Value Proposition Design – A new light on an old concept

Value Proposition Design – A new light on an old concept

You may have never heard of value proposition but if you ever needed to sell a product or service you definitely know what it is.
The authors of Value Proposition Design, the sister book to Business Model Generation, have a very succinct definition that I like. It defines the value proposition as the benefits your customers can expect from your product or service.
It’s so simple. Why write a whole book about it then? I can assure you from experience that while the definition of a value proposition may be simple, writing one for your own product or service is not.


Helps you organise your thoughts and communicate to your markets

Putting your value proposition into words will help you gather in one place all of your top selling arguments. You will be using all or parts of it in most of your communications to your customers. It will speed up your content creation and provide guidance for it.

Creating your corporate pitch will be a breeze

Once you have nailed your value proposition down you will only need to adapt it to your audience, add other messages if need be, and practice your timing and delivery of it to create your pitch.

It’s your lighthouse on a stormy sea

Your value proposition will remind you that answering your customers’ needs with a product or service they value is what your business is all about. If your business starts to skid and can’t deliver on its value proposition, you know corrective measures are necessary.


Value propositions are not new. The way we use to define them gave equal weight to the product, the market segment and the industry. The value proposition was the answer to the following three questions.

  • What is your product or service?
  • Who is it for?
  • Why is it better than your competitors’ offering?

A value proposition in the ‘90s would have looked like this.
Palm Pilot. The electronic pocket agenda, for busy professionals, that won’t weigh you down.


Today, market segments are getting more and more granular. The competitive environment you operate in is changing much more rapidly. Focusing on market segments and competitors make writing your value proposition the old way a less precise exercise and a recurring task.
The approach suggested by the Value Proposition Design authors is better suited to today’s market realities.
It focuses on the value your product brings to answering a customers’ specific need. You only adjust your value proposition when the need changes. Which is a good thing given you will also need to change your product or service at this juncture if you want to stay in business. This way of creating your value proposition brings it all back to the customer’s need and positioning your offer against it.
Designing your value proposition now requires you to dig in order to understand your customers’ pains. What gains they expect as well as how they will interact with your product or service. This information will then allow you to analyse what pain relievers you offer them. The level of gain your product or service can bring them. It will also give you insight into how else your customers are answering the need you are addressing. This vantage point allows you a broader vision of your competitive environment by not restricting it to your industry competitors.
Value PropositionSource: Osterwalder A., Pigneur Y., et Al. – Value Proposition Design – Wiley – 2014 – xxv+290p
You can click on the above image to download a more detailed and free version of the Value Proposition canvas on the Strategyzer site.

An example of a good value proposition today would be:
Unbounce. Build, publish and A/B test your landing pages without I.T. Increase the ROI of your marketing campaigns
This value proposition talks to the jobs (building, publishing and A/B testing landing pages), the pains (having to ask and wait for the IT department to do the pages), and the gains (increasing campaigns ROI) their customers care about.
There are other methodologies out there to help you create your value proposition. Whichever one you use, make sure it is suited to your reality. The Value Proposition Design method is particularly suited for companies operating in environments where markets can effectively be micro-segmented and the environment evolves rapidly.
A value proposition is very much like a macro or template you create when you have a repetitive task. It may take some effort to build but it will bring you high returns on the time you save and act as a guide in your every day work.

Canadian online retailers shooting themselves in the foot

Canadian online retailers shooting themselves in the foot

We have all heard it before. Canadians don’t shop online as much as Americans. When they do, they mostly shop on American websites. In the end, this means less overall revenues for Canadian retailers online and offline. Canadian retailers are hurting, some are even shutting down. Jacob Boutiques are the latest casualty.
I have done most of my shopping for books, electronics, small appliances, kitchen gadgets, and clothing online for the past 5 years. I admit the majority of the online dollars I spend cross the border.   The one exception is my clothes shopping. I do a large part of it at Simons, a Canadian retailer.
My reasons for shopping at American online retailers are similar to those of most Canadians (note to Canada Post study). They give me what I want. I want fast and free shipping, a simple pleasant shopping and checkout experience, all the info I need on the product I’m thinking of purchasing and its price. I also want the assurance that I can return any merchandise that is not up to my standards at no cost and with as little hassle as possible. Demanding you say? I agree. However since American retailers like Amazon satisfy almost every single one of my requirements, it is now the standard by which I judge all my online purchasing experiences.
In the table below, you can see how I rate my experiences with Amazon and 3 Canadian online retailers. The ratings are in the form of colours. Red is bad. Yellow is ok, and Green is good.

Table 1: My shopping experiences with Amazon, The Bay, Canadian Tire and Simons

Amazon The Bay Canadian Tire Simons
Free shipping $75 buys me free shipping on almost any item. Otherwise the minimum order is $25 to get free shipping. My orders are usually above $25.Shipping information is on the purchasing page I need a minimum order of $99 to get free shipping. Less than half of my orders would qualify for free shipping.Shipping policies are on the home page Can’t find shipping fees anywhere before getting to checkout. Fees apply to any size order. Free in-store pickup mostly useless if you want to shop online. $100 minimum order or free in-store pickup. About 75% of my orders qualify for free shipping. Shipping policy is on the home page.
Shopping experience They invented 1 click shopping. Easy and pleasant. Search engine is accurate and categories make sense to me. Product search engine is not very accurate. Category sub-menus are not v helpful. Overall site ergonomics are iffy. Checkout is horrible. Cart application shows both discounted prices on some items and regular price for others with discounts totalled at the end of invoice. Very confusing. One of the most irritating online shopping experience one can have. You have to enter your postal code in order to check whether a product is in stock at the nearest store. The entire experience is geared to send you into the physical store. TProduct information incomplete or non existant. Static pictures.hey’re missing the point of ecommerce entirely. Easy and pleasant. Beautiful design and photography. Checkout is fast and easy
Product information Accurate search engine. Complete and well written product information. Multi-view pictures on most products. Good product information. Good search engine. Deficient produc information. Static pictures. Very good product information with multi-view pictures.
Easy returns Print your own return label that you get on Amazon and return in original box. Shipping charges are pre-paid by Amazon Ship back, at your own cost, with receipt in original box. You can also return at the nearest store. You can only return merchandise in store, with receipt, un-open packaging and proof of ID. Return merchandise with pre-paid label and invoice copy enclosed in original shipment. You can also return in store

Source: Baker Marketing 2014

The Achilles’ tendon of etailers in Canada is shipping costs. They are almost 4 times higher than in the States. Brick and mortar retailers, who offer online shopping, are still reticent to absorb their online shipping costs in the rest of their business. These shipping costs represent the major reason Canadian shoppers prefer American online retailers but certainly not the only one. The Bay and Canadian Tire online stores are representative of a majority of online shopping experiences with Canadian etailers. Thankfully, there are some very good Canadian etailers such as Simons. The difference is that Simons fully invested itself, from the beginning, into online distribution. Despite being historical institutions in Canada, The Bay and Canadian Tire are relatively newcomers in etailing. Aside from a disastrous attempt from 2000 till 2009 Canadian Tire only reopened its online store, in pilot mode, in November 2013 and is only now rolling it out. The Bay has been online with its full catalog for less than a year.
Canadian online shoppers pay higher shipping fees, often have to deal with subpar shopping experiences and incur extra costs if they need to return products when shopping at Canadian etailers. Their best alternative is to shop on American online store. This option can entail customs fees if the American etailer doesn’t have a warehouse in Canada. Not surprisingly, customs fees is one of the most cited reason preventing Canadians, who are not yet shopping online from doing so.
Canadian retailers are shooting themselves in the foot by not fully investing themselves into online selling. Not only are they losing sales to American etailers, they are also discouraging some Canadians from shopping online altogether.
Note: Part of the data this post is based on can be found in the 2013 Canada Post Online Shoppers and buyers White Paper

Focus and In-depth Knowledge of your Target Markets: The Road to Profitability

Focus and In-depth Knowledge of your Target Markets: The Road to Profitability

Do you ever feel like you are leaving money on the table with one or all of your target markets? This situation is like bad breath. If you think it may be a problem it usually is. Failing to get all you can out of your markets has a myriad of causes. Two of the most common ones are chasing too many markets at once and not knowing enough about them.
Aside from developing, building and selling your product, market research will very likely be one of the costliest activities in your company. That is why you want to get every last drop of sales you can from each dollar invested in your market research. Just like with your product development, doing it half-way will not yield the best results.
If you are a start-up, it usually means you won’t have the resources to go after more than one or two market segments at once. You will need to do exploratory research with all your potential segments at first to see which ones have the best potential. Once you have zoomed in on the most promising segment you then need to learn everything you can about it. I know, it is very tempting to go after the low hanging fruit in different segments. It can definitely be a short term strategy to get revenues up quickly. Making it your permanent strategy will, however, only lead you to missing sales opportunities in all segments. Not getting to a deep enough level of understanding of your main market segment will also lead you to overlook new product opportunities. This all translates into leaving a lot of money on the table, and in the worst cases, running out of runway to allow your business to take off.
If you are an established company it’s ok to go after multiple market segments at once. Allocating enough resources to get to know each segment in depth, and not going too far in the trade off game is what will allow you to pull it off. The game I am referring to is the trade off between functionalities or aspects of your product/service that are appreciated by one segment in order to please another. Knowing each of your segments intimately, as well as their present and future revenue potential, will enable you to understand how many sales will be lost/gained with the product compromises in each segment and decide which modifications are profitable overall and which aren’t.

Market focus
Here is an example of what can go wrong when you try to please too many segments at once and cut corners on your market research budget. A real estate promoter had a project to build an upscale shopping mall in the suburb of a large Canadian city. It did a location study which takes into consideration all the available published data on surrounding populations. The promoters didn’t do any terrain interviews because it would have been too long and costly to do so with all segments they had chosen to address. The research identified eight different target markets in the area. Two of the largest markets identified in the study were the urban segment, consumers living in the nearby city, and a local wealthy Chinese immigrant segment. After a year of operation the shops noticed that they had very few urban or Chinese customers. Hence business wasn’t very good. What happened? Only after doing interviews with their two main segments did the promoters discover the following. They had not considered road congestion in the time if took the urban consumers to reach the suburban mall. The cost in time, given only a few shops specifically addressed this segment’s needs was greater than the benefits derived from shopping in that mall. Interviews also allowed them to understand that the behaviour and preferences of the wealthy local Chinese segment were completely different than the ones from the data they had. They hadn’t picked up on the differences in the household composition of wealthy Chinese consumers (mostly families with children) in their segment vs. the one of wealthy Chinese consumers in their generic data (single men or couples).
The promoters lose rent revenues (tied to shop sales in the first two years) and possible mall expansion money by targeting too many segments and not understanding them well enough. They also left on the table all the money from the opportunities that specialising in building suburban malls in a multi-ethnic context could have brought them.
In-depth knowledge of your market segment entails collecting, interpreting and managing massive amounts of data. It is, however you look at it, a costly proposition. Ensuring that you get everything you can out of a strong market segment is not only the best way to recuperate your market research investment it’s also the road to a profitable company.