The Business Model Canvas is a fantastic tool to guide your strategic thinking. However, most canvasses I see have a fatal flaw: misunderstanding the purpose of the “Value Proposition” box.
It is very tempting to fill this box with a list of features, because that’s how we entrepreneurs naturally think… “of course the customer will see the value in my features!”. The problem is that customers don’t buy features. They are trying to either solve a problem or fulfill a desire.
Imagine you want a new shelf in your kitchen, and you realize you can’t install the fixture for the shelf because you don’t have a drill to make a hole in the wall. So you go down to the local home improvement store, ask for a drill, and they lead you to a whole aisle of drills: big ones, small ones, heavy ones, light ones, yellow ones, orange ones, corded ones, cordless ones, ones that go “ping”…
Standing in that store aisle, what are you looking for? How do you choose? If you’re a tool fiend, you may compare features to decide: power, battery life, weight and balance. If you’re a home repair klutz like me, you may just grab the cheapest and get out of there. Are you looking to own a powerful and durable drill so you can do more extensive home improvement projects (fulfill a desire)? Or is it to get the cheapest one possible to make a hole in the wall so you can finally install that freaking shelf (solving a problem)?
Your value proposition boils down to how your offer creates value as perceived by the customer: are you a gain creator or a pain reliever?
If what you write down your canvas’ Value Proposition box is a list of features, expecting the customer to figure out what value these features have for him or her, then most likely the customer will skip the hard work of figuring out what your features can do for them and go elsewhere. You need to do the work to translate how your features create value for the customer, digging down until you find which specific value will trigger your customer to buy.
Are you aiming for the weekend home improvement klutz (me) who buys on price, simplicity or getting out of the store as quickly as possible, or the “pro” hobbyist who buys on power or battery life? What you decide as your core Value Proposition becomes the fulcrum to the rest of your business strategy: the channels you use to distribute, your income streams, cost structure, etc. The success or failure of your business therefore rests on how you define, validate and express your Value Proposition.
Your Business Model is all about how you create, deliver and harvest value. Your Value Proposition is the “added value” you propose to your customer, the gain created by fulfilling their desire or the pain relieved by solving their problem. It needs to be simple, clear and obvious to the customer segment you are looking to serve. If your Value Proposition fails to resonate with the gain or the relief they are looking for, they will go elsewhere.
When you succeed in defining a Value Proposition which fulfills their desire or solves their problem, making their life “ten times better”, what you are doing is adding value not only to your customer, but also to your business. A well-defined, tested and scalable Value Proposition becomes the foundation of your strategy which will ensure you create the kind of company you really want, with customers who really want you.
Read More: Adam M. Brandenburger and Barry Nalebuff explore the idea of “added value” as it relates to growing your business and your market in “The Added-Value Theory of Business”, Strategy+Business https://www.strategy-business.com/article/12669?gko=5c72a