Value Proposition Design

Testing
&
Evolving

1
The Environment Map
helps you understand the context
in which you create

The Business Model Canvas

helps you
Create value for your business

The Value Proposition Canvas

helps you
Create value for your customer

2
3
4
5
6
7
8
9
10
10 Questions to ASSESS your VALUE PROPOSITION
1– 2- 3-

Are embedded in Focus on the jobs, Focus on unsatisfied

Great Business Models pains and gains that jobs, unresolved pains
matter most to customers and unrealized gains

4- 5- 6–

Target few jobs, pains Go beyond functional Align with how

and gains, but do so jobs and address emotional customers measure
extremely well and social jobs success
11
10 Questions to ASSESS your VALUE PROPOSITION

7– 8-

Focus on jobs, pains, Differentiate from competition

and gains that a lot of on jobs, pains and gains that
people have or that customers care about
matter most to customers

9- 10 -

Outperform competition Are difficult to copy

substantially on at least
one dimension 12
Testing - Why ?

When you start exploring new ideas you are in a space a maximum uncertainty

You don´t know if your ideas will work

Refining them into a Business Plan either

You are better off testing your ideas with cheap experiments to learn and
systematically reduce uncertainty

13
14
Testing - Why ? 1 – Realize that evidence trumps opinion
Whatever you think 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
1 risk

3 – Test early; refine later

Gather insights with early and cheap experiments
before thinking through or describing your ideas in
detail

2 3 4
4 – Experiments is not equal to Reality
Remember that experiments are a lens through
which you try to understand reality. They are a great
indicator, but they differ from reality

15
 5 – Balance earnings and vision
Testing - Why ? Integrate test outcomes without loosing your vision

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
5 6 7 what you could offer them

8 – Make it measurable
Good test lead to measurable learning that gives
you actionable insights
8 9 10
9 – Accept that not all facts are equal
10 – Test irreversible decisions twice as much
Make sure that decisions that have na irreversible
16
impact are particularly well informed
 Testing - How ? Provide evidence showing what the
First – Test the Circle customers care (the circle)

Before focusing on how to help

them (the square)

Then – Test the Square Provide evidence showing that your

customers care about how your
Products and Services kill pains and
create gains

Finally – Provide evidence showing that the

test the Rectangle way you intend to create, deliver
and capture value is likely to work
17
18
19
20
How to try to overcome this limitation ?

21
22
23
24
25
26
27
28
Overview of the Testing Process

29
30
31
32
 1 – Extract Hypothesis
What needs to be true for your idea to work ?

Use your Business Model and your Value

Proposition Canvases to identify what to test,
before you “get out of the building”

Define the most important things that must be true

for your idea to work

33
34
35
 Critical to survival
2 – Prioritize Hypothesis
What could kill your business?

Identify the business killers.

These are the hypothesis that are critical to the
survival of your idea
Test them first !

Less Critical to survival 36

37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53
54
55
56
57
58
59
60
61
62
63
64
65
66
67
68
69
70
71
72
73
74
75
76
 3 – Design Tests
1 – Design an experiment
Describe the hypothesis that you want
test

Outline the experiment

Define data you are going to measure

Define a target threshold to validate

(or invalidate) the tested hypothesis

2 – Design a series of experiments for

the most critical hypothesis

4 – Prioritize Tests
5 – Run Tests 77
78
 6 – Capture Learning
Capture your insights with the Learning Card
Describe the hypothesis that you tested

Outline the outcomes

Explain what conclusions and insights you

derived from the test results

Describe what actions you will take based on

your insights

79
80
 6 – Capture Learning
You experimented and learned Now What ?

1 – Invalidated
Get back to the drawing board : PIVOT

2 – Learn More
Seek Confirmation : Design and conduct further tests
Deepen your understanding: same but with different objectives

3 – Validated
Expand to the next building block
Execute

81
7 – Make Progress

Measure your progress

82
 We are now evolving between

Customer Discovery & Customer Validation

Customer
Discovery

Validated Assumptions on
the Customer

Problem / Solution FIT

83
 We are now evolving between

Customer Discovery & Customer Validation

Customer Customer
Discovery Validation

Validated Assumptions on
Validated Assumptions on
the Customer
Value Proposition
Problem / Solution FIT
Product / Market FIT
84
 We are now evolving between
Customer Discovery & Customer Validation

Testing
Customer Customer
Discovery Validation

1 – Validated Relevance
& Interest
Validated Assumptions on
Validated Assumptions on
the Customer
Value Proposition
Problem / Solution FIT
Product / Market FIT
85
 We are now evolving between
Customer Discovery & Customer Validation

Testing
Customer Customer

2 – Validated Preference
Discovery Validation

1 – Validated Relevance

& Priority
& Interest
Validated Assumptions on
Validated Assumptions on
the Customer
Value Proposition
Problem / Solution FIT
Product / Market FIT
86
 We are now evolving between
Customer Discovery & Customer Validation

Testing
Customer Customer

2 – Validated Preference
Discovery Validation

1 – Validated Relevance

Willingness & Capacity

& Priority

3 – Validated
& Interest

to Pay
Validated Assumptions on
Validated Assumptions on
the Customer
Value Proposition
Problem / Solution FIT
Product / Market FIT
87
 1 – Testing Relevance & Interest
Prove that potential customers and partners are genuinely interested and
don’t just tell you so.

Show that our ideas are relevant enough to them to get to perform
actions in specific, such as:

. E-mail sign-ups
. Meetings with decision makers and budget holders
. Letters of intent
….

1.1. Ad Tracking
“Fake” Ads
Unique Link Tracking

1.2. Landing Pages

88
 1 – Testing Relevance & Interest
1.1. Ad Tracking
Mock Ads
Unique Link Tracking

Ad tracking is an established technique that is used by advertisers to measure

the effectiveness of ad spending. The same technique can be used in a powerful
way to track the interest or lack of interest of potential customers for a new value
proposition that doesn’t even exist yet. If few or no potential customers respond
to your ad campaign they either don’t have the job, pain, or gain you are
planning to address or they don’t see fit in your advertised value proposition.

Google ads are a very scalable way to test potential customers’ reactions to
certain search terms. With a small budget you can run a campaign on Google
AdWords and you only pay if people click on your ads and visit your landing page.

Link tracking in general is a great way to track people’s interest. For example,
when you send people a URL to your offer in an email, make sure you track if
they click on it or not. This can easily be done with services like goo.gl. If people
don’t click on the link you sent them they are not interested or have more
pressing issues.
89
 1 – Testing Relevance & Interest

1.2. Landing Pages

Creating Landing Pages is a quick and cheap way of testing interest of

potential customers, users and partners in the idea.

The purpose is to generate traffic and then test various CTA’s (Call To Action) –
in order to obtain systematic feeddback to validate one or more hypotheses

Exemplos de CTA’s:

. Ask to subscribe via e-mail to be notified of a produc launch.

. Convince lasers to fill a questionaire

. Measure and analyse number of clicks for each page of landing page

90
 2 – Testing Preference & Priority

To show which jobs, pains and gains our potential customers and
partners value most and which ones they value least.

Provide evidence that indicates which features of our value proposition

they prefer. Prove what really maters to them.

We can use the techniques below, so to understand price level

acceptance.

2.1. Split Testing

2.2. Innovation Games

91
 2 – Testing Preference & Priority

2.1. Split Testing

Split testing, also known as A/B testing is a technique used to

compare the performance of two or more options.

It allows for the comparison of two (or more) versions of na

identical Value Proposition, MVP or Landing Page, with slight
variations of version, to test its acceptance or preference.

The purpose is to identify changes or versions that enhance or

maximize to outcome of na initial interest.

A/B testing can also be used in physical products such as

packaging and product presentations.

92
 2 – Testing Preference & Priority

2.2. Innovation Games

Is a methodology that helps “unearth”, describe and prioritize

Value Propositions and its characteristics through Colaborative
Games to play with potential clientes, online or in person.

Buy a Feature – focused on prioritizing tha characteristics that

clientes value the most.

Product Tree – focused at defining de evolution clientes are

loking for in the Value Proposition characteristics.

Speed Boat – Identifies the most severe Pains that refrain our
clients from performing tha jobs they have in hand.

93
 3 – Testing Willingness & Capacity to Pay

Provide evidence that potential customers are interested enough in the

features of our Value Proposition.

Deliver facts that show “they will put their Money where their mouth is…”

3.1. Mock Sales

3.2. Presales

3.3. MVP

94
 3 – Testing Willingness & Capacity to Pay

3.1. Mock Sales

There is a major difference between people saying that they

are interested in our Value Proposition and using their credit
card to formalize a purchase (or to formalize a proposal in
B2B).

That’s the big difference between information and facts.

In the physical world, we can
Simulating a sale of na unfinished product or a simple Value
Proposition, is clearly a proof a interest. use catalogue sales to
Naturaly, we will have a problema to solve with the customer, simulate sales.
to justify that was a simulated sale.

The simpler way to generate a “small” problem is by using a

BUY NOW button in our site or landing page.

Buy now >

95
 3 – Testing Willingness & Capacity to Pay

3.2. Presales In the Physical World:

The main purpose is to explore the customer’s interest; it is
not to sell. Commitments, waranties, Letters
of Intent, even though, without
An “in-house” solution is to develop something simu«ilar to legal value, they confirm the
Simulated Sales, but where the customer is perfectly informed willingness to buy and are
of assuming a commitment over a Value Proposition that does commonly used in B2B
not YET exist.
Book now >
In case the Value Propostion does not come live, the sale is
canceled and the cliente reimbursed.

We now have online plataforms online providing this service.

Kickstarter is one of the most popular.

96
 3 – Testing Willingness & Capacity to Pay

3.3. MVP Minimum Viable Product

The MVP concept is an approach to, efficiently, explore and test customer and partner
interest in the product or servisse, prior to being available.

A MVP IS NOT a smaller, simpler and cheaper version of the final product.

IT IS a representation, prototype, brochure, scheme, vídeo, drawing, presentation,…, of the

final product, that we will use to test and validate one or more hipóteses and assumptions
of our Value Proposition.

The goal is to do the complete cicle Hipothesis / Test / Learning / Validation, as quickly,
cheaply and efficiently possible.

97
98
99
With Customer Validation, we conclude the SEARCH PHASE

. We have various hypothesis with their corresponding approaches,

some of which are validated into a new version of the Busines Model

. We are now starting to prove that we have some Traction in the market

…. We now move on into the Execution Phase

100
…. We now move on into the Execution Phase, as,

We have a Business Model :

. sustainable, (so tested & validated)
. repeatable
. scalable

101
 Overview of the Testing Process
1 – Extract Hypothesis
2 – Prioritize Hypothesis

3 – Design Tests
4 – Prioritize Tests
5 – Run Tests

6 – Capture Learning

7 – Make Progress
102