Summary
Highlights
Value is the core of any business, guiding decisions, innovations, and customer targeting. A Value Proposition articulates what a service or business does, who it brings value to, and why it's valuable, differentiating it from competitors. Value can be tangible (lower price, higher quality) or abstract (better customer service). Crafting a clear value proposition saves time and money by ensuring products meet customer needs, avoiding endeavors like 'Cheetos lip balm'.
To write a value proposition, consider customer experiences and product capabilities. The Value Proposition Canvas, created by Strategyzer, helps with this. Understanding customers involves asking three key questions: What are their jobs (what they do in work and life, and their problems)? What pains do they experience (risks, obstacles, bad outcomes)? What positive gains are they looking for and receiving? Entrepreneurs aim to maximize gains and minimize pains.
After understanding the customer experience, consider your potential business with three response questions: What products and services are offered to help complete jobs? Is the offering a pain reliever that cuts out risks, obstacles, and bad outcomes? Is the offering a gain creator? Together, understanding customers and products helps define a business's value.
To understand customer jobs, pains, and gains, entrepreneurs must conduct market research to find their target market. Methods include one-on-one interviews, focus groups, and surveys. The goal is to learn from potential customers to develop a top-notch solution to a problem. This involves sleuthing out the 'Who, What, Where, When, Why, and How' of the target market, considering demographics, activities, locations, timing, and problem causes, as well as how different people experience the problem.
Customer jobs can be functional (work-related), social (looking good, supporting community), or emotional (personal growth). Understanding these jobs helps entrepreneurs develop new or better ways to deliver value. Disruption is a strategy to create new markets (blue oceans) instead of competing in existing ones. This involves letting customers achieve the same jobs in a totally new format, as seen with television disrupting radio by entertaining and informing in a fresh way.
Every job comes with pains. For college applications, pains could include clunky websites, high costs, lack of support, or trade-offs between work and education. Gains are what customers want to experience before or after a job, such as better career prospects, higher salary, new ideas, a fresh start, or new friends. Addressing these pains and delivering gains creates a better business with more value.
Stitch Fix, a personal styling service, provides an excellent example. Their customers' job is to shop for clothes, but they experience pains like lack of time, limited budgets, distance from stores, or uncertainty about body types. Stitch Fix offers pain relievers like a mobile app, varied package options, doorstep delivery, easy returns, and personalized styling. They also create gains by helping customers look and feel confident, using technology like surveys and algorithms alongside personal stylists to save time. Their value proposition: 'We save our clients time by doing the shopping.'
By understanding customer jobs, pains, and gains, businesses can ensure their products and services effectively alleviate pains or create gains. This customer-driven thinking allows entrepreneurs to clearly articulate their unique value, making a strong case for why customers should choose them. The next episode will focus on understanding and learning from competitors.