The Value Exchange Canvas

This post is the first of a series I will do about online marketing.

Overall

The Value Exchange Canvas describes the basic function of any business and helps you to understand how to do business, marketing and communication. The model will help you to determine the basic building blocks of your own value exchange model. By evaluation of these rudimental aspects you can improve what is needed to have an effective value exchange and hereby grow your business. In essence a business is a platform to do value exchange by two parties. This aspect sounds probably so familiar to you that you are not aware of what that actually means and what implications it has. After reading this blog and understanding the value exchange you will!

Value

To be able to understand value exchange we need to take a step back to the period when goods were traded between persons without the influence of money and businesses.

The figure above shows us a situation of two persons having something valuable to the other. A farmer grows grain and a baker creates bread of out of grain. Without the grain of the farmer the baker cannot create bread and without the bread the farmer cannot eat. So here we have it. The basic need of doing an exchange!

Two valuables are being exchanged for another. Hereby a win-win situation is being established. The two goods contain both a certain value that is equal to the other but is manifested in another form. So by doing a value exchange you actually keep your original value but change it in to another form. Like energy we can swap the value of goods and services into another shape but keeping the same intrinsic value. You can have warmth energy, fossil energy and wind energy. They all possess the same ability to deliver work but come in different forms.

Today we use off-course money in the equation. A typical value exchange would be between a customer who pays money and a business who delivers a product. We do this for the simple reason that the ‘money - product exchange’ is a lot more practical than pure goods exchange. You cannot easily store millions of breads. However money is nowadays just a figure on your bank account and it won’t deplete after one week. Money can be sent all over the world and its intrinsic value can be easily understood.

Still there is a lot more to say about the value exchange itself. Why would you exchange your grains for someone else’s bread? Why would you exchange your grain for bread if you could also exchange it for someone who can make pancakes for you? There are infinite ways to exchange the value you have to another. Therefore three important conditions must to be met for any value exchange to be taken place. By understanding these you can ultimately grow your business.

·         Benefits

·         Trust

·         Proof

Benefits

So why would you or your customer choose for this particular exchange? The first condition for an exchange is to have unique benefits coming out of this exchange for both parties. A customer chooses to exchange his or her money for a bicycle from a certain reseller because it comes with benefits that the competitors do not have. Maybe it is a wow color or cool looking tires. On the same time, if the bicycle reseller sells the bicycle for the same price he bought it from his suppliers, he would exchange value but not gain any profit.

Financial profit is the obvious benefit businesses are seeking for. But it can be more. I would argue that you will think of other ways you can benefit from the deal. Maybe the customer gives you a good reference or he will give you other goods instead. Be open.

It is important to note that benefits are not the same for every person. The person / customer block is therefore connected with the benefits block. To be able to create real benefits you have to understand your customer completely. What are their needs and their problems? What can you do so they benefit greatly from the exchange with you? The more unique benefits you can add for your customers the more customers will choose you and thereby the more (financial) benefits you can retrieve yourself. And this is the essential part of value creation. Keep that in mind.

This building block requires you to think about how to create benefits for you customers and how to communicate them.

Trust

For any value exchange there must be a certain form of trust between the two parties. If there is no trust relationship it is simply impossible to do an exchange. Except if someone points a gun at you. “Give me your money or your life”.  In our capitalistic society we still need a basic trust that the value we give to someone will be exchanged by the value we expected to get. The more trust we have in the other person, value or benefits, the more likely the exchange will take place. If you are a start-up company you have the problem that nobody knows you and thereby trusts you. If you are Apple, however, you simply put the Apple logo on a shitty phone and people will buy it because they simply trust you all the way.

Trust is all about the human part of the exchange. The more people already liked you on Facebook, purchased your products or are talking about what value you have, the more people will follow to exchange their value for your product.

I thereby believe that we never actually buy from websites, machines or companies. In the end we are programmed to buy only from other humans, and the more human you can make your business, the easier it is for others to buy from you. So come up with a personal story instead of hiding yourself behind a template webshop. Ever wondered why brands exist? This is the answer! Because it’s the only way a big company can be human and personal. A brand is an artificial way to create a human face. 

This building block requires you to think about how to create a trust-relationship between your business and your customers and how you will communicate your trustworthiness.

Proof

The final condition for establishing a value exchange is the Proof block.

“Ok, so you say you give me all these benefits with your new product? Prove it!” Only trust and benefits are not enough to convince someone that this value exchange is a smart one. Big words and stolen hearts still need proof of all the goodness before the deal can be closed. The more mutual trust there is the less actual proof you need to deliver and vice versa. For a start-up company it is crucial to have proof because much trust has probably not been created.

This building block requires you to think about how to prove the benefits the customers will gain from the exchange and how you will communicate this proof.

Template

How can you improve these building blocks for your own business? I created a template for the customer side so you can start a brainstorm or discussion with others. Soon I will update this blog-post with examples about how you can use Video and other online tools to create trust and proof your benefits online.

Contact 

If you have any questions about these models or you want to use the pictures please contact us.
info@studiolooklook.com