Your Value Proposition is about quantifying in as concrete and precise a way as possible, the value your product will create for your End User.
Customers will be much more likely to buy your product if the value it provides lines up with their highest priorities and aligns with how they measure value.
In previous articles, we focused on the selection of a beachhead market and identified the characteristics of the End User and a Persona (real person) that we can actually talk to about our solution. Primary market research was conducted to identify the top two pain points of the customer along with their sense of urgency to reduce or eliminate that pain. We now want to understand how the customer measures value to ensure alignment of our value proposition.
Identify Your Customer’s Top Pain Points
Start by going back to the Persona, or others interviewed during primary market research, and ask them about their top two pain points. There may be many problems they would like to resolve, but there’s one (or two) that keep them awake at night. The goal is to figure out how your solution lines up with the top problem they desperately need to resolve and to understand how they measure value.
How do they measure their pain? Is the pain related to costs of goods and profit margin? Then their pain would be measured in dollars or dollars over a period of time, like per year. Is their pain related to time to market, and speed of customer response? Then their pain would be measured in units of time. Is their pain about quality of the product, user friendliness, or reliability? Then their pain could be measured by product failure rates, customer churn, or down time.
The bottom line is to determine how the customer measures their pain and how your solution provides a “quantifiable” improvement. Quantifiable improvement is usually expressed in some variation of better, faster, cheaper. If your solution is faster: how much faster? If your solution is cheaper: how much cheaper? If your solution is more reliable: how much more reliable?
There’s one or two pain points that is going to cause your persona to move from status quo to a paying customer. You want to focus your efforts on defining and measuring how your solution addresses their pain.
Map Out Your Customer’s “As-Is” State
The next step is to map out how the customer currently operates in the “as-is” state. Interview the Persona, or others interviewed during primary market research, and use their words to describe the “as-is” state of their current operations. Work with the customer to break their process down into discrete steps and determine how they are measuring pain at each step of the process. If their pain is the time it takes a product to go to market, then their process may be broken down into steps like 1) ideation, 2) product design and build, 3) product testing, and 4) product commercialization. You want to understand how much time it takes to accomplish each step and you want the measurement criteria to be in their words.
Define the “Possible State” for Your Customer and Quantify the Value of Your Product or Service
Next you want to define the “possible state” that could be achieved with your proposed new product or service in the exact same terms as you just did for the “as-is” state. You want to show how your new solution will better satisfy the Persona’s top priorities (top 1 or 2 pain points) in detail and using the same units of measurement that the Persona uses. This is how you identify the value you provide to the customer and how to “quantify” your value proposition.
- When a customer analyzes the value of your product or service against your competitors, they will typically assess your value based on some variation of better, faster, or cheaper.
- If your value proposition does not line up with how the customer perceives and measures value, they will not see (perceive) the value of your solution and how it will help solve their problem.
- If you can’t measure the value your solution provides, your knowledge is insufficient to improve the process.
- If you can’t quantify the value your solution provides to the customer, you don’t know your customer well enough.
- We are still on the front end of developing our product or solution through a systematic approach to entrepreneurship and we are still in the design stage working with customers to iterate our solution. For this reason, when quantifying the value your solution provides to customer, be careful to under promise and over deliver.
- The Quantified Value Proposition will ensure alignment between internal staff and external customers on the actual value your solution provides.
Founder and CEO, Leadership Institute For Entrepreneurs