Discover What Providing Value Means
Now there’s a question! What does it mean to provide value? If you look up the definition of value in the Merriam-Webster dictionary, you’ll see the following options:
the monetary worth of something: its market price
a fair return - in goods, services, or money for something exchanged
relative worth, utility, or importance
something (such as a principle or quality) intrinsically valuable or desirable
For example, think about why you chose your mobile phone. The overall monetary value is either what you paid for it or what you could sell it for now. But think a little deeper now. What makes your mobile phone valuable to you? Maybe you like the camera features, the signal in your area, the games, the app store best suited for you, etc. I’m sure I could continue.
Each of those aspects provides some value for you.
You could find value in the following:
Saving time.
Making (or saving) money.
Making you happy (which is valuable in its own right).
Connecting to friends.
Etc.
When thinking about a business and its relationship with the target audience, the value provided is critical to its success. The value proposition articulates the value a company and its products or services provides to customers. And, of course, the company needs to get some value back in return, which leads to the concept of value exchange.
Understand the Concept of Value Exchange
Let me explain with an example:
I want a chocolate bar and buy a certain brand, paying a certain amount of money. Let’s say it’s a Twix.
In the build-up to my purchase, Twix will have spent a lot of their marketing efforts building its brand - convincing me that it is a very nice chocolate bar from a trustable source, and if I spend my money, the value I get will be worth the money I spend.
As a result of that branding, I will develop a perception of the value of that bar. If they’ve done it well, I will be prepared to pay my money to get the value they are offering. In this exchange, I am spending my money (value) in return for what I expect from the quality Twix bar (perceived value).
Now, when I open the Twix bar and eat it, there’s no pretending about the value of this particular chocolate bar. But, as I eat it, I will make a subconscious (or sometimes conscious) judgment about whether I believe it was worth it (value). Was the value exchange worth it for me? The answer to this will determine what I tell other people about it and whether I will buy it again or not.
On the other side of this relationship, the company that makes Twix (Mars) must get enough money from me for that Twix bar (value) to ensure they can make a profit.
If there is an imbalance in the value exchange, the customer might feel swindled. Then the business will have a problem, as the customer may not buy again or even go so far as to tell others, “Don’t buy that chocolate bar - it’s not worth the money they’re asking.”
Your Turn! Assess the Value Exchange
Here’s another type of value exchange - maybe a slightly less obvious one. For example, let’s assume you are a customer of a retail company - we’ll say it's a BMW Mini.
Assume you own a Mini Clubman (a small station wagon) and have done so for about two years. When you go into the Mini dealership to get the car serviced, the customer service person asks you if you want to subscribe to Mini’s regular email newsletter. What’s the value exchange here?
To work out the value exchange, I suggest you reflect on the following questions:
What’s the value (to BMW Mini) of your subscription to the Mini email newsletter?
What is the value to you (the customer) of subscribing?
✅ You can check how I've answered these questions here.
Use the Value Proposition Canvas
As mentioned earlier, a value proposition articulates the value a business and its products or services provides for its customers.
And we’ve just talked about the importance of getting this value right for a business’s success. If the value proposition is so important, you can’t leave it to chance. For that reason, we’re going to introduce you to yet another canvas - the Value Proposition Canvas. It can guide you to completing the next critical part of the BMC - the value proposition.
Let’s look at this one from Strategyzer (you can download the pdf version of the Strategyzer Value Proposition Canvas here):
Let’s see how it works using our fledgling business - The Founders Book Club.
Fill In the Customer Segment of the VPC
In the top right field, add the name of the customer segment. We already have that from our Empathy Map process. So, this part is easy.
The next part is easy as well. As you draw your eyes down the canvas, you see three fields for the customer - Pains, Gains, and Customer Jobs.
Looks familiar!
You’re right! Pains and Gains is something we have already completed in our Empathy Map.
The gains identify what the target audience hopes to achieve regarding their journey with your service or product. What does success look like for them?
The pains are like obstacles that get in the way while they are trying to solve the problem or realize the opportunity your product or service might help them with. It could also encompass the pains they experience with other potential solutions they currently use.
Your Turn! Fill In the Customer Segment of the VPC for Our Business
Now let’s go back to The Founders Reading Guild. How would you fill in the Customer Segment of the VPC for this business idea? And how about the Pains and Gains? Let’s copy those across from our Empathy Map now.
✅ You probably came up with your own great suggestions, but you can look at my canvas version to compare.
Consider the Customer Jobs
To complete the customer elements of the VPC, you need to think about their jobs.
Jobs include all the tasks that customers are trying to solve. These jobs might consist of things they are trying to do. Maybe it’s a problem solved, a task achieved, or any other need they might have.
The jobs-to-be-done (JTBD) framework is an approach to understanding both the customer’s specific goal or “job,” and the thought processes that would lead that customer to “hire” a product or service to complete that job.
You can use it to determine what your potential customer is trying to accomplish or achieve when they buy a product or service.
The jobs can be broken down into social, emotional, and functional jobs.
Social jobs are motivated by feelings of duty, optimism, fear, or aspiration – these are the things you feel you have to do to maintain relationships or to fit into society. For example, when buying a mobile phone, a social job would be what that phone says about your social status.
Functional jobs are the practical things you have to get done. An example of this would be frying an egg, and the steps would include putting butter or oil in the pan, getting the temperature right, breaking the egg into the pan, so the yolk doesn’t break, etc.
Emotional jobs come from the things you prefer, or likes and dislikes, and your insecurities. When buying clothes, it could be about how you feel when wearing them.
Your Turn! Define the Customer Jobs for The Founders Reading Guild
Have a go at doing this for The Founders Guild Book Club!
As you think this through, here are some useful questions to help define customer jobs:
Social Jobs
What social goals does your customer try to accomplish?
How does your customer want to be perceived by others?
What can they do to achieve this?
Functional Jobs
What functions does your customer try to perform? (for example, execute a specific task, solve a specific issue, etc.)
Emotional Jobs
What are your customer’s emotional goals?
What jobs make them feel satisfied?
How does your customer want to feel?
What do they need to do to get this?
✅ Here is our completed version, so you can compare it to what you have filled in.
You now have a complete picture of the customer side of the VPC. Next, let’s move over to the other side and see how to use the canvas to design/define the value proposition.
Fill In the Value Proposition Segment of the VPC
On the left-hand side, you can see three segments of the circle: Products and Services, Gain Creators, and Pain Relievers. Let’s go through them one by one:
See how this looks for our super business idea (here's a pdf version with Products and Services filled in) !
One of the benefits of this process is that, as you work your way through the BMC, the empathy map, and the VPC, you are constantly asking questions about your customers, your business, and its offering. As a result, you might discover something new about your customers or find a significant dependency.
Here’s my suggestion: reading notes or TL;DR (which stands for too long; didn’t read). This demonstrates one of the benefits of this process. In this instance, we identified a feature we could offer to enhance our product.
Pain Relievers
How might you do this? Here are some helpful questions to ask regarding pain relievers.
Does my product/service provide saving time, money, or effort?
Does it enhance the emotional state of my customer?
Does it improve the problems or existing solutions?
Does it reduce the difficulties or issues that my customer faces?
Does it avoid risks that my customer is afraid of?
Does it eliminate barriers that keep my customer from implementing the specific solution?
Gain Creators
As we did with pain relievers, here are some questions that might help you uncover the gains.
Does my product provide savings that please my customer?
Does it achieve the results that the customer desires?
Does it simplify their work or life?
Does it give my customer something that they want?
Does my product/service reflect some of their daydreams?
Does it give positive results that meet the criteria for the success and failure of the customer?
Have a go at filling these questions for The Founders Reading Guild.
✅ Here’s how our Value Proposition Canvas can look at this point. I’m sure you came up with some great ideas of your own, so don’t forget to add them to your canvas!
Let’s Recap!
Value exchange refers to the relationship between the product or service offered and the perceived value the potential customer is willing to pay.
The Value Proposition Canvas is a useful tool for identifying the value the business provides for the customer.
Customer pains and gains provide valuable insight into the customer’s processes in your category (whatever category your business is in).
So, we have completed all of the fields. What does it tell us? Well, it appears that we have a good value proposition. We can identify many strong gain creators and pain relievers for our customer, and we seem to offer them loads of value. This is good enough to transpose it to our Business Model Canvas, but first, we must challenge our thinking. It is a critical element; we can’t leave this part to chance! We’ll challenge our customer-centric thinking in the next chapter and critique our value proposition. See you there!
