Value Proposition Canvas: What It Is and How to Use It to Know Customers Better [Templates & Step-by-Step Guide]

I still remember the first time I read Alex Osterwalder’s Value Proposition Design. I have a visual memory of sitting in a café and leafing through the book, then immediately having the urge to test it out in practice.

And test I did.

Since then, almost 5 years ago, I’ve worked with a number of clients to fill in their Value Proposition Canvas. And every time it was a true revelation. It helped them understand the true needs of their target customers and the value (pardon the repetition) their products and services bring.

Most often, the Value Proposition Canvas (VPC) is mentioned as a way to create new products and find product-market fit. But I’ve seen that VPC is also useful for existing and mature products. It’s a way to make your messages more concrete and aligned with the customer’s point of view.

What is the Value Proposition Canvas?

Let’s start at the start. The VPC was created as a supplement to Osterwalder’s Business Model Canvas. While working with the original canvas he saw that people were having trouble finding the right fit between their customer segments and the value proposition of their brand. Coincidentally, these were the sections most crucial to success.

So Osterwalder worked on a separate tool that examines in detail the fit between the customer profile and the solution the business has to offer.

The Value Proposition Canvas was created as a way to facilitate a core challenge of businesses everywhere – creating compelling products and services customers want to buy.

Here’s a quick overview of the canvas:

Why you need a Value Proposition Canvas

Why do you need to spend time on the VPC? Well, there are a few benefits you can expect:

• Better customer understanding: the fact that you begin by analyzing your customer is a powerful one. It makes you more customer-centric. It urges you to see the situation from the customer’s point of view. And it brings your attention to all the right questions that will make you understand.
• Focus and product development direction: the life of a startup company is difficult. You need to make sure you have the right benchmark to measure the urgency of new features and product improvements. Knowing your value proposition makes it that much easier to get your product moving in the right direction.
• Messaging improvements: I left the most important one for last. In my line of work, finding the right message to attract new audiences with is a pinnacle of success. And building your VPC is a way to find how you should approach your customers and what you need to promise them.

These are just some of the reasons you need to focus on your value proposition. It’s not an extensive list and it doesn’t have to be. It just needs to persuade you to take on the next steps.

How to fill in your Value Proposition Canvas

The VPC is a powerful tool that helps you understand what value you bring and how to communicate it to your customers. It’s a deceptively simple tool but one that needs to be filled with care.

Understand the Value Proposition Canvas layout

The canvas created by Alex Osterwalder consists of two sides – the customer profile and the value proposition. Each side, in turn, comprises 3 parts. Finally, it’s the fit between the two that is the end goal and the major win of filling in the VPC.

Here’s a quick explanation in video form:

Always start with the customer

One important part of the VPC is to always start with the customer side of the VPC. This ensures you will truly focus on the needs and wants of the customer.

The crucial thing at this point is to distance yourself from your solution and to try and understand what the customer wants. This can be done in a couple of ways, either through message mining or customer interviews – or through simply talking with customers regularly.

Of course, you can always start with a hypothesis based on general knowledge. But I’d definitely advise you to validate these thoughts with actual qualitative data.

Define the Customer Jobs

Jobs are the tasks and goals that your customer tries to satisfy. These should be directly related to your field of work in order to be useful in the long run.

Osterwalder’s notion of Jobs is very specific, covering direct functional tasks, as well as emotional and social goals. The way the author defines that these cover everything from specifics to broader concepts of personal development and self-actualization. It may mean both the concept of personal progress that traditional Jobs to be Done research has in mind, as well as more specific tasks.

Here are some key questions that help you uncover customer jobs:

• What is the one thing that your customer couldn’t live without accomplishing? What are the stepping stones that could help your customer achieve this key job?
• What are the different contexts that your customers might be in? How do their activities and goals change depending on these different contexts?
• What does your customer need to accomplish that involves interaction with others?
• What tasks are your customers trying to perform in their work or personal life? What functional problems are your customers trying to solve?
• Are there problems that you think customers have that they may not even be aware of?
• What emotional needs are your customers trying to satisfy? What jobs, if completed, would give the user a sense of self-satisfaction?
• How does your customer want to be perceived by others? What can your customer do to help themselves be perceived this way?
• How does your customer want to feel? What does your customer need to do to feel this way?
• Track your customer’s interaction with a product or service throughout its lifespan. What supporting jobs surface throughout this life cycle? Does the user switch roles throughout this process?

Lay out the Customer Pains

Once you’ve listed the tasks and goals your customers are likely to strive for, you need to look at all the barriers and the issues they may run into.

Pains will include everything that annoys or directly prevents your user from accomplishing the task at hand. These may be risks or potential bad outcomes that may manifest if the job isn’t done right. Like all the sections of the VPC, these pains can have functional (related to not accomplishing the task) as well as emotional or social dimensions (feeling like a failure or seeming foolish to others).

Here are some trigger questions you can use to uncover pains:

• How do your customers define too costly? Takes a lot of time, costs too much money, or requires substantial efforts?
• What makes your customers feel bad? What are their frustrations, annoyances, or things that give them a headache?
• How are current value propositions underperforming for your customers? Which features are they missing? Are there performance issues that annoy them or malfunctions they cite?
• What are the main difficulties and challenges your customers encounter? Do they understand how things work, have difficulties getting certain things done, or resist particular jobs for specific reasons?
• What negative social consequences do your customers encounter or fear? Are they afraid of a loss of face, power, trust, or status?
• What risks do your customers fear? Are they afraid of financial, social, or technical risks, or are they asking themselves what could go wrong?
• What’s keeping your customers awake at night? What are their big issues, concerns, and worries?
• What common mistakes do your customers make? Are they using a solution the wrong way?
• What barriers are keeping your customers from adopting a value proposition? Are there upfront investment costs, a steep learning curve, or other obstacles preventing adoption?

Uncover Customer Gains

Everything has a flip side. Customer pains included. Customer gains are the expected or desired benefits the customer wants to get when doing their job correctly. Some of these gains will be things that your customer expects to get. Others will be desired or completely unexpected. It’s a way to understand what are the table stakes for existing in your category and what are the ways to delight your customers.

Here are the trigger questions to uncover customer gains:

• Which savings would make your customers happy? Which savings in terms of time, money, and effort would they value?
• What quality levels do they expect, and what would they wish for more or less of?
• How do current value propositions delight your customers? Which specific features do they enjoy? What performance and quality do they expect?
• What would make your customers’ jobs or lives easier? Could there be a flatter learning curve, more services, or lower costs of ownership?
• What positive social consequences do your customers desire? What makes them look good? What increases their power or status?
• What are customers looking for the most? Are they searching for good design, guarantees, specific or more features?
• What do customers dream about? What do they aspire to achieve, or what would be a big relief to them?
• How do your customers measure success and failure? How do they gauge performance or cost?
• What would increase your customers’ likelihood of adopting a value proposition? Do they desire lower cost, less investment, lower risk, or better quality?

Differentiate between Customer Pains and Gains

There’s a common issue when building your VPC. Far too often teams would mention certain things in the Pains section only to list their opposites in the Gains sections. This isn’t really helpful and will clutter your VPC.

To get the right info in, you can think of different degrees. What consists a true pain or gain:

• If you’re at lunch with a client, a pain might be the POS terminal not working and you not having any cash. This will put you in an awkward position. But does the terminal working represent a gain? Or is it just the way things should work?
• The most helpful format will be to note pains and gains as degrees on a spectrum. Say, waiting for your coffee in the shop for more than 5 minutes is a pain because it makes you be late for work. But a gain will be spending less than 2 minutes in the coffee shop and having to wait for no other customers.

Move on to the Value Proposition side

The second half of the VPC focuses on your product or service. The best way to go about it is to try to completely forget about the customer profile when drafting this side. In that way, you’ll ensure you don’t accidentally add elements you don’t really cover in your value proposition only to satisfy things mentioned on the customer profile side.

In my work with clients, I try to leave at least a day between a session that outlines the Customer Profile and one that focuses on the Value Proposition. If you don’t have enough time, just make sure you’re being honest to yourself.

Outline the products and services

This is the most straightforward part of the whole VPC. It outlines the specific products or services you offer. It can also outline elements that are currently in development or ones that work together to bring more value.

List your Pain Relievers

Your solution is only useful if it helps customers surmount a significant pain point. This section of the VPC covers ways in which your products and services alleviate pain, eliminate annoyances, or remove risks related to achieving your customer jobs.

To understand pain relievers, ask if your solution can…

• … produce savings? In terms of time, money, or efforts.
• … make your customers feel better? By killing frustrations, annoyances,
• and other things that give customers a headache.
• … fix under-performing solutions? By introducing new features, better performance, or enhanced quality.
• …. put an end to difficulties and challenges your customers encounter? By making things easier or eliminating obstacles.
• … wipe out negative social consequences your customers encounter or fear? In terms of loss of face or lost power, trust, or status.
• … eliminate risks your customers fear? In terms of financial, social, technical risks, or things that could potentially go wrong.
• … help your customers better sleep at night? By addressing significant issues, diminishing concerns, or eliminating worries.
• … limit or eradicate common mistakes customers make? By helping them use a solution the right way.
• … eliminate barriers that are keeping your customer from adopting value propositions? Introducing lower or no upfront investment costs, a flatter learning curve, or eliminating other obstacles preventing adoption.

List the Gain Creators

Once you’re done with Pain Relievers, comes the moment to list the benefits and positive outcomes your solution can create for your customers. These are the Gain Creators – the ways in which you make your customer’s life better.

Again, it’s time to ask yourself if your solution can…

• … create savings that please your customers? In terms of time, money, and effort.
• … produce outcomes your customers expect or that exceed their expectations? By offering quality levels, more of something, or less of something.
• … outperform current value propositions and delight your customers? Regarding specific features, performance, or quality.
• … make your customers’ work or life easier? Via better usability, accessibility, more services, or lower cost of ownership.
• … create positive social consequences? By making them look good or producing an increase in power or status.
• … do something specific that customers are looking for? In terms of good design, guarantees, or specific or more features.
• … fulfill a desire customers dream about? By helping them achieve their aspirations or getting relief from hardship?
• .. produce positive outcomes matching your customers’ success and failure criteria? In terms of better performance or lower cost.
• … help make adoption easier? Through lower cost, fewer investments, lower risk, better quality, improved performance, or better design.

Ensure your fit

The final step of creating your VPC is actually the one that’s most often overlooked. It consists of measuring the fit between your value prop and your customer’s needs and wants.

Let me start by saying you’ll never achieve 100% fit between the two sides of the VPC. Nor would you want to. And if you do, it means you lied to yourself along the way, trying to overfit the contents of the canvas.

I’d say that the truest fit will cover 50-70% of the customer’s jobs, pains, and gains. This means you’re covering key aspects well. It also means you’ll have a clear understanding of where to focus your messaging. Make sure there’s no doubt in your customer’s mind that you can deliver what they want. And use that information to build your general messaging framework and your positioning.

Finally, keep in mind that some of your Gain Creators can actually link to Customer Pains, while your Pain Relievers can link to Customer Gains. You don’t need to look at the VPC as a one-dimensional framework.

Value Proposition Canvas examples

We’ve been through a lot of theory. But what does the VPC mean in practice? To start, here’s an example from the Strategyzer YouTube channel:

Another handy example comes in this article showing how different car brands serve different market segments.

An example from my work

To be as specific and actionable as possible, I wanted to also give you an example from my work.

I am the type of person who likes to eat her own dog food. So I couldn’t propose an exercise to my clients without testing it on myself first. And I found that the VPC complements traditional buyer personas quite brilliantly.

I worked on creating a separate VPC for each of the personas I try to cater to. Here’s an example with my “Technical Tom” persona – a technical founder who strongly believes in their product but is lacking the in-house knowledge to make marketing work.

If you look closely, you will see a couple of things:

• Tom has predominantly functional Jobs, Pains, and Gains. However, there are emotional (feeling pride in what he built) and social (convincing investors) ones, too.
• My Value Proposition doesn’t perfectly fit everything in Tom’s profile (the unserved needs are marked in grey). And it doesn’t really need to. It needs to cover the right elements in an efficient way.
• My services are outlined not as specific packages but in terms my customer would understand.
• There are some elements in the Gain Creators section that match Customer Pains. “Demonstrate wins through reporting” in Gain Creators links to “insecurity about marketing’s performance” in Customer Pains.

Ideally, once you outline all elements in the VPC you will also rank them based on importance. I have done that although it’s not visible in the graph. This ensures you will match at least the most important desires of your customer well.

The next steps

The Value Proposition Canvas is a great tool but it’s just a way for you to list out your hypotheses. From there on, you need to talk to actual real-life prospects to validate your assumptions and make sure you’re not just making things up.

It will be terribly hard to fit everything into a single blog post, so the practical thing at this point is to direct you to Strategyzer’s website, the original book, and the YouTube channel where you can find out a lot more.