Want to deeply understand your prospects to become customers?

Want to deeply understand your prospects to become customers?

Want to deeply understand your Prospects

to enable them to become Customers?


Why should one spend time in better understanding their Prospects?  Isn't that just a waste of time?


The reality is that one can waste a lot of time, effort and money in targeting the wrong Prospects, in mis-directing your message and in losing the opportunity to convert these Prospects into valuable Customers -- and revenue!


Here is a series of steps for deeply understanding your Prospects and for positioning your messages so that you get more revenue sooner!


The stages are based upon Alex Osterwalder and Team's work on Value Proposition Design. (Please see a link for purchasing their book:  Amazon Kindle - The Value Proposition Design book )


Enjoy! 




1.

The Value Proposition Design process has 4 stages:  1. Canvas, 2. Design, 3. Test, and 4. Evolve



Canvas 

canvas
canvas

The main topics within this stage include:

  • Background - Business Canvas
  • Customer Profile
  • Value Map
  • Fit


Background - Business Canvas


Key takeaways:

  • You can use the Business Canvas to embed your value proposition in a viable business model -- to capture value for your organisation
  • The Business Canvas includes the following components:
    • Customer Segments are the groups of people and/or organizations a company or organization aims to reach and create value for with a dedicated value proposition. 
    • Value Propositions are based on a bundle of products and services that create value for a customer segment. 
    • Channels describe how a value proposition is communicated and delivered to a customer segment through communication, distribution, and sales channels. 
    • Customer Relationships outline what type of relationship is established and maintained with each customer segment, and they explain how customers are acquired and retained. 
    • Revenue Streams result from a value proposition successfully offered to a customer segment. It is how an organization captures value with a price that customers are willing to pay. 
    • Key Resources are the most important assets required to offer and deliver the previously described elements. Key Activities are the most important activities an organization needs to perform well. 
    • Key Partnerships shows the network of suppliers and partners that bring in external resources and activities. 
    • Cost Structure describes all costs incurred to operate a business model. 
    • Profit is calculated by subtracting the total of all costs in the cost structure from the total of all revenue streams.

      Osterwalder, Alexander. Value Proposition Design: How to Create Products and Services Customers Want (Strategyzer) (p. xvi). Wiley. Kindle Edition.

The following image is the Business Model Canvas -- with a preliminary overlay of the Value Proposition (i.e. represented by the envelope and side-ways peace sign!)

business model canvas



1.1 Customer Profile 

customer profile


Key takeaways:

  • With the Customer Profile, you clarify your customer understanding.
  • Customer jobs refers to Functional jobs, Social jobs, Personal/emotional jobs, Supporting jobs (e.g. role of Buyer of Value, Cocreator of Value, Transferrer of Value).
  • Customer Pains - Describe bad outcomes, risks and obstacles related to Customer Jobs.
  • Customer Gains - Describe the outcomes customers want to achieve or the concrete benefits they are seeking.
customer profile



1.2 Value Map

value map


Key takeaways:

  • With the Value Map, you describe how you intend to create value for that customer.
  • Products & Services:  A list of what you offer, e.g. Physical/tangible goods, Intangible such as copyrights or services such as after-sales assistance., Digital, Financial such as investment funds, insurances, services such as financing of a purchase.
  • Pain Relievers:  Describe how exactly your products and services alleviate your specific customer pains.
  • Gain Creators:  Describe how your products and services create customer gains.
value map


1.3 Fit 

fit

Key takeaways:

  • You achieve Fit between the Customer Profile and the Value Map when one meets the other.
  • Are you addressing essential customer gains?
  • Are you addressing extreme customer pains?
  • There are 3 types of fit, i.e. Business Model Fit (in the bank), Product-Market Fit (in the Market), Problem-Solution Fit (on Paper).

Below is an example wherein the checkmarks show that there is a fit between the Customer Profile and the Value Map.

value proposition
value proposition

The following is a sample worksheet wherein one can brainstorm and put "sticky notes" in answering the issues of fit. Such worksheets can be very helpful.

value proposition canvas
2.

Design 

design
design

The main topics involve:

  • Prototyping Possibilities
  • Starting Points
  • Understanding Customers
  • Making Choices
  • Finding the Right Business Model
  • Designing in Established Organisations

You can kick-start your value proposition design with Prototyping Possibilities for one of your Starting Points. Shape your value propositions by Understanding Customers, then select which ones you want to further explore by Making Choices and Finding the Right Business Model.  If you are in an existing company, you can discover the particularities of Designing in Established Organisations.


Ten characteristics of great value propositions are:

  1. Are embedded in great business models
  2. Focus on jobs, pains, and gains that matter most to customers.
  3. Focus on unsatisfied jobs, unresolved pains and unrealised gains.
  4. Target few jobs, pains and gains, but do so extremely well.
  5. Go beyond functional jobs and address emotional and social jobs.
  6. Align with how customers measure success.
  7. Focus on jobs, pains and gains that a lot of people have or that some will pay a lot of money for.
  8. Differentiate from competition on jobs, pains, and gains that customers care about.
  9. Outperform competition substantially on at least one dimension.
  10. Are difficult to copy.


2.1 Prototyping Possibilities 

prototyping

Key takeaways:

  • Use the activity of making quick and rough study models of your idea to explore alternatives, shape your value proposition, and find the best opportunities. Prototyping is common in the design professions for physical artifacts. We apply it to the concept of value propositions to rapidly explore possibilities before testing and building real products and services.

Ten prototyping principles:

  1. Make it visual and tangible.
  2. Embrace a beginner's mind.
  3. Don't fall in love with the first idea -- create alternatives.
  4. Feel comfortable in a "liquid state", i.e. uncertainty initially.
  5. Start with low fidelity, iterate and refine.
  6. Expose your work early -- seek criticism.
  7. Learn faster by failing early, often and cheaply.
  8. Use creativity techniques.
  9. Create "Shrek models", i.e. outrageous prototypes.
  10. Track learnings, insights and progress.


2.2 Starting Points 

starting points

Key takeaways:

  • Zoom in and zoom out when considering starting points.
  • Spark ideas with design constraints, 
    • Transform from product to services (e.g. Hilti).
    • Create a value proposition composed of a base product and a consumable product that generates recurring revenues (e.g. Nespresso).
    • Transform a technology (innovation) into a fashionable trend (e.g. Swatch).
    • Reduce the core value proposition to its basic feature or target an unserviced or under-served customer segment with a low price and sell everything else as an additional value proposition (e.g. Southwest Airlines).
    • Build a platform model that connects several actors with a specific value proposition for each (e.g. airbnb).
  • Invite big ideas the table with books and magazines.
  • Technology push, e.g. technology in search of jobs, pains, and gains.
  • Market pull, e.g. identify high-value jobs.

Six ways to innovate from the Customer Profile:  Can you...

  • Address more jobs?
  • Switch to a more important job?
  • Go beyond functional jobs?
  • Help a lot more customer get a job done?
  • Get a job done incrementally better?
  • Help a customer get a job done radically better?



2.3 Understanding Customers 

understanding customers

Key takeaways:

  • Understanding the customer's perspective is crucial to designing great value propositions.

Six techniquest to gain customer insights:

  1. The Data Detective -- Build on existing work with (desk) research.
  2. The Journalist --Talk to (potential) customers as an easy way to gain customer insights.
  3. The Anthropologist -- Observe (potential) customers in teh real world to get good insights into how they really behave.
  4. The Impersonator -- "Be your customer" and actively use products and services.
  5. The Cocreator --Work with customers to expore and develop new ideas.
  6. The Scientest -- Get customers to participate (knowingly or unknowingly) in an experiment!.



2.4 Making Choices

making choices

Key takeaways:

  • Simulate the Voice of the Customer.
  • Understand the context.
  • Compare your value proposition with competitors.
  • Avoid cognitive murder to get better feedback. Present the protoypes effectvely.
  • Master the art of critique.
  • Collect efficient feedback with de Bono's Thinking Hats.
  • Define criteria and select prototypes.

Ten questions to assess your value proposition:

  1. Is it embedded in a great business model?
  2. Does it focus on the most important jobs, most extreme pains, and most essential gains?
  3. Does it focus on unsatisfied jobs, unresolved pains, and unrealised gains?
  4. Does it concentrate on only a few pain relievers and gain creators but does those extremely well?
  5. Does it address functional, emotional, and social jobs all together?
  6. Does it align with how customers measure success?
  7. Does it focus on jobs, pains, or gains that a large number of customers have or for which a small number are willing to pay a lot of money?
  8. Does it diff erentiate from competition in a meaningful way?
  9. Does it outperform competition substantially on at least one dimension?  
  10. Is it difficult to copy?


2.5 Finding the Right Business Model 

finding the right business model

Key takeaways:

  • To create value for your business, you need to create value for your customer.
  • To sustainably create value for your client, you need to create value for your business.
  • Zoom out to the bigger picture to analyse if you can profitably create, deliver, and capture value around this particular customer value proposition.
  • Zoom in to the detailed picture to investigate if the customer value proposition in your business model really creates value for your customer.

Seven questions to assess your business model:

  1. Switching Costs. How easy or difficult is it for customers to switch to another company?

    Osterwalder, Alexander. Value Proposition Design: How to Create Products and Services Customers Want (Strategyzer) (p. 156). Wiley. Kindle Edition.
  2. Recurring Revenues. Is every sale a new eff ort or will it result in quasiguaranteed follow-up revenues and purchases?
  3. Earnings vs. Spending. Are you earning revenues before you are incurring costs?
  4. Game-changing Cost Structure. Is your cost structure substantially diff erent and better than those of your competitors?
  5. Others Who Do the Work. How much does your business model get customers or third parties to create value for you for free?
  6. Scalability. How easily can you grow without facing roadblocks (e.g., infrastructure, customer support, hiring)?
  7. Protection from Competition. How much is your business model protecting you from your competition?





2.6 Designing in Established Organisations 

designing in established organisations

Key takeaways:

  • Adopt the right attitude to invent or improve.
  • Reinvent by shifting from products to services.
  • Use design workshops. 
3.

Test  

test

The main topics involve:

  • What to Test
  • Testing Step-by-Step
  • Experiment Library
  • Bringing It All Together

Reduce the risk and uncertainty of your ideas for new and improved value propositions by deciding What to Test.  Then, get started with Testing Step-by-Step and drawing from the Experiment Library before Bringing It All Together and measuring your progress.


When you start exploring new ideas, you are usually in a space of maximum uncertainty. You don’t know if your ideas will work. Refining them in a business plan won’t make them more likely to succeed. You are better off testing your ideas with cheap experiments to learn and systematically reduce uncertainty. Then increase spending on experiments, prototypes, and pilots with growing certainty. Test all aspects of your Value Proposition and Business Model Canvases, all the way from customers to partners (e.g., channel partners).


Ten testing principles:

  1. Realize that evidence trumps opinion. Whatever you, your boss, your investors, or anybody else thinks is trumped by (market) evidence.
  2. Learn faster and reduce risk by embracing failure. Testing ideas comes with failure. Yet failing cheaply and quickly leads to more learning, which reduces risk.
  3. Test early; refine later. Gather insights with early and cheap experiments before thinking through or describing your ideas in detail.
  4. Experiments ≠ reality. Remember that experiments are a lens through which you try to understand reality. They are a great indicator, but they diff er from reality. 
  5. Balance learnings and vision. Integrate test outcomes without turning your back
  6. Identify idea killers. Begin with testing the most important assumptions: those that could blow up your idea.
  7. Understand customers first. Test customer jobs, pains, and gains before testing what you could off er them.
  8. Make it measurable. Good tests lead to measurable learning that gives you actionable insights.
  9. Accept that not all facts are equal. Interviewees might tell you one thing and do another. Consider the reliability of your evidence.
  10. Test irreversible decisions twice as much. Make sure that decisions that have an irreversible impact are particularly well informed. 


  • Use the Customer Development Process, i.e.
    • Customer Discovery
    • Customer Validation
    • Customer Creation
    • Company Building
  • Integrate lean start-up principles (Zoom in and Zoom out)
    • 0. Generate a hypothesis.
    • 1. Design/Build
    • 2. Measure
    • 3. Learn
  • Apply build, measure, learn


3.1 What to Test  

what to test

Key takeaways:

  • Provide evidence showing what customers care about (the circle) before focusing on how to help them (the square).
  • Provide evidence showing that your customers care about how your products and services kill pains and create gains.
  • Provide evidence showing that the way you intend to create, deliver, and capture value is likely to work. 


3.2 Testing Step-by-Step 

testing step by step

Overview of the testing process:

  • Extract hypotheses -- What needs to be true for your idea to work?
  • Prioritise hypotheses -- What could kill your business?
  • Design tests - with Test Cards (see Alex Osterwalder)
  • Prioritise tests
  • Run tests
  • Capture learnings -- with the Learning Card
  • Make progress

Key takeaways:




3.3 Experiment Library  

experiment library

Key takeaways:

  •  Choose a Mix of Experiments
    •  Every experiment has strengths and weaknesses. Some are quick and cheap but produce less reliable evidence.
    • Some produce more reliable evidence but require more time and money to execute.
    • Consider cost, data reliability, and time required when you design your mix of experiments.
    • As a rule of thumb, start cheap when uncertainty is high and increase your spending on experiments with increasing certainty.
  • Consider tools like:
    • Produce evidence with a call to action
    • Ad tracking (Google Adwords)
    • Unique link tracking
    • MVP (minimum viable product) catalog
    • Illustrations, storyboards, and scenarios
    • Life-size experiments (e.g. prototypes)
    • Landing page
    • Split testing
    • Innovation Games
    • Speed Boat
    • Product Box
    • Buy a Feature
    • Mock sales
    • Pre-sales


3.4 Bringing It All Together  

bringing it all together

Key takeaways:

  • The testing process -- use all the above tools.
  • Measure your progress
  • Use a Progress Board


4.

Evolve 

evolve
evolve


Use the Value Proposition and Business Model Canvas as a shared language to Create Alignment  throughout every part of your organization while it continuously evolves. Make sure you constantly Measure and Monitor your value propositions and business models in order to Improve Relentlessly  and Reinvent Yourself Constantly.


The main topics involve:

  • Create Alignment
  • Measure & Monitor
  • Improve Relentlessly
  • Reinvent Yourself Constantly
  • Taobao: Reinventing (E-) Commerce

4.1 Create Alignment


Key takeaways:

  • The Value Proposition Canvas is an excellent alignment tool. It helps you communicate to diff erent stakeholders which customer jobs, pains, and gains you are focusing on and explains how exactly your products and services relieve pains and create gains.

    Osterwalder, Alexander. Value Proposition Design: How to Create Products and Services Customers Want (Strategyzer) (p. 260). Wiley. Kindle Edition.


4.2 Measure & Monitor


Key takeaways:

  •  Use the Value Proposition and Business Model Canvases to create and monitor performance indicators once your value proposition is operational in the market. Track the performance of your business model, your value proposition, and your customers’ satisfaction.

    Osterwalder, Alexander. Value Proposition Design: How to Create Products and Services Customers Want (Strategyzer) (p. 262). Wiley. Kindle Edition.

4.3 Improve Relentlessly


Key takeaways:

  • Use the same tools and processes from testing and monitoring to improve your value proposition once it’s in the market. Continuously test “what if” improvement scenarios, and measure their impact on customer satisfaction.

    Osterwalder, Alexander. Value Proposition Design: How to Create Products and Services Customers Want (Strategyzer) (p. 264). Wiley. Kindle Edition.


4.4 Reinvent Yourself Constantly


Key takeaways:

  • Successful companies create value propositions that sell embedded in business models that work. Outstanding companies do so continuously. They create new value propositions and business models while they are successful.
  • Five things to remember when you build transient advantages: ·
    • Take the exploration of new value propositions and business models just as seriously as the execution of existing ones.
    •  Invest in continuously experimenting with new value propositions and business models rather than making big bold uncertain bets. ·
    • Reinvent yourself while you are successful; don’t wait for a crisis to force you to. · 
    • See new ideas and opportunities as a means to energize and mobilize employees and customers rather than a risky endeavor. ·
    • Use customer experiments as a yardstick to judge new ideas and opportunities rather than the opinions of managers, strategists, or experts. 

So if you wish to learn more tools to help you more deeply understand your Customers and to position your messages optimally to result in more sales and more money, please feel free to contact me to set up a free initial appointment via:  kenbusinessdoctor.youcanbook.me 


Also, please feel free to check out my other helpful blogs at:  https://www.kenbusinessdoctor.com/blog/


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