Imagine you have a brilliant idea that you want to bring to market. Much of your idea’s fate depends on how well you manage the “Search” phase of going back and forth between designing your value proposition and business model and testing the underlying assumptions in the market. In this post we outline how you might structure the testing of your value proposition.
Picture it as a funnel with three stages:
- Testing the jobs, pains, and gains of your customers (i.e. testing the circle aka Customer Profile of the Value Proposition Canvas)
- Testing the products, services, and features of your value proposition (i.e. testing the square aka Value Map of the Value Proposition Canvas)
- Testing their willingness to pay (i.e. testing the revenue block in the rectangle aka Business Model Canvas)
At the top of this funnel, tests are conducted with a large pool of customers simply to verify if they’re interested. The more experiments you conduct and the more insights you gain, the more this pool of potentially interested customers is narrowed down to a more clear segment of real buyers at the end of the funnel.
1. Test the circle (customer jobs, pains, and gains)
The first stage of the funnel is about testing if potential customers are actually interested in your idea and have the jobs, pains, and gains you imagined they had. Hence, in this first phase you test the assumptions regarding your customers’ jobs, pains and gains (aka the Customer Profile in your Value Proposition Canvas).
Before wasting time building products and services that customers don’t care about, we suggest you provide evidence for what makes them tick, what problems they face, and which benefits would might fulfil their needs. To test customer jobs, pains, and gains you could - for example - run a keyword advertising campaign using Google Adwords. You will learn about your customer’s interest by measuring how frequently people conduct searches regarding the problem you’re trying to solve, and by measuring how many of them click on your Google ads.
2. Test the square (products, services, and features)
In this second stage of the funnel you try to learn which products, services, and features customers want and which ones they want most (aka the Value Map in your Value Proposition Canvas). This will allow you to design the best value proposition for the largest possible market. An important part of this stage of the funnel is to understand your customers’ priorities. A tool we often use for this is Luke Hohmann’s Buy-A-Feature game that you can play with customers to identify what features a large number of customers value most.
3. Test the rectangle (at the very least the potential revenue streams from your products and services)
After testing the circle and the square you try to figure out which customers are actually willing to pay for your value proposition. You’ll experiment with potential customers that care about your value proposition to verify that you can generate revenues from your value proposition (the Revenue Streams block of the Business Model Canvas). Setting up a fake-sales website is a quick and cheap way to test if customers will put money where their mouth is.
What approach do you use to structure the testing of your value proposition?