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Mental Models
Featured Models

Value Proposition

What’s your business or product’s reason for being? And can you explain why your offer is valuable to your customer? If so, then you might be on your way towards capturing your Value Proposition. Your Value Proposition is a positioning statement that summarises your promise of value to a potential customer and why they should buy from you as a result. DEFINING VALUE.  Your Value Proposition doesn’t have to be complicated, nor is there a single correct way to express it. For example, serial entrepreneur Steve Blank suggests using a simple statement of:  We help (X) do (y) by doing (z). Using this approach I could describe Twitter’s Value Proposition as: ‘We help people to stay connected with global communities by quickly sharing and exploring short messages.’ Sticking to the simplicity theme, product designer Viktor Golias suggests the following ‘formula’:  Value Proposition = [Action 1] + [Action 2] -> [Benefit] Applying that to Twitter might get you: ‘Start a conversation + Explore your interests -> Be in the know’. Another approach inspired by Dan and Chip Heath leverages established approaches in new contexts. So the template here is:  [Prove industry example] for/of [new domain] Using this approach for Twitter might be ‘Facebook for busy people’. Other examples for fictional companies might be ‘Netflix for marketers’, ‘Youtube for job hunting’ etc.. Meanwhile, a Harvard University model frames your Value Proposition as identifying the customers you are targeting; the needs are you meeting; and the price you are delivering.  And you might want to take another look at Simon Sinek’s Golden Circle, with its ‘why/ what/ how' questions, which can be used as a value-driven form of your Value Proposition.  See the In Practice section below for some examples.  UNIQUE SELLING PROPOSITION.  A Value Proposition often touches upon the point of differentiation with competitors but it also considers the broader value being delivered. This has some overlap to the Unique Value Proposition aka Unique Selling Proposition model, which specifically focuses on that point of difference as the key point of value.  For example, when M&Ms created a patented hard sugar coating for their chocolate, they used the Unique Value Proposition: ‘Melts in your mouth, not in your hands.’ They didn’t bother communicating the broader Value Proposition for chocolate, they were more concerned with talking to a potential chocolate buyer and making a pitch, targeting a perceived pain point, to contrast their offer with their competitors.  THE VALUE PROPOSITION CANVAS.  The Value Proposition Canvas, captured in the image at the top of this page, was created by Alex Osterwalder from Strategyzer and has become a popular tool when developing a Value Proposition. It aligns with Strategyzer’s Business Model Canvas, which explores broader business viability.  The key elements of this canvas include:  Customer segment. Fill this section out first based on an analysis of your target audience. The sections include:  Jobs to be done. This captures what your customers want to achieve and, according to Osterwalder, might include functional jobs and basic tasks that customers want to do, like getting healthy or buying groceries; or Social Jobs that are about impressing others, such as looking good or being able to deliver a great presentation.  Customer pain. This describes the blockers, friction or constraints preventing your customer from achieving their desired jobs and goals. These might include unwanted outcomes which don’t deliver as expected or just things that make achieving the goal harder such as expense, risk, or inconvenience.  Customer expected gain. This describes what the customer wants which might include required, expected or desired gains related to the relative level of expectations of your customer. Product or service. Fill this section after you have established your customer segment jobs, pains and gains. It includes:  The product or service description. You might want to consider the physical component, the intangible component, and the digital component of your offer.  Pain relievers. Ask questions like ‘how can I save customers time and money?’ For socially motivated jobs ask, ‘how can I help customers to be seen more positively by others?’  Gain creators. Consider how your offer delivers on the expected and desired gains of your customer. And how you might exceed those expectations.  IN YOUR LATTICEWORK.  Whether you use the canvas or any of the approaches I've outlined above, a Value Proposition is a powerful model for enabling strategic alignment, driving customer-centric product innovation, and targeted marketing. It's also a versatile model that has many strong connections in your Latticework, here are a few of them.  The customer segment exploration makes direct links to Jobs to be Done and, to a lesser extent depending on the nature of your implementation, to Personas. You might also use empathy-based approaches such as Design Thinking, including using Prototypes, to more deeply understand your customers.  The identification of what is important to your customers might be assisted by connecting this approach to the Kano Model, to identify what needs to be invested in to meet basic expectations versus delighting customers; or, via a more simplistic approach, using something like the MoSCoW Method.  When weighing up targeting pains versus gains, you might want to consider Loss Aversion to understand their disproportionate impact; and Hyperbolic Discounting on the need to deliver quick results. 

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