Value Proposition Canvas - Part Three
This is part three of our Value Proposition Canvas series. You can also read Part One and Part Two
Product-Market Fit
We know our customer, and what we think they’re looking for.
We crafted an offer, hopefully it excites them.
Now what?
The next stage can be confronting, because it can’t be done from the comfort of an office.
It has to be done… out in the real world.
Steve Blank put it best:
“There are no facts in the building, so get the hell out there and talk to customers”
That’s because the next step is to check our assumptions – as cheaply and quickly as possible.
Right now, there are three possibilities:
We’re spot on, and customers love the offer.
Or
We’re dead wrong, and customers hate or ignore it.
Or
We’re close, but customers think it’s not quite worth it.
It’s vital that we find out which case we’re in.
If it’s the first case, then testing reassures your team, and will help you pitch for investment.
If it’s the second case, then we’ve been saved a lot of money stress, and embarrassment.
If it’s the third case, then we’ve been given an opportunity to tweak the product, message or price, to better capture our customers’ interest.
Either way, testing is your friend.
What are we testing?
We’re first checking to see if our guesses about our customer’s jobs, pains and gains were right.
Do our customers feel frustrated?
Are they focused on different issues and obligations?
Is the problem viewed as a gain or a pain?
Secondly, we’re checking to see if our messaging is getting through.
Does our customer make the connection between the feature and the benefit?
Thirdly, we’re looking to see how they respond to the price point
The Office, NBC
The price tag is the best test of value proposition.
This isn’t about saying “Our customer would love this gain…”
But instead “Our customers would be happy to pay $27 for this gain”
People are price sensitive. They may want the value proposition, but not at any cost.
Most customers would love to support your cause or help the environment, but not if they have to pay a premium.
Crowdfunding does this really well.
If you ask for support and enthusiasm, people will tell you they love you and your product.
The test is: will they pre-order it?
Do they love it enough to hand over their money?
This is where you get pure honesty. If they like the concept and won’t pay the asking price, you know the value proposition isn’t strong enough (or they’re not your real customer).
Maybe we go back to the whiteboard, and see if we can make the offer even stronger, or try to address a different pain/gain. Yeah it’s disappointing, but we’ve also been spared a lot of frustration and money.
Your job is not to “create demand”, but to respond to the demand that already exists.
If you have to twist your customer’s arm, you’ve either got the wrong customer or the wrong offer.
Let’s go back to the Value Proposition Canvas and try another few iterations.
Try keeping your current product/service, and brainstorm new customers who might have relevant pain points.
Try keeping your current customer, and brainstorm new products and services that solve a problem for them.
It may not be something they currently buy, it just needs to hit their current pains and gains.
Think of Netflix switching from DVDs to online streaming
McDonalds launching their custom burger range
Amazon selling e-readers as well as books
UberX and UberBlack being pitched at different parts of the market
Thankyou entering the nappy business
Tesla going from luxury to affordability
Then think of how Kodak ignored their customers changing needs.
How Nokia valued complexity over design
Arnotts thinking that people wanted Shapes to change their recipe
Coca Cola misreading customer interest in Stevia
Masters assuming that customers had problems with Bunnings
When you’re ready, try the Strategyzer Learning Card, a one page tool that distils exactly what you’re trying to test.
Available for free at Strategyzer.com
It can feel strange to put it into words, but it’s a useful process to clarify why you’re testing your value proposition.
It creates clarity for your team, your investors, and most importantly, yourself.
Right now, you're coming up with a tonne of reasons as to why you don't want to do a test.
That fear, that hesitation, that nausea, all of it is exactly why you need to do it.
This is a gentle environment to learn harsh lessons, and a great way to build momentum and customer insights.
Best of all, all these tools are free and testing is cheap.
You'll either have a win or an "A-Ha!" moment.
Now get the hell out there and talk to customers.
For more of the Value Propositions Case Studies series;
Part One featuring Louis Vuitton, AFL, Uber and TOMS
Part Two featuring Nespresso, Heineken, and Shoes of Prey
Part Three featuring a variety of Men’s Watches and Chocolate brands
Part Four featuring the classic iPod ads, Whiskey, Hardware, Butter and Barossa Tourism
Being The Best explores how companies frame themselves as industry leaders
Being The Cheapest covers strategies for demonstrating value for money
Social Proof examines how brands make themselves look popular and trustworthy
Cologne looks at how intangible gains are conveyed through imagery and design
Bottled Water compares ten brands selling the same product in different ways
If you’re crafting Value Propositions, you’ll love my free Value Propositions eBook, full of tips for designing and testing compelling Value Propositions that will delight your customers.
