Provide evidence showing what customers care about (the circle) before focusing on how to help them (the square).
Start with jobs, pains, and gains
In the design section we looked at a series of techniques to better understand customers. In this chapter we go a step further. The objective of “testing the circle” is to confirm with evidence that our profile sketches, our initial research, our observations, and our insights from interviews were correct. We aim to know with more certainty which jobs, pains, and gains customers really care about.
Possessing evidence about customer jobs, pains, and gains before you focus on your value proposition is very powerful. If you start by testing your value proposition, you never know if customers are rejecting your value proposition or if you are simply addressing irrelevant jobs, pains, or gains. This is less likely to happen if you have evidence about which jobs, pains, and gains matter to customers.
Of course, this means you need to find creative ways to test customer preferences without already drawing on the use of minimum viable products (MVPs). We show how to do so with the tools in the testing library.
Do you have evidence showing…
Which ones are most essential?
Which jobs matter to your customers?
Which ones matter most?
Which ones are most extreme?
Which pains matter to your customers?
Which ones are most extreme?
Test if and how much your customers care about how you intend to help them. Design experiments that produce evidence showing that your products and services kill pains and create gains that matter to customers.
Do you have evidence showing…
Which one of your products and services customers really want?
Which ones they want most?
Which one of your gain creators customers really need or desire?
Which ones they crave most?
Which one of your pain relievers
Which ones they long for most?
The Art of Testing Value Propositions
It is an art to test how much your customers care about your value proposition because the goal is to do so as cheaply and quickly as possible without implementing the value proposition in its entirety.
You need to test your customers’ taste for your products and services one pain reliever and gain creator at a time by designing experiments that are measurable, provide insights, and allow you to learn and improve.
Make sure your experiments allow you to understand which aspects of your products and services customers appreciate, so that you can avoid offering anything unnecessary. In other words, remove any features or efforts that don’t contribute directly to the learning you seek.
Always make sure you aim to find the simplest, quickest, and cheapest way to test a pain reliever or gain creator before you start prototyping products and services.
Test the most critical assumptions underlying the business model your value proposition is embedded in. Remember, even great value propositions can fail without a sound business model. Provide evidence showing that your business model is likely to work, will generate more revenue than costs, and will create value not only for your customers but for your business.
Provide evidence showing that the way you intend to create, deliver, and capture value is likely to work.
Don’t neglect testing your business model
You can fail even with a successful value proposition if your business model generates less revenue than it incurs costs. Many creators are so focused on designing and testing products and services that they sometimes neglect this obvious equation (profit = revenues - costs) resulting from the building blocks of the Business Model Canvas.
A value proposition that customers want is worth little if you don’t have the channels to reach customers in a way they want to be reached. Likewise, a business model that spends more money on acquiring customers than it will earn from revenue from those same customers won’t survive over the long term. Similarly, a company will obviously go out of business if resources and activities required to create value are more costly than the value they capture. In some markets you might need access to key partners who might not be interested in working with you.
Design experiments that address the most important things that have to be true for your business model to work. Testing such critical assumptions will prevent you from failing with a great value proposition that customers actually want.
Key Partnerships That you will have access to the partners required for your model to work? Key Activities That you will have access to the resources required to create value? Customer Relationships How you will generate revenues from customers? Channels Through which channels will you be able to reach customers? Revenue Streams That you will be able to perform the activities required to create value? Cost Structure That you can generate more revenue than costs incurred? Key Resources How you will succeed in acquiring and retaining customers?
