear? (e.g. loss of face, power, trust, or status)
• Does it eliminate risks your customers fear? (e.g. financial, social, technical risks, or what could go awfully wrong)
• Would this help your customers better sleep at night? (e.g. by helping with big issues, diminishing concerns, or eliminating worries)
• Can this limit or eradicate common mistakes customers make? (e.g. usage mistakes)
• Does this remove barriers that are keeping your customer from adopting solutions? (e.g. lower or no upfront investment costs, flatten learning curve, less resistance to change)

Rank each of the pain relievers your products and services address according to their intensity for your customer.

Does this align with the ranking of the pains in the customer profile?

Is the pain reliever very intense or very light?

Gain Creators

Finally, describe how your products and services create customer gains.

How do they create benefits your customer expects, desires, or would be surprised by, including functional utility, social gains, positive emotions, and cost savings?

Questions to help you understand your customers’ gain creators:

• Would this create savings that make your customer happy? (e.g. in terms of time, money, and effort)
• Could this produce outcomes your customer expects or that go beyond their expectations? (e.g. better quality level, more of something, less of something)
• Does this copy or outperform current solutions that delight your customer? (e.g. regarding specific features, performance, quality)
• Does this make your customer’s job or life easier? (e.g. flatten learning curve, usability, accessibility, more services, lower cost of ownership)
• Can this create positive social consequences that your customer desires? (e.g. makes them look good, produces an increase in power, status)
• Does this do something customers are looking for? (e.g. good design, guarantees, specific or more features)
• Can this fulfill something customers are dreaming about? (e.g. help big achievements, produce big reliefs)
• Would this produce positive outcomes matching your customer’s success and failure criteria? (e.g. better performance, lower cost)
• Could this help make adoption easier? (e.g. lower cost, less investments, lower risk, better quality, performance, design)

Rank each gain creator your products and services create according to its relevance to your customer.

Is the gain creator substantial or insignificant?

Does this align with the ranking of the gains in the customer profile? For each gain, indicate how often it occurs.

6. Testing and pivoting

Using the Value Proposition Canvas as a thinking and design tool is only a start. To get the best out of it, you need to combine it with testing and pivoting.

Now, we’re not saying you should start testing like a fisherman casting a wide net to gain as many insights as possible. To structure the testing of your value proposition, break down the process into three key stages:

Test the circle: the jobs, pains, and gains of your customers

Begin by validating your assumptions about what your customers are trying to accomplish, the problems they face, and the benefits they seek. Tools like keyword advertising campaigns can provide insights into customer interest.

Test the square: the products, services, and features of your value proposition

Determine which aspects of your value proposition resonate most with customers. Engage in activities like the "Buy-A-Feature" game to prioritize features based on customer preferences.

Test the rectangle: their willingness to pay

Finally, verify that customers are willing to pay for your offerings. Setting up a fake-sales website can be an effective method to gauge actual purchase intent.

While it’s tempting to run a barrage of experiments, this structured approach will help you refine your value proposition to better meet customer needs and enhance your chances of success.

8. Ensuring your value proposition’s success

One of the biggest mistakes organizations make is jumping straight into execution with detailed business plans and financial projections, without validating their value propositions.

This often leads to failure because they might build something customers don’t want or cannot support with a sustainable business model.

Take the leap. But, not without looking.

Strive to achieve three kinds of fit before execution:

• Problem-Solution fit: Ensure your solution addresses customer jobs, pains, and gains.
• Product-Market fit: Validate that your value proposition creates real value for customers.
• Business Model fit: Confirm that your value proposition can be embedded in a profitable and scalable business model.

Getting these results requires trying things out and talking directly to customers.

Even though this method can be messy and involves lots of different things being tried, rigorously testing and refining your value proposition helps you minimize risks and ensure that your business idea meets market needs and expectations — you'll see that it's the reason for your success later on.

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