3 Lagging Indicators Your Value Proposition is Going Nowhere

It’s easy for an entrepreneur to drink their own Kool-Aid. They spend countless hours selling their idea to their team, friends, family and investors. They talk about how the product will do [fill in blank], and users will do [insert clever work flow here]. This type of fallacy can lead your product into a weak value proposition offering.

When you are stuck, it’s hard to get out of such a rut. This is why we want to get ahead of this potential catastrophe.

It’s not usually self evident that concepts or a product was not validated. By validation, I mean, potential customers demonstrated interest. Customers must confirm the value proposition solves a pain or opportunity. I much rather focus on the former rather than the latter.

 

There are two assumptions entrepreneurs must prove:

  1. Customers want to buy this product.
  2. Product is adding value to customers and users over time

The following lagging indicators show you may be having trouble with your product strategy:

1) Your outsourced dev shop is not learning fast enough

Most clients of mine outsource their development. This means that there are developers and project managers focused on building technology. Development shops work in vacuums. Usually there’s lack of communication on what is failing, and how customers are responding to releases. Which means your dev shop is not learning fast enough.

“The ability to learn faster than your competitors may be the only sustainable competitive advantage.” – Arie de Geus

When you are working with a development shop, expect delays. Moreover, expect to not deliver value-added features. Most development shops are not interviewing your customers. Which is the most crucial part to building product that solves a problem.

Expect the following problems when working with development shops or outsourced engineers:

  1. Engineers will not interview your customer and make immediate changes based on customer feedback. This will lead to building inaccurate features.
  2. Development shops will cost you at least 80% more than if you were to bring engineering in-house. They will take long to get it done the first time. They will take even longer to get it done the second time. All this time is billable and non-refundable. Boo!
  3. Dev Shop-Designers are not typically trained to interview customers. These designers tend to create through conviction, which leads to wasted unevaluated efforts.

My recommendation is to implement a product person as a proxy between development and business. Also, make sure your development shop is able to include their team in frequent customer feedback discussions.

2) You are not testing assumptions through marketing tactics

I don’t believe in lengthy business plans or strategy documents. The least you should have is some kind of illustration of what you expect to test in the market and why.

Keep track of what is working or not working with your segmentation.

Experimentation means finding and actually measuring what your customers love – Sean Ellis, Founder/CEO, GrowthHacker.com

If you don’t have a strategy of what to test, it’s a sign you don’t have clear assumptions that need testing. Furthermore, it’s evident that you don’t have a direction that you are following. Which leads to ineffective executions.

List and prioritize your assumptions. Then build and execute experimentations that will help cut through your questions. This is the most useful method of strategically asking your users what is working or not working with regards to the product.

3) Customers are not immediately convinced of your value proposition

Do you find it exhausting to sell your product?  A customer will let you know if the product is worth the money. Learn by observing their reaction. Here are the following indications your product hasn’t been validated by the right segmentation:

  1. It takes more than one explanation to get them to understand the full value proposition.
  2. You don’t have user-centric behavioral data to use as reference
  3. They are not chopping at the bits to see a demo
  4. You can’t find your customers
  5. Customers are not interested in renewing

Narrow your focus down to a small segmentation. Go after national restaurant owners is too broad. While food trucks in the NYC area is more of narrowed focus. This will allow you to go out there and study, interview, and experiment with a group that is less ambiguous. Iterating through your product and validating your hypotheses just go a bit more clearer.

Anthony Cintron
Leveraging my Brooklyn bred tenacity, I have built and supported several startups for 15 years. I'm most notably known for being the Co-founder and Chief Technology Officer at Take the Interview, a digital interviewing startup located in the heart of NYC and Belgrade, Serbia. I've also had the privilege of consulting for companies such as Starwood Hotels & Resorts, Young & Rubicam and Arnold Worldwide.

2 Comments

  1. Hey!
    Regarding point 1, WHY is it the dev shops responsibility to interview clients. You need to know what you need building.
    I run a software studio that specialises in helping entrepreneurs bring software products to market. We engage at different levels and if you elect to do so, we will manage the entire PRODUCT development for you, including prototypes, client interviews, full stack dev, deployment, distribution, client support, upgrades, support, …… etc.

    1. Ultimately, the entrepreneur should be going through the validation process. They should never hire a third-party to do so. The closer you are to the problem, the better you can solve it. There’s no true way of solving a problem unless you have empathy. It’s difficult to generate understanding through someone else’s interpretation. Hence removing the middle man and working directly with the source.

      Regarding your question: It’s risky to make static assumptions. The client has hypotheses that need validating. It’s the teams responsibility (development, design, and management) to facilitate customer interviews and review feedback. When a development shop takes on 100% of the product development cycle, they should insure they are collecting continual feedback as they continue to create new solutions.

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