How to figure out if your product is valuable
It’s not news that running a business is extremely difficult, especially amid economic uncertainty.
But when you have a strong micro understanding of the value you provide to your customer, and it’s backed by real data, getting your customers to pay you even in difficult times, becomes a much more realistic proposition.
Here, I’m going to explain an approach to evaluating the value your product or service provides in the real world.
Step 1: Write down your assumed value proposition
The world is moving constantly, so micro and macro effects are continuously influencing the perceived value of our products and services (the value your customers think you provide) and your actual value (the value your customers actually receive, potentially unbeknownst to them!).
Most of us are pretty good at assuming what value our product or service provides, but without the necessary data it is just that, an assumption.
Going further than that, we as business owners have inherent bias to our product or service. Of course, you might believe your product is cheaper, quicker or just downright better than anyone else, but the key is having your customers recognise that too, and making sure your assumed value and the actual value match up.
I recommend writing down your assumed value proposition with a goal to validate or invalidate whether it is true or not.
Step 2: Identify Your Target Customers
Your target audience is not you.
Remember, even if you’re fixing a problem for yourself, you can’t assume everyone is like you. You are trying to solve a problem for thousands of other consumers or businesses. So you need to build profiles on your target customers, and again recognise these are assumptions and validate them.
A few ideas for B2C:
What are their personal attributes: age, gender?
What is their occupation, where do they work and how much do they earn?
Where do they hangout IRL and online?
And a few for B2B:
What is the role of the decision maker?
How much experience do they need to have?
What are their values?
Step 3: Ask Unbiased Questions
This is arguably the hardest part of all.
The aim is to create a series of questions to ensure the data you get back when you speak to your customers is as clean as possible. This helps ensure you make decisions about the value of your entire business on leading questions.
There are many different types of bias such as Confirmation Bias (trying to get confirmation in your own beliefs rather than objective data) and Social Desirability Bias (people answering questions in a way they think they ‘should’ answer).
Avoiding these biases as much as possible in the questions you create is key.
Step 4: Interview People
We might all be in lockdown but we know many people are accessible via video conferencing and lots of people have a bit more time on their hands. So take advantage of that.
Get in touch with existing customers and ask them for an interview.
Locate other people who match your customer profiles. You can access your own personal networks or use social media (LinkedIn can be good for this).
Decide a series of unbiased questions focused around the problem you’re solving and the value you’re providing (bespoke to each profile). Write these questions in advance and stick to them. Don’t ask questions on the fly as there needs to be intent (“a process”) to your questioning.
Once you’ve interviewed them on video chat, now it’s time to look at the data you received.
Step 5: Crunch The Data
With the data you have, you’re trying to figure out the following:
Is the assumed value that I am providing to my customer aligned with the perceived value and actual value my customer experiences?
Is the problem that you solve a real problem for them, and if so, how are they solving it themselves? Are they using an alternative product or service? If so, much do they spend on it?
Does your product, messaging or price point need updating?
Step 6: Sales Magic
Now you need to:
Commit to selling with your updated understanding of your value proposition
Try different techniques because it won’t just “work”
Learn and iterate
Here to Help
At Tectonic we help you understand the exact needs of your current and potential customers. During the pandemic understanding your customer’s changing needs and behaviours is key to your strategic decision making. If you think we can help with this, you can book office hours with us here.
