What is the Value Proposition Canvas?

value proposition canvas

Value proposition is simply a statement we use in business to summarize an expectation of value – why a consumer (or business if your customers are other businesses) should buy your product or service. It’s a promise of value to be delivered. A value proposition is a promise by a company to a customer or segment of the market. It’s an easy-to-understand reason why a customer should purchase a product or service from you. A value proposition should be a clear statement that explains how a product solves a pain point, communicates the specifics of its added benefit and states the reason why it’s better than similar products on the market. The ideal value proposition is concise and appeals to a customer’s strongest decision-making drivers.

About the Value Proposition Canvas

Strategyzer.com and Swiss business management theorist Alexander Osterwalder developed the Value Proposition Canvas, which is intended to guide development of products and services customers are really looking for. It creates a fit between what you’re selling and what customers want.

The Value Proposition Canvas helps us to systematically understand customers . It collects information about their needs and requirements, so you can design of your products and services in a more targeted way. The intended outcome is increased sales and profitability, and less time wasted on developing ideas that customers may not be interested in.

By using the Value Proposition Canvas, you identify customer needs, and come up with products and services to meet those needs, in a visual and structured way.

Want to learn more? Check out our industry-leading online small business course!

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How to research your customers

business customers

Who will you be selling to? Selling to everyone is highly discouraged, since everyone has different wants and needs. Instead, it’s best to decide on target markets – groups of customers who share similar characteristics that you can market to more effectively. It’ll save you time and money, reduce headaches from trying to please large amounts of people with different needs, and it can make the difference between a successful business and falling flat right out of the gate.

Gathering market research data is a crucial step in the business planning process. Market research is used to determine consumer opinions, industry trends and competitor stats.  It’s used to gauge consumer interest in new products and service offerings and to establish a list of prospective customers. There are a number of ways to go about collecting this data, but we’ve developed a free, step-by-step guide on how to use one of them – CANSIM.

Check out GoForth’s free guide to navigating Statistics Canada’s CANSIM database, and start the process of understanding your ideal customers today!

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Defining your small business’ brand experience

In a recent post, we talked about brand pillars and why they’re so important to have in a small business. Because branding is a multi-layered thing, we also wanted to touch on the topic of brand experience.

What is brand experience?

A brand experience is just what it sounds like – every possible interaction between a customer and your brand. This can include several factors:

  • The brand’s performance  – If it meets customers’ needs and performs better than other options available.
  • The brand’s treatment – The way customers are treated when dealing with the small business.
  • The brand’s community –  Whether or not a small business has a connection to its broader customer base.

Of course, as with many things related to branding and marketing, the feelings and emotions of the customer come into play. And for good reason, too – would you want to keep up a relationship with a small business that consistently made you feel dumb, or like a nuisance?

The brand experience is designed to encourage people to return to your small business gladly, to meet the needs and desires of your customers, and to increase customer satisfaction. Take time out to imagine your small business from your customers’ point of view – in what ways do you want to be treated? How do you want your questions answered? If you do have any complaints, what actions do you want your small business to take? Make sure your brand experience is consistent, while keeping up with customers and meeting new and emerging needs. It’s the culmination of all your hard work in developing your brand, so make it good!

What tips do you have for defining your small business’ brand experience?

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Define your customer experience

Running a small business is more than just selling to customers in exchange for their money – much more. The experience the customer has when dealing with you has the power to make or break your small business’ reputation.

Customer experience can occur either during one transaction or over the lifetime of a customer’s relationship with your business, ranging from negative to positive. Your business’ ability to deliver a positive customer experience each and every time really sets you apart in their eyes. Research shows that customers do business with companies they like, something you have already experienced. How many times have you returned to a business where you felt welcomed, respected and taken care of – in other words, where you showed loyalty? On the flip side, how many people have you told about a business that treated you poorly? We’re betting you didn’t recommend that business to your friends.

How to define your customer experience

As a small business owner, defining your customer experience – knowing what they want and need – is important. The best way to do this? Go straight to the source, as early on as you can. Primary market research should be conducted with your target market to make sure you know what customers are looking for, what they’re not looking for, and what gap in the marketplace you can fill. Once you have a clear picture of what your customers want, you can plan out the best ways to give them the best customer experience.

Start by putting yourself in your customer’s shoes. If you were your customer, how would you want be treated? What would you want to be told? How would you want your product or service to be seen each and every time? What would you want to hear if you phoned with a question? How could you be satisfied if you were unhappy? Figure out what all these diverse experiences should look and feel like.

How to deliver a great customer experience

Now that you’ve defined your small business’ customer experience, you can go forth and deliver it. However, the fun doesn’t stop there! To make sure you really are getting it right, ask your customer how their experience was.

A Harvard Business School study of big American companies found that more than 80% of executives believed that their companies delivered on their customer experience design. But when the researchers asked those business’ customers, the outcome was not quite as rosy. Only 8% of customers felt they had the experience they were looking for. What explains the huge discrepancy? To us, it sounds like the big companies weren’t communicating with their customers. Either they were designing the wrong customer experience, or they weren’t delivering the experience properly. In either case, the customer walked away with a negative impression of the business, and the business potentially loses out on future sales – think back again to how many of your friends you’ve told about a bad customer experience. The popularity of review sites like Yelp is proof that the customer experience is a powerful thing.

Once a customer experience has been designed, it’s important that your small business delivers this experience each and every time. Empower your entire team – no matter how large or small – to deliver on a positive customer experience and to really make sure it sticks. And don’t forget to follow up, to make sure your efforts aren’t falling flat.

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The four types of primary market research

Primary market research is a great way to gather information about your small business’ product or service idea. You might conduct market research to determine things like the size of your target market or the demand for your great product idea. Primary market research is tailored to your small business’ specific needs and can be customized to suit. There are four ways primary market research can be conducted – all with their own benefits for your product or service idea.

The four types of primary market research:

  1. Observation – Just as it sounds, observation market research involves watching your potential customers and their behaviours in action. This means – without interacting – watching customers buying products or services similar to yours, listening to what they say as they shop, noticing what they buy and how much they paid. This type of market research works best if your business caters to customers, not to other businesses.
  2. Focus Groups – Focus group market research means assembling a small group of eight to 12 potential customers to gather information and opinions about your product or service. These groups are led by an objective discussion moderator. Focus groups are a great way to get feedback on a product or service idea directly from several potential customers.
  3. Interview – Interviews are like focus groups, but there is only one participant speaking to one researcher, who leads the discussion. Interviews are well-suited for product or service ideas that could be too personal or private for group discussion, like personal hygiene products or financial services.
  4. Survey/Questionnaire – This method of market research involves getting feedback from potential customers through a structured, multi-question survey. Market research surveys or questionnaires can be done over the phone, through mail/email or in person. You may need to conduct several surveys to several groups in order to get feedback from all possible types of customers. One note about surveys – if you don’t have the resources to conduct a large amount of them, small sample groups are okay – but be cautious of making major business decisions based on this small amount of feedback.

Do you have questions about primary market research? Ask us in the comments, or visit our website’s Q+A section to get market research advice from experienced entrepreneurs!

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