4.1.1 Offer (value proposition) area

The offer, or value proposition, is embedded in the business model canvas and explains how value is created for the customer. The value proposition is shown in the value propositions block of the business model canvas. The value propositions block is also known as the value map and shows how the business model creates value for the customer. The components of the value map (or value propositions) are:

• Products and services: these are what the organisation offers. They help customers in completing their customer jobs, satisfying their needs and creating value for customers. Products and services can range from physical assets, such as clothes, to online services such as music streaming. The value proposition typically combines more than one product or service, such as the possibility of buying a fridge online and the delivery and installation service.

  

• Pain relievers: these describe how products and services reduce customers pains, or problems. It is unlikely that all customers’ problems could be solved, but the most relevant could be addressed by the value proposition. For instance, the possibility of having medicines delivered at home may be a useful service for people with mobility problems. During the coronavirus pandemic in 2020, this service became an important pain reliever for customers who, being at a higher risk of fatal outcomes in case of contracting the Covid-19 virus, were advised to shield (stay home) and could not travel to pharmacies.

  

• Gain creators: these describe how the products and services provided can create benefits for the customers. Again, it is not possible to address all customer gains with gain creators, but the value proposition can tap into the most relevant gains. An example of a gain creator is buying train tickets with a possibility of having their e-versions sent to the buyer’s email address and a possibility of downloading them onto a smartphone. In this case, a customer gains by having easy access to a ticket via email or on the phone in case its hard copy is lost. For those travelling for business purposes, this service has an additional benefit: a speedy recording of the ticket purchase in the business’ accounting system.

  

These last two components of the value map are useful for representing the value creation for the customer. Pain relievers and gain creators can be designed in order to reduce customer pains and provide customer gains, respectively. To evaluate the fit of the value proposition with customer needs, two questions should be asked:

1. Is the value proposition providing essential customer gains?
2. Is the value proposition reducing extreme customer pains?

Activity 7 Identifying and reflecting on the value proposition of Starling Bank

Timing: Allow about 20 minutes.

Watch Video 5 and make notes on the value proposition of Starling Bank (value map) before comparing your answer to the response given in the Discussion below. You should focus your response on the following key elements of the value map of Starling Bank:

1. Products and services
2. Pain relievers
3. Gain creators.

Download this video clip.Video player: Video 5

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Transcript: Video 5 The value proposition of Starling Bank

ALEXANDRA FREAN:

One of the ways in which Starling is trying to reflect the way people live their lives and the social trends that we're experiencing right now is through doing banking in real time. With Facebook, with Twitter, with Instagram, with social media, people expect everything instantly. We live in a world of now. Everything now.

We are updating people's balances in real time. When you spend money, when money goes in or out of your bank account with Starling, you will get an instant alert into your phone. If you're in a store you're paying for something with your debit card, you'll get an alert even before you've put it back in your wallet half the time.

It's very handy because it helps you track all your spending. And that instant notification, there's a gratification element in it. But it's actually much more useful than that. We update your balance in real time so the minute you spend money it's taken away from the balance that you see on your screen. And that is trying to help people manage their money better. But I think it is also part of this zeitgeist of doing everything now.

Also it's mobile banking. People want to do everything on their phones. They want to bank anywhere. And "Bank Anywhere" is one of our slogans. You can do your banking on the sofa, in the bath, on the bus. You can do it anywhere. You can do it 24/7. We have a slogan, "if you're awake, so are we." We have people answering the phones day and night to serve customers because that is how people live their lives nowadays.

JULIAN SAWYER:

If you look at Starling, we're fundamentally different than most of the banks. So we don't have a branch network. Our customers are people who live their life on a mobile phone, who don't understand why you have to go to a browser or why you have to go into a branch to do certain activities. So we've designed this as a bank only on a mobile phone. And therefore, you can do absolutely everything that you need on that device. So that's the first thing. That's really, really important.

But behind the scenes we are exactly the same as any other bank. So we have our risk, and we have our compliance teams, and we have our finance and our technologies, et cetera. And that, therefore, is really important that we have all the main functions that a bank absolutely needs. But it's the way that we execute, the way we think, the way we hire, and the type of people that we have is different than other banks.

So as an example, our product team doesn't have anybody from the banking industry. Most of our software engineers don't come from banking. They come from other industries because we can teach them the banking piece. We can't teach them how to code and how to develop some great products.

I don't think customers would look down High Street and go where is Starling Bank because we're talking to them. We're engaging to them on the media that they like which is the mobile phone. And that is the key part.

There are customers that do need a branch. There are customers that need other products like a pension or a mortgage, which is much more advice-based. But we don't offer that. We just offer one product, which is the Current Account, on one channel, which is the mobile phone.

And if you look at what that product is, the Current Account we use many times a day and how many hundreds of times a day do we actually use our mobile phone. So we've got the right product and the right channel. That's not to say that all financial services products should be sitting on a mobile phone because I don't think that is correct. But a Current Account should absolutely be on a mobile phone.

I think if you look at a Current Account, there is no silver bullet. There's no single answer. We haven't solved the problem everybody for the last 100 years has tried to work out what it is. What we have is a whole set of amazing features. Some of which I use and love are the ones that you love and you use.

But what this is about is giving customers choices. It's about giving them insight in how they spend their money. It's about giving them instant note notifications of payments. So my phone or my watch will buzz even before the point of sale will tell me to remove my card. I know you've taken the money. I know the retailers got my money. That's great because I've made that purchase. But I will tell you that.

Which also means that if my phone buzzes right now, I know that someone is using my card fraudulently because I know where it should be. So just giving people that insight in where the money is- where they're spending their money, they're spending insights, giving them goals, round up, features, et cetera- is really, really important.

So for us, it's about having 101 fantastic features, getting them out to customers, deploying them really quickly, and then listening and learning what customers really like, what they use, which features they want more of, and then develop from there.

And it's really, really important in the technology business to get your product out to market. And we've done lots of early work when we said this is the type of customer we're going to have, et cetera. And lots of things change. We didn't go with the post office straight away because we didn't think our customers would use cash.

Then we found they did. So we've gone and now given 11,000 outlets for our customers. Now that's about listening to customers. We could have spent years and years trying to derive a strategy for cash or cashless. And we would never have got to that same point. So getting our product out early is really critical. And listening to customers is the most important thing.

End transcript: Video 5 The value proposition of Starling Bank

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Video 5 The value proposition of Starling Bank

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Discussion

1. Products and services

   Starling bank offers its customers a bank app and a possibility for performing all their transactions online. This application is both a pain reliever and a gain creator of the bank’s business model.

2. Pain reliever

   The bank’s customers are typically not sure how much money they have in their current account. Therefore, in the design of its value proposition, Starling Bank has offered a solution to this problem by making it possible for the customers to use the app for full control of, and direct access to, their account. The app allows seeing the immediate balance change after each transaction; hence the availability of the information on how much money has been spent and remains in the current account. The customers can also receive notifications about their expenses immediately.

3. Gain creator

   Customers want to save time by accessing their bank accounts from mobile devices. Starling Bank has created a simple bank account accessible from a smartphone application. The banking app proposed by Starling is designed to be accessible for all people. It also enables people to get full control of how their money is spent.

It is impossible to think about a value proposition without considering the customers it is designed for. Therefore, the next section will focus on the customer.