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  • Amancio Bouza

How to Create the Value Proposition for an API Product in 5 Easy Steps.

Updated: Sep 17, 2019

The Value Proposition Interface Canvas (VPI Canvas) makes it explicit how you are creating value with your API for your customers and how you are providing value. It is a tool that helps you to systematically understand the customer needs and to design API products your customer wants.


The goal of the VPI Canvas is to make an API's value proposition explicit to validate it and eventually find a good problem-solution fit. The canvas consolidates the Empathy Map Canvas and the Value Proposition Canvas, which complements the business model canvas. The VPI Canvas consists of two parts: the Customer Profile and the Value Proposition Interface Map.


The Value Proposition Interface Canvas (VPI Canvas) combines the concepts of empathy map, the value proposition canvas, and the API as the value proposition interface (VPI).

We briefly presented the API product 'Identity Verification', an API product to verify identities, in Paradigm Shift: From API to VPI (Value Proposition Interface). Let's us it as our example.


Here's the situation. A company (our customers) wants to onboard users on their Web platform. These users are the end-customers. To this goal, they put a registration process in place to get users' personal info, verify their phone number, and verify their home address. This is paramount for them because the company wants to build end-customer relationships and sell products via the Web platform to them.


Now, let's take a look to the corresponding Value Proposition Interface Canvas.


Solve Customer's Pains


Customers are primarily interested in solving problems and in relieving their pains. Therefore, relieving customers' pains is crucial with respect to their buying decision. Truth is, gains don't sell. But they make up for good differentiators and added value.


In the following, we present how our API product is helping the customer to get his job done by relieving his pains.


How to complete the Pain Reliever Flow


Start with the Customer Profile. Be very clear about the jobs that the customer wants to get done and what the pains are. Afterwards, continue with the Value Proposition Interface Map. List the value sources (e.g., data sources, apps, business processes). Find pain relievers from those value sources that relieve the customer's pains. Finally, translate the feature to the interface (API). The following figure presents the pain reliever flow. The numbers indicate the order in which they have to be completed.


Flow of a Value Proposition Interface Canvas for Pains and Pain Relievers]

  1. Customer Jobs: Describe the jobs the customer needs to get done.

  2. Customer Pains: Be clear about why those jobs are painful. Validate those pains with the customer.

  3. Value Sources: List relevant data sources, apps, business processes, and other products & services.

  4. Pain Relievers: List the features of your API product that will relieve their pain.

  5. Value Proposition Interface: Translate the product features to API features. More precisely, describe the API's resources and methods.


In the following, we will follow the sequence as described before. In short, start with the Customer Profile, particularly customer's jobs and pains. Continue with the Value Proposition Interface Map, particularly products & services, pain relievers, and interface.


Step 1: Define Customer's Jobs


The customer wants to:

  • onboard the customer

  • get end-customer's personal info

  • verify customer's personal info

  • eliminate fake accounts


Step 2: Define Customer's Pains


The customer has the following pains getting his job done. The pains are:


  • Sending a letter by post to the end-customer's home is expensive to verify his home address. It costs approx. 6$

  • End-customers drop out of the onboarding process because verifications interrupt the registration flow. Particularly the verification of the home address interrupts the registration process by days and represents a great medium break.

  • The registration process asks to many input info from the end-customer that make him drop out.


Step 3: Value Sources


We have the following value sources that we can reuse.


  • Addresses API. It's based on an internal GEO applications that manages all existing and future addresses. The main applications is managing the telecommunication infrastructure to existing homes as well as to building lots.

  • SMS Token Validation API. It sends a token (secret code) via SMS to a specific phone number. The owner of that mobile phone has to enter the token on a Web form where it gets validated.

  • Customer Relationship Management system. It contains all info about our customers.


Step 4: Pain Relievers


  • Registry of all valid and existing addresses to verify if an address exists and is written correctly. It corresponds to the home address verification.

  • SMS Token Validation to verify if the end-customer has access to the phone with the particular phone number. It corresponds to the verification of the mobile phone number.

  • Registry of verified identities to verify personal info like first name, last name, and address. It corresponds to the personal info verification and the home address verification.


Step 5: Value Proposition Interface


The value proposition interface consists of the Identity API, which provides a method to verify a set of personal info. To this goal, it uses the customer relationship management system. This is an example of using an application and data for another business case.


The Address API and SMS API complement the Identity API to validate addresses and verify the owner of the mobile phone number. The API product can consolidate these three APIs or just the Identity API, which is also a facade to the Address API and SMS API.


  • Identity Verification Resource. It represents the verification result of an identity's personal info. A new resource can be created (POST) and retrieved (GET with a verification Id).

  • Address Resource. It represents an existing address. It includes street, house number, zip code and city. An address resource can be searched for via query parameters.

  • SMS Token Resource. It's generated and send as SMS to the a mobile phone number. It can be also used to verify the SMS token. A new resource can be created (POST) and verified (GET with mobile phone number and SMS token)


How to Create the Value Proposition Statement?


Combine the customer's jobs, the pains, and the pain reliever.


  • Value proposition: We simplify the registration process by verifying the personal info (e.g., personal info, phone number, address) in real-time without interruptions and saving costs of sending a letter by post to verify an end-users address.


Please note that we don't have the data of all citizens in our country. But for the ones we have, we can make it way simpler. This would be a great opportunity to collaborate with the competition who have comparable info about other citizens. Think big!


Boost API Value with Gains


Truth is, customers don't buy your product to get gains. If their business is doing badly then customers are primarily interested in cost reduction. If their business is doing well then customers enjoy the current situation and don't care much about improvements. Nevertheless, gain creators make up for good differentiators and added value.


In the following, we present how our API product is helping the customer to get his job better done by creating gains.


How to complete the Gain Creator Flow


Typically, customers talk about their pains the have to get their jobs done. Gains are different, however. They can be completely new elements of feature. That's why it's better to start again from the customer's jobs rather than from the pains.


Analogously to the pain reliever flow, start with the Customer Profile. Be very clear about the jobs that the customer wants to get done and what gains facilitate the jobs getting done. Afterwards, continue with the Value Proposition Interface Map. List the value sources (e.g., data sources, apps, business processes). Identify gain creators from those value sources that facilitate gains for the customer. Finally, translate the feature to the interface (API). The following figure presents the gain creator flow. The numbers indicate the order in which they have to be completed.


Flow of a Value Proposition Interface Canvas for Gains and Gain Creators

Let's define how we create gains for our customer. It is quite common to repeat a similar mistake as with the pain relievers that negate pains. All to often, customer gains just negate the pains.


  1. Customer Jobs: Describe the jobs the customer needs to get done.

  2. Customer Gains: Be clear about what can provide gains. Validate those gains with the customer.

  3. Value Sources: List relevant data sources, apps, business processes, and other products & services.

  4. Gain Creators: List the features of your API product that will create gain.

  5. Value Proposition Interface: Translate the product features to API features. More precisely, describe the API's resources and methods.


Let's continue with the gain creators. To this goal, follow the sequence as described in Section "Gain Creator Flow: Solve Customer's Pains". In short, start with the Customer Profile, particularly customer's jobs and gains. Continue with the Value Proposition Interface Map, particularly products & services, gain creators, and interface.


Step 1: Customer's Jobs


The customer wants to:


  • onboard the customer

  • get end-customer's personal info

  • correct address info

  • check legal of prospect customers to start customer relationship


Step 2: Customer's Gains


The customer has the following gains that facilitate getting his job done. The gains are:


  • high conversion-rate

  • good user experience

  • smart comparison of first and last names

  • legal age verification

  • cost control of using the API


Step 3: Value Sources


  • Address Catalog that provides lists of cities, zip codes, streets and house number, and house names for a type-ahead input field.

  • Multi-tenant Identity Verification History that allows our customer to access requested identify verifications and the results at a certain point in time.

  • Birthdate Verification of a customer to check his legal age.


Step 4: Gain Creators


  • Provide type-a-head search for addresses to help customer's provide correct address

  • Fuzzy end-customer name matching. Sometimes, end-customers provide short version of their name (e.g., Alex instead of Alexander), replace special characters with more simpler ones (e.g, é with e, ä with ae)

  • Identity Verification History that provides the info about what personal info have been verified, how, and when for the purpose of audits and traceability.

  • Birthdate Verification that provides an info if the end-customer is over 18 or 21. This is relevant to sell certain type of products and build a contractual relationship.

  • Customizable SMS message, which our customer can customize (e.g., message text, sender) to provide the end-customer a consistent user experience.

  • Multi-tenant dashboard that shows the customer the current costs for the identity verifications.


Step 5: Value Proposition Interface


  • Identity Verification Resource. It represents the verification result of an identity's personal info. It provides the birthdate and the customer's language that can be used to personal content. The verification process will do a fuzzy similarity matching of names.

  • Cities, Zip Codes, and Streets Resources. They represent lists of all cities, zip codes, and streets.

  • Customer Dashboard. It is a Web GUI to configure customize SMS messages and manage the API usage. This is not an API.


How to Create the Value Proposition Statement?


Combine the customer's jobs, the gains, and the gain creators.


  • Value Proposition: We facilitate higher conversion rate, consistent user experience, and cost control by simplifying the registration process, fault tolerant identity verification, and providing a dashboard for cost control.


In this case, many features aren't provided by the customer. In our case, we decided to build them. For instance, we extended our API management platform with a backend-as-a-service (BaaS) to provide the history of identity verification with multi-tenant capability as well as an elastic search for addresses. Further, we built a Web application to provide our customers a self-service capability to customize their SMS messages and to manage their API usage.


Conclusion


The Value Proposition Interface Canvas helps you to make it explicit how you create value for your customers. It considers the jobs that the customer needs to get done, his pains in getting them done and gains. Based on this, you formulate the features of your API product to relieve specific pains and create gains for your customer.


The completed Value Proposition Interface Canvas builds the foundation of your API design and corresponds to the Value Proposition in the Hierarchy of API Design Principles. Further, it helps to formulate a compelling value proposition that you can present and validate with prospect customers applying the Lean API Product Development method.


Lean Approach of Value Proposition Interface Canvas


The lean approach is applicable to the Value Proposition Interface Canvas. Generally, the Value Proposition Interface Canvas needs some iterations with the customer. Specifically, the gain creators tend to be what the customer doesn't really want or make your API product not viable by means of pricing.


  1. Build: Create Value Proposition Interface Canvas.

  2. Measure: Validate your assumption about the customer.

  3. Learn: Learn from customer feedback and adapt the Value Proposition Interface Canvas.


 

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©2019 by Amancio Bouza.