When to Use the Value Proposition Canvas

Are you familiar with the Business Model Canvas? If so, you know it’s a great tool for developing business models. However, it can be a little overwhelming to see those quadrants you have to fill out. This is especially true if you simply have an idea for a product or service, or only want to test something or add a feature to a custom software product.

I like to start with the customer segments and value proposition sections. Why? Because if you don’t understand your customer segments—who they are and what they want—then you don’t know if your value proposition is going to match their needs. And if your customer segments and your value proposition don’t align, why fill out the rest of the Business Model Canvas?

The Value Proposition Canvas

Enter the Value Proposition Canvas.

With this tool, you fill out the customer segments on the right side and the value proposition on the left side.

Business Model Canvas vs. Value Proposition Canvas

When do you use the Business Model Canvas and when do you use the Value Proposition Canvas? Here’s how I look at it. The Business Model Canvas helps you create value for your business. Examples of this might be your revenue streams or connections. The Value Proposition Canvas helps you create value for your customers. If you just want to validate customers and how your well your product fits with what your customers want and need, begin with the Value Proposition Canvas.

When to Begin with the Value Proposition Canvas

Here are some scenarios where you may want to begin with the Value Proposition Canvas:

• You’re adding a feature to an existing product that requires a large effort to implement.
• You’re looking to expand into a new market. For example, your product currently targets manufacturers, but you think it’d also apply to contractors.
• You’re targeting new customer segments.
• You’re working on a startup idea.
• You’re building a tool to use internally at your company.

Getting Started

You know the difference between the two canvases. You know which one to use in a given situation. Now what?

I recommend you read this Value Proposition Canvas blog post to learn more about its benefits and how we used it for an actual software project. You can also download the Value Proposition Canvas presentation I gave last month at EntreFEST. And be sure to reach out if you have any additional questions on the topic.