Validating and Executing on Value Propositions
Previously, we dove deep into creating a value proposition that is based on both meaningful customer research and thoughtful consideration of the benefits and costs that your organization will offer.
In this article, we’ll discuss how to validate your value proposition before actually building against it. Then, we’ll show how you can execute faithfully against your value proposition.
Validating Your Value Proposition
To validate your value proposition, put it in front of your proposed customers and users. There’s nothing better than live data to confirm your hypothesis.
Be sure to select only customers and users who fit within your target segments. In my experience, the easiest way to get started is to ask the same people that you interviewed when you were originally identifying your target customer segment.
When looking for interviewees, focus on fidelity over convenience. For example, if your product is targeted at Salesforce administrators at companies larger than 10,000 employees, find these people specifically because they will give you the most meaningful feedback.
Tell your interviewee about your proposed value without bringing up the cost: what is the benefit that they would get in using your product, versus some alternative?
Your first check is to see whether your proposed value actually captures their attention. Don’t worry about the cost yet. If you get lukewarm responses at this stage, then your value proposition already doesn’t have legs.
After all, a value proposition contains two parts: the benefit and the cost. If the benefit isn’t compelling at zero cost, there’s no way your full value proposition will resonate with your customers.
One key factor to keep in mind is that when you share ideas with others, they will tend to say that they are more positive than they actually will be.
People don’t like to let others down, and it costs them nothing to tell you that they’d love your product or that it seems cool. This is a well-researched bias called the social desirability bias, and you need to account for it as part of your validation.
Actually check for genuine excitement - if you don’t have genuine excitement, then your value proposition needs additional work on the value side.
I know that someone is genuinely excited when she says phrases like, “This is an amazing idea! I wish I had come up with it!” or “Can I buy this right now?”
Furthermore, if they start telling you immediately about all of the ways in which your product would make their life better without you needing to prompt them, you know that you’ve struck a chord with them.
The other key insight to capture here is what your proposed customers perceive the benefit to be.
Even though you just told them what your proposed value is, they’ll perceive it through their own lens. This perception is critical to understand as it enables you to refine your value proposition to better solve their pain.
Here’s an example. I’ve had value propositions where my proposed value would save the customer money, but what she was really interested in was the feeling of security that she would get from my product.
Knowing that my customers care more about security rather than savings enabled me to refine my value proposition to focus on security.
A Step-by-Step Guide to Value Validation
What does value validation look like in practice? My favorite framework looks something like the below.
By giving your interviewee a piece of paper with your value statement written on it - plain white paper and plain black font is fine.
Then, ask your interviewee to read the value statement out loud, and to tell you their thoughts out loud. This step enables you to check for any confusion.
You don’t want your interviewee to tell you about how amazing your offering is, only for them to find out that it’s not really what you’re offering in the first place!
After they finish reading the statement out loud, ask your interviewee about their initial reaction. You want to check for their immediate gut reaction. Don’t let them filter it out or try to be rational.
At this step, you’re looking for instinctive concerns such as “this seems too good to be true” or “I don’t trust what you’re offering.” Many products fail in the market because they seem like scams.
Remember that part of the cost of your value proposition is trust - if your value statement incurs an immediate trust cost, you need to refine your value statement further.
From the start, ask your interviewee about how they feel your value statement would apply to their life. As mentioned before, what you think your value is can be very different from what your customers think your value is.
Finally, ask them why they feel it applies or doesn’t apply to their life, and what the benefit means for them. At this stage, use a 5 Why’s methodology - dig deeper and deeper until you get to an answer that is part of Maslow’s hierarchy of needs.
For example, if someone tells you that the benefit of your product is that it makes their marketing team more productive, ask them why that matters to them.
They might say that it then makes them look better in front of their boss.
Ask them why looking better in front of their boss matters. They might say that it enables them to eventually get a raise.
Ask them why they care about getting a raise, and they might say that it enables them to maintain a better standard of living.
At this point, you’ve reached a benefit that Maslow’s hierarchy of needs - in this case, it’s a security need.
You should therefore design your product in such a way that enables your customer and their team to shine in front of their boss.
Here’s a different example.
Say that someone told you that the benefit of your product is that it enables their marketing team to be more productive. On the surface, this seems like the same benefit.
But, ask them one step deeper, and they might say that they need their team to be more productive because their team is currently burning out.
Ask them why their team is burning out. They might tell you that it’s because they’re being asked to do too many things.
Ask them why they’re doing so many things. They might tell you it’s because they don’t have the budget to hire more people.
Ask them why they don’t have the budget to hire more people. They might tell you it’s because their boss doesn’t see the value of the marketing department.
Ask them why their boss doesn’t see the value of their department. They might tell you it’s because their boss comes from a different background and needs to be educated about the value of marketing.
At this point, you’ve reached a benefit that Maslow’s hierarchy of needs - in this case, it’s a self-actualization need.
You should therefore design your product in such a way that clearly describes to managers what sort of value their marketing department is already generating for them, how their marketing department should focus their efforts, and how your product will enable them to deliver even more value.
If the core underlying need is different, then you need to address these needs differently for these two customers, even though their surface benefit is exactly the same.
By having a clear sense of underlying motivators, you can craft your product offering to target the underlying needs directly.
Each product expert will have a different approach to this; you can learn a lot by discussing product offerings within the PMHQ community.
Validating Willingness to Pay
Now that you have data around the value component of your value proposition, probe your interviewee on what costs she’s willing to pay for it.
Begin by proposing a cost that is higher than what you would actually want to charge. Your goal is to be reasonable but to cause pushback.
When (not if!) your proposed customer flinches, ask her what she believes a reasonable trade-off would be.
Because you started high, you’ve anchored her - and she’ll likely provide you an answer somewhat closer to reality.
Remember that customers will likely tell you a lower cost than they’d actually be willing to pay in the real world. Customers know that you are using this data to determine a price point, and of course they would prefer that you charge them as little as possible.
Never ask a customer directly, "How much would you be willing to pay?" You don't want to be anchored by a low price - and your customers have every incentive to encourage you to price cheaply!
Iterating on Your Value Proposition
Bring back the insights that you’ve captured in the field around the value and cost components of your value proposition. Are you on the right track? Are you solving a problem that people actually about, and are willing to pay you for?
Refine your value proposition and come up with alternative value components and alternative cost components.
Test these alternatives in the field and identify which set gives you the greatest fit from your future customers.
Use a test versus control methodology. For example, say you wanted to test out 2 alternative value statements. Place all 3 versions (the original and the 2 alternatives) in front of your interviewee, then ask them to rank the 3 versions from highest to lowest desirability. Remember to switch up the order for each interviewee you speak to so that you prevent the serial position effect (where the first and last items tend to do better than those in the middle).
If you're testing 1 alternative value statement and 1 alternative cost statement, then you need to test all 4 versions with the same interviewee: 1) original value and original cost, 2) new value and original cost, 3) original value and new cost, and 4) new value and new cost.
You know you’re in good shape when additional iterations wind up providing worse results versus the original instead of better results.
Now that your value proposition has been refined and optimized, you can finally execute against it.
Value Proposition Execution
Just because we have identified a value proposition doesn’t mean that we’ve delivered it.
Your entire product is an expression of your value proposition. You will lose your customers' trust if you fail to execute, and you will gain their trust if you execute well.
I’ve found that creating artifacts centered around the value proposition focuses my team and my stakeholders to execute faithfully on the value proposition, as it aligns us to think about the world from the perspective of the customer.
The first artifact you should create is a mock press release.
If your company would publish something about your product, what would it publish?
As you go through the press release, think about how potential customers, users, employee candidates, and competitors would react to the press release.
Based on just the press release alone, would you come closer to achieving your objectives?
Here’s an example of an actual press release from Amazon about a kid's tablet.
Notice how clearly the press release defines the user (children) and the customer (parents), and how each of the features specifically ties to user pains and customer pains.
You want your mock press release to be just as crisp as Amazon’s.
Then, create 2-3 mock testimonials in the voice of your customers and users. Even better, if you have actual testimonials from your test customers and users, use those!
Your goal is to think about the world from the vantage point of the customer/user, ensuring your product is built on their personas.
Now that you have your press release and your testimonials, you can finally dive into evaluating your proposed features.
List out every feature that you believe should be part of the value proposition. As you and your team analyze each one, check to see that each feature satisfies the press release and the testimonials and that you are staying true to the value proposition.
Once you’ve completed your evaluation, break down each feature into more granular components.
For example, you might have a search utility as part of your proposed product. Break it down as granularly as you can: search involves an input action, an output screen, the ability to suggest results, the ability to auto-complete, speed to result, comprehensiveness of results, fuzzy matching, etc.
Identify which ones align best to the value proposition - then, place them as highest priority, and ship those first. Leave the rest behind for a future iteration.
Remember, in most cases, if you ship only when you’re ready, you’re shipping too late.
The only exception is when your customers wield a lot of power and may cause you to go bankrupt if you don’t ship a fully baked product with all features included.
As you ship iteratively, ask customers and users for feedback.
Does their feedback sound like your mock press release and your mock testimonials?
If not, work with your customer to learn why they don’t perceive the value that you thought they’d perceive, and learn why your customer is perceiving more pain than you thought they’d perceive. Fix these gaps in your next product iterations.
Another great way to identify whether your feature would be perceived as valuable by your users is to conduct a fake door test, which is where you ship the "visual entry point" of the functionality without building the whole thing out. From there, you can actively measure user engagement on your proposed functionality!
Value propositions are powerful frameworks that enable you to deliver maximum value in minimum time.
To succeed with a value proposition, validate it with customers and users, iterate on it, and execute against it. Always use your customers and your users as your true north.
In our final article in this series, we’ll discuss additional insights around value propositions, so that you can maximize the value that you deliver.
Have thoughts that you'd like to contribute around validating and executing on value propositions? Chat with other leaders around the world in our PMHQ Community!