what is value test in business plan

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How to Write a Business Plan "Concept and Value Proposition" Section

A key component of your business plan is your business concept and value proposition, which is the clear articulation of why customers should choose your solution over that of your competitors.

This section of the plan for developing your business concept and positioning your value proposition follows the executive summary and company history , so readers should already have a general idea of what your company does, who it's for, and what your long-term goals are for the business.

The business concept comprises your vision of the company, explaining the value your product or service will bring to the customer, why you are especially qualified to offer it, as well describing your offering's uniqueness and growth potential  within your industry.

This section enables you, as well as interested parties and potential investors, to research and analyze the concept for feasibility, both from a market and financial perspective. Keep in mind that everything in your business plan must relate back to the value and benefits your product or service provides to your target customers.

The Feasibility Test

Think of a feasibility test as a reality check for your business idea. The goal of conducting a feasibility test is to prove to yourself and your team or investors the probability of your product or service being successful within your industry.

A feasibility test should be as low-cost as possible and should revolve around creating a Minimum Viable Product (MVP) or simple proof of concept, which communicates the most simple, basic value propositions of your future product or service.

According to Entrepreneurship For Dummies, by Kathleen Allen, a feasibility test weighs the validity of your business concept by examining four main points:

• The product your firm will offer.
• The customer you will target.
• Your value proposition.
• How you will get the product to its intended users.

By this stage in your business plan, you should have a firm grasp on what product or service you intend to offer, as well as who you believe will be your primary customer. The final item requires weighing various distribution channels, but, again, should be answerable with a little legwork.

The Value Proposition

Your value proposition is what makes customers choose you instead of the competition. It's part marketing, part operations, and part strategy; your value proposition is the foundation of your competitive advantage.

On a subconscious level, customers will compare the value proposition of your company against those of your competitors when deciding where to take their business. With that in mind, here are a few things to remember when writing your value proposition:

• Keep it short and uncluttered. Your value proposition explains why customers should buy from you. If you can't sum it up in 10 words or less, chances are you won't be able to execute it, either.
• Be precise. Your customers have specific needs; your value proposition should offer targeted solutions
• It is about your customer, not you. Your value proposition should discuss only what matters to your customers and the value you can bring to them.
• Value comes in numerous forms. Money, time, convenience and superior service are a few of the ways you can help deliver value to your customers.

Distribution Strategy

After you've validated your business idea with a small group of paying customers, the last part of the business concept is to determine how you will deliver your product to your customers at scale. Taking a manual approach to reaching your first customers is necessary, but won't work as you grow your business. Are you going to sell directly to consumers? Through strategic partnerships? Retail distributors?

Consider these several factors when planning the distribution strategy for your business:

• Will you set up a brick-and-mortar shop or office, sell online, or both?
• What unique obstacles exist for your company in these two different channels?
• If your company sells a product, will you have the space to keep enough inventory on hand, or will customers have to agree to waiting periods?
• Can you strike exclusive deals with any particular distributor or retailer? Do your competitors have any such deals that hinder your operation?

Vision is important if your business is going to grow. The more focus your business concept has in terms of clear solutions for a like-minded niche group of people, the greater the likelihood that you'll attract the best investors and customers.

How to write a value proposition for a business plan

Table of Contents

What is a value proposition?

Aspects that make up your value proposition, how to write a value proposition for a business plan (and everywhere else), value proposition canvas, customer profile, the steve blank formula, tips to create a value proposition that converts, take your business to new heights with countingup.

A value proposition is an articulate description of why customers should choose your business over others. In other words, your value proposition is the foundation of your competitive advantage. So it’s important to highlight it in your business plan to show potential investors and other stakeholders that you’re worth their time and money.

This guide will show you how to write a value proposition for a business plan. We’ll cover the following topics:

• Why you need to include a value proposition
• Tips to write a value proposition that converts

In a business plan, your value proposition comes after your executive summary and company description, meaning readers already have a general understanding of your business. If you’re unfamiliar with the term, a value proposition describes the value you promise to deliver to your ideal customer or client. 

Basically, you use your proposition to explain why someone would invest in your business and solution over anyone else. You already know why your business is special, but the key is to make it clear to anyone who reads your business plan. 

Your value proposition is only a simple statement rather than a long message, such as Grammarly ’s “Great writing, simplified” or HelloFresh ’s “Take the stress out of mealtime ”. Both these companies tell you how they help you in just a few words. 

But don’t let the simplicity keep you from coming up with a good value statement in the first place. The important thing is that your statement answers the following questions:

• What problem or pain point does your business solve?
• What are the benefits people get from your solution?
• Why should someone invest in you rather than your competitors? 
• What’s your advantage over other companies?

When developing your value proposition for your business plan, make sure you consider and include the following elements:

• Vision – this describes the ‘why’ of your business, meaning why you do what you do. Your vision shares your aspirations and how they help guide your efforts.
• Mission – this is where you explain what you do and how you do it. Describe the strategies you use to achieve your vision. 
• Values – here, you describe your values as a business and what characteristics clients thank you for (or will thank you for). 
• Unique selling point – your unique selling point (or USP) is the distinct advantage you have over your competitors that makes you stand out in the market. It can be your price, quality, design, selection, or even words. Or perhaps you offer a highly efficient service because you have a system like Countingup that speeds up many of your internal processes?
• Ideal client – you need to know who your ideal customer/client is to clearly communicate why they need your solution specifically. Try creating an ideal customer profile where you add all the relevant information you have about your ideal client. The more specific your profile, the easier it will be to explain your solution’s value to that group of people.

There are a few ways you can create a value proposition for your business. Here are some methods you can use.

This visual tool helps you position your solution around your customers’ needs. You can use the value proposition canvas to build your first statement or to enhance the one you already have. The canvas has two components: the customer profile and the value map. Let’s look at the parts that make up each component.

• Gains – the benefits your customer expects and needs that will increase the likelihood of attracting them to a value proposition.
• Pains – the negative experiences, emotions and risks customers want to escape.
• Customer jobs – the tasks customers try to perform, needs they try to satisfy, or problems they try to solve.
• Gain creators – how your solution helps create customer gains and satisfy their needs and expectations. 
• Pain relievers – how your solutions help eliminate customer pains.
• Products and services – the products and services you provide that create customer gains and relieves their pains. 

Explore each section from your customers’ perspective, imagining how each benefit increases pleasure or decreases pain for the person using your solution. 

For example, every self-employed person has financial management tasks they need to complete. By using Countingup , they can manage their finances from one simple app and minimise their time spent on these tasks. They’ll feel less stressed and more inspired to move their businesses forward. 

If you think the value proposition canvas is too complicated, you can try the simple formula by entrepreneur Steve Blank . He noticed many startup founders focus on features instead of benefits when attempting to create their value proposition. Instead of summarising how their company offers value to customers, leaders get stuck trying to choose which features to highlight. 

The Steve Blank formula gives you a way to transform your ideas into a simple sentence. Simply write down your ideas like this:

We help (X) do (Y) by doing (Z)

Let’s look at each component a little closer:

• We help X = Who is your ideal client, and what problem or pain point do they suffer with? 
• Do Y = Where does your ideal customer want to achieve by using a solution like yours?
• by doing Z = What value does your business deliver to the customer, and what makes you unique from your competitors?

When using this formula to come up with your value proposition, remember to go with your gut. Sometimes the first thing that comes to mind is the best. 

For example:

Countingup helps self-employed entrepreneurs manage their businesses efficiently by streamlining key financial processes. 

To wrap up, here are a few quick tips to help you create a value proposition that will inspire investors to keep reading your business plan and convert leads to customers. 

• Keep it short and concise – your statement needs to instantly tell people why they should buy from you. 
• Be precise – your value proposition should offer targeted solutions to specific needs.
• Focus on the customer – your goal is to prove how you solve customers’ problems, not your own. 
• Value takes many shapes – there are a bunch of ways you can deliver value to your customers, including money, convenience, time, and superior quality or service.

Countingup is the business current account and accounting software in one app. It automates time-consuming bookkeeping admin for thousands of self-employed people across the UK. 

Save yourself hours of accounting admin so you can focus on growing your business. 

Start your three-month free trial today. 

Apply now .

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How to Write a Great Value Proposition [7 Top Examples + Template]

Published: January 31, 2024

Your company's value proposition is the core of your competitive advantage. It clearly articulates why someone would want to buy from your company instead of a competitor.

So how do you actually write a value proposition statement that's strong enough to lift conversion rates and sales? In this article, you'll learn the definition of a value proposition, what a value prop isn't, examples of some of the best value props we've seen, and tactics to create amazing value props.

We'll cover:

What is a value proposition?

• Value Proposition vs Mission Statement (vs Others)

Elements of a Value Proposition

How to write a value proposition.

• How to Create a Value Proposition Canvas

Value Proposition Templates

Value proposition examples, value proposition canvas examples, tactics to develop an effective value proposition.

• Let's summarize: What makes a good value prop?
• Value Proposition FAQs

A value proposition is a short statement that communicates why buyers should choose your products or services. It's more than just a product or service description — it's the specific solution that your business provides and the promise of value that a customer can expect you to deliver.

Value propositions are one of the most important conversion factors. A great value proposition could be the difference between losing a sale — and closing it.

For that reason, it's important to create one that accurately represents your products and services and makes it clear why you're the best choice. However, writing it from scratch is hard. Download our templates below so you can follow along with the rest of the post.

Free Value Proposition Templates

15 templates to help you brainstorm, write, and promote your value prop.

• Value Proposition Writing Templates
• Value Proposition Canvas Template
• Brand Hierarchy Template

You're all set!

Click this link to access this resource at any time.

Your value proposition is a unique identifier for your business. Without it, buyers won't have a reason to purchase what you sell. They may even choose a competitor simply because that business communicates its value proposition clearly in its marketing campaigns and sales process .

That said, you might think: Isn't my value prop interchangeable with, say, my slogan?

Nope. It's easy to confuse your value proposition with other similar brand assets , such as your mission statement, slogan , or tagline. We break down the differences below.

Value Proposition vs Mission Statement

Your value proposition details what you offer customers and why they should choose you, while a mission statement details your objective as an organization. While the two can have points in common, a value prop is more product- and service-oriented while a mission statement is more goal-oriented.

Here are two examples for HubSpot and our CRM platform:

Value Proposition: "An easy-to-use CRM."

Mission Statement: "To help businesses grow better."

Value Proposition vs Slogan

A slogan is a short, catchy statement that brands use in marketing campaigns to sell a specific product. While your value proposition wouldn't necessarily go in an ad (at least, not usually), a slogan would. The most important thing to note is that a company can have different slogans for different campaigns or products.

Here are two examples from De Beers Group:

Value Proposition: "Exquisite diamonds, world-class designs, breathtaking jewelry."

Slogan: "A diamond is forever."

Value Proposition vs Tagline

A tagline is a short statement that embodies a certain aspect of your brand or business. While a value proposition is more concrete, a tagline can represent a concept or idea that your business stands for. Most businesses have only one tagline that is instantly recognizable and connected to their brand.

Here's an example from Apple:

Value Proposition: "The best experiences. Only on Apple."

Tagline: "Think Different."

Value Proposition vs Mission Statement vs Slogan vs Tagline

Now, let's look at an example of a business that has all four: Nike. Remember that slogans can differ depending on the campaign.

Value Proposition: "Customizable performance or lifestyle sneakers with unique colorways and materials."

Mission Statement: "To bring inspiration and innovation to every athlete in the world."

Slogan: "Twice the guts. Double the glory."

Tagline: "Just do it."

TLDR; While your value prop should help differentiate you from the rest of the industry, keep in mind it's not a slogan , tagline, or mission statement. Those types of copy are important accessories to your brand, but your potential customers and employees don't choose one business over the other solely based on these elements.

Your value proposition goes deep into the problems you want to solve for buyers, and what makes your product or service the perfect solution.

Your value proposition will most often appear on your website. While you can include it on marketing campaigns and brochures, the most visible place is your home page and, if you'd like, your product pages.

There are three main elements of a value proposition: the headline, the subheadline, and a visual element.

The headline of your value proposition describes the benefit the customer will receive as a result of making a purchase from your business. The headline can be creative and catchy, but it should be clear and concise, first and foremost.

Subheadline or Paragraph

The subheadline or paragraph should explain in detail what your company offers, who it serves, and why. In this section, you can elaborate on the information in the headline.

Visual Element

In some cases, a video, infographic, or image may convey your value proposition better than words alone can. Enhance your message with these visual elements to capture your audience's attention.

To better visualize these tools, here are a couple templates to follow when formatting a value proposition.

• Identify your customer's main problem.
• Identify all the benefits your product offers.
• Describe what makes these benefits valuable.
• Connect this value to your buyer's problem.
• Differentiate yourself as the preferred provider of this value.
• Use a template to help you brainstorm.

If you're a visual learner, check out this video to learn how to create a value proposition. 

Step 1: Identify your customer's main problem.

While this will require some upfront research, you can get a head start on this aspect of the value proposition by speaking with different members of your team. Customer service reps, marketing specialists, and salespeople can fill in the gaps about what problems your customers are looking to solve by using your product or service.

For example, let's say your business sells tax software on a subscription basis and automated templates are included in the software package. Your ideal customer is looking for an affordable and user-friendly way to access complicated tax documents for their business. In this example, your business's offerings could be the solution they need.

Step 2: Identify all the benefits your products offer.

This step can be as simple as listing out every product you sell and describing its primary benefit. The benefit should be concise and focused on a single customer need.

In our tax software example, you'd list each tax template, explain the benefit it provides, and why a customer would need it.

Step 3: Describe what makes these benefits valuable.

Next, add another sentence that explains why this benefit matters to the customer.

Using the same example above, the value would be that customers have affordable tax documentation at their fingertips — something that would normally cost them thousands of dollars.

Step 4: Connect this value to your buyer's problem.

Next, pair the buyer's problem to the elements that make your product or service valuable. Do they align? If so, you're ready to refine your value proposition to differentiate your offerings from the competition. If they don't align, repeat the steps above until you find a valid buyer need and a viable solution your business offers to meet that need.

There are three templates we think do an excellent job of connecting value to buyer pain points:

Step 5: Differentiate yourself as the preferred provider of this value.

Finally, polish your value proposition to make it unique. Is there a specific customer service offering your business provides that others don't? Do you offer any additional services that other companies charge for? These elements can help differentiate your value proposition from competitors while keeping the focus on the buyer's needs.

Step 6: Use a template to help you brainstorm.

Once you understand the first five steps, you can easily implement them into value proposition templates.

Steve Blank Method

Instead of focusing on the features themselves, Blank saw the need to emphasize the benefits derived from the features in a simple sentence. By following this formula you'll connect the target market and their pain points to the solution:

"We help (X) do (Y) by doing (Z)"

Geoff Moore Method

Moore provides a template that's more specific in identifying the industry categories alongside the benefits customers value. This makes a more clear value proposition formula as follows:

"For [target customer] who [needs or wants X], our [product/service] is [category of industry] that [benefits]"

Harvard Business School Method

According to HBS a value proposition is executed best when it answers the following questions:

• "What is my brand offering?"
• "What job does the customer hire my brand to do?"
• "What companies and products compete with my brand to do this job for the customer?"
• "What sets my brand apart from competitors?"

HubSpot Value Proposition Templates

HubSpot offers 15 free templates to help you brainstorm the perfect value proposition for your brand. Not only can they help you hone in on your business's core values, but they can also give you a boost when working on your actual statement.

Some questions you will ask yourself when using the HubSpot templates include:

• "Why do you do what you do?"
• "How do you do what you do?"
• "What do you do for your customers?"

Download for Free

Now, before you write the statement itself, it's important to create a value proposition canvas.

Taking these three elements into consideration, you'll be able to make your own after you build a value proposition canvas.

Value Proposition Canvas

A value proposition canvas is a visual tool that helps you position your business's product or service around your customers' needs. The goal of the value proposition canvas is to identify how your business provides value within the market. You can use one when introducing a new offer into the market or when enhancing an existing one.

The value proposition canvas is made up of two major components: the customer profile and the value map.

Here's how to make one:

Step 1: Create a customer profile to represent your target buyer.

The customer profile makes up the first half of the value proposition canvas. When performing this exercise, you'll want to start with this section first so that their wants and needs can influence the overall value proposition canvas.

The customer profile consists of three areas:

Customer Jobs

What is the task your customer needs to complete or the problem they're trying to solve with your product or service? The answer to this question sums up the "customer job" or the purpose of your product or service in the eyes of the customer.

Customer Expectations

"Expectations" are also referred to as "gains" — in other words, what your customer is hoping to gain from doing business with you. No matter what you sell, your ideal customer will have an expectation of what that product or service will do for them. In this section, you'll use research to explain what your customers expect from you in order to purchase your product.

Customer Pain Points

As your customer completes their "customer job," what pains do they experience? Do they take any risks while they do the customer's job? Do they experience any negative emotions? These pain points should be considered so that you include the most helpful products and services on the value map side of the value proposition canvas.

Step 2: Create a value map for your products and services.

In this section of the value proposition canvas, three specific sectors help describe what the business offers to the customer.

Gain Creators

These are features your products or services have that make the customer happy. Think creatively about the elements of happiness your customers experience. Consider their financial and social goals as well as their psychographics .

Pain Relievers

In the section above, we discussed customer pains. This section will define exactly how your business will help them overcome those pain points.

Products & Services

While this section won't list every single product or service your company offers, it should include the ones that will create the most gain and alleviate the most pains for your customers.

Step 3: Determine value proposition-customer fit.

Once you've completed the value proposition canvas exercise, the next step will be to determine how your value proposition fits within the customer profile. To do this, you'll use a ranking process that prioritizes products and services based on how well they address the customer profile.

All together, your value proposition canvas should look like this:

Next up, let's go over some templates you can use when you're creating your value proposition and publishing it on your website.

We've crafted 15 templates to help you create an amazing value proposition for your brand — and pairing each of them with an example of how they may look for a real business.

This offer has all the tools you need to craft a value proposition that precisely communicates your brand to users and stakeholders, including:

• 10 value proposition writing templates
• 1 value proposition canvas template
• 1 mission statement brainstorm template
• 1 vision statement brainstorm template
• 1 competitive analysis template
• 1 brand hierarchy template

Click here to download these free value proposition templates for your business.

Now that we've reviewed the elements, visual tools, and templates — let's look at some brand examples that effectively identify and satisfy its customer needs.

• HubSpot: An Easy-to-Use CRM
• FedEx: Manage Your Home Deliveries
• LG: State-of-the-art Living Experience
• Subaru: The most adventurous, most reliable, safest, best Subaru Outback ever
• Samsung: Get Ready to Unfold Your World
• Imperfect Foods: Groceries that help you fight food waste
• Hulu: All The TV You Love

Because value propositions are typically internal information and rarely stated publicly, finding a value proposition example to model yours after can be difficult. We've taken the liberty of using the value proposition canvas and applying it to some successful companies that have been recognized by the American Customer Satisfaction Index (ASCI).

In these examples, you'll see real-world instances of customer gains and pains aligned with well-known products and services offered by these companies.

1. HubSpot: "An easy-to-use CRM."

Headline: "An easy-to-use CRM."

Subheadline/Paragraph: "HubSpot's CRM platform has all the tools and integrations you need for marketing, sales, content management, and customer service."

Visual Element:

Most companies can benefit from using a CRM — even freelance businesses and small family-owned firms. The problem is that most systems are expensive, over-complicated and cobbled together, creating challenges for businesses as they grow.

HubSpot's value proposition aims to target active CRM users who are tired of handling over-complicated systems, and beginners who are intimidated by legacy options. These users want a system that makes growth easier, not harder.

While each product in HubSpot's CRM platform can be used individually, the true benefit comes from using each hub in tandem. Instead of having to deal with incompatible software and productivity tools, you can manage all your marketing , sales , content , and customer service needs in one place. To that end, the product's value proposition emphasizes its ease-of-use and ability to synchronize different teams across the business.

The brand includes an image of a smiling woman to show what it would be like to use the product in your team (hint: it's so easy, it'll make you smile).

2. FedEx: "Manage your Home Deliveries"

Headline: "Manage Your Home Deliveries"

Subheadline/Paragraph: Sending and receiving packages is convenient and safe for individuals who want to ship ideas and innovations across the globe.

Image Source

If you own a business, shipping and packaging products is likely a significant part of your operations, but it can be a time-consuming, labor-intensive, and plain inconvenient process. If you're a consumer, you've likely experienced driving to a shipping office to get your package after a missed delivery. Both of these are significant pain points for FedEx's target customers.

With FedEx, you can opt to receive notifications about your package's delivery status, provide instructions on how to deliver packages to your home, or even request to pick up at a different location.

Shipping packages with FedEx is just as easy as receiving them. All you have to do is create a shipping label on FedEx's website, choose which shipping service you'd like to use, and then drop your package off. Even if there isn't a FedEx office nearby, you can still drop off at national retailers like Walgreens, Dollar General, OfficeMax, and Walmart.

FedEx's value proposition makes it clear that it will make managing your deliveries much, much easier — whether you're a business or a consumer.

3. LG SIGNATURE: "State-of-the-art Living Experience"

Headline: "State-of-the-art Living Experience"

Subheadline/Paragraph: LG SIGNATURE delivers an innovative product design that creates an exceptional living experience for people who want to achieve a state-of-the-art living experience.

The right home appliances can make your at-home experience easy and hassle-free — or it can quickly create headaches with low power efficiency and outdated features. In its value proposition, LG SIGNATURE targets customers who are willing to spend just a little more on the right appliance in exchange for a comfortable, hassle-free, and luxurious experience.

LG SIGNATURE isn't your typical appliance brand. It doesn't want to sell you a bunch of products you don't need with unnecessary features you won't use. Instead, it's dedicated to crafting premium products that are functional, user-friendly, and aesthetically pleasing.

Even the imagery helps you imagine what your life would be like after purchasing an LG SIGNATURE appliance. Instead of having to replace obsolete appliances every few years, you can enjoy innovative, long lasting products.

4. Subaru: "The most adventurous, most reliable, safest, best Subaru Outback ever."

Headline: "The most adventurous, most reliable, safest, best Subaru Outback ever."

Subheadline/Paragraph: The 2022 Subaru Outback takes drivers to the most adventurous places in style with the most advanced safety technology.

Subaru knows that its target audience uses its Outback SUVs for outdoor adventures. Rather than designing a vehicle solely for utility, Subaru made the 2022 Outback attractive and spacious enough for everyday use as well as reliable and sturdy enough for all terrain and weather conditions.

So in its value proposition, it makes it clear that the Outback will help its drivers go off the road safely and in style. If I were a potential Subaru customer, I'd know exactly what I'm getting from the headline alone. That's why it's so important to think about your wording, because it's likely the first thing potential buyers will see.

5. Samsung: "Get Ready to Unfold Your World"

Headline: "Get Ready to Unfold Your World"

Subheadline/Paragraph: This is everything you'd want in a premium, durable, 5G smartphone. Then we made it unfold — revealing a massive screen so you can watch, work and play like never before.

In its value proposition, Samsung effectively targets its most tech-savvy segment by front-lining its most innovative design to date: a foldable phone that can double as a mini-tablet. Even more, it solves a common pain point for some customers: owning both a tablet and a mobile device can feel unnecessary, so why not get the best of both worlds?

The Galaxy Z Fold4 attracts customers by promising a lightweight, durable smartphone with an ultra powerful processor.

Some of its premium features include hands-free video capabilities, a large screen that's perfect for multitasking, and an advanced camera that's perfect for taking pictures at night. The phone is also crafted with high quality materials that help protect it from water damage, scrapes, and scratches. Plus, its unique design will appeal to anyone who appreciates cutting-edge technology.

6. Imperfect Foods: "Groceries that help you fight food waste"

Headline: "Groceries that help you fight food waste"

Subheadline: "Sustainably sourced, affordable, and conveniently delivered to your door."

Whether you're shopping for an entire family or just yourself, grocery shopping can be a major pain.

Planning out all your meals for the week can be overwhelming and time-consuming, especially if you're trying to ensure no food goes to waste. Even if you do successfully create the perfect shopping list, finding the time to go to the store can also be a challenge.

In its value proposition, Imperfect Foods offers a sustainable alternative to traditional grocery shopping. Unlike other delivery services, Imperfect Foods' grocery selections solely consists of food that would have otherwise been discarded due to minor cosmetic and physical imperfections.

Imperfect Foods' website design further communicates its commitment to reducing food waste with its badge counting how many pounds of food it has saved.

The company also appeals to customers' sustainability concerns by delivering to neighborhoods in one trip to reduce CO2 emissions and only using recycled packaging.

7. Hulu - "All The TV You Love"

Headline: "All The TV You Love"

Subheadline: "What full seasons of exclusively streaming series, current-season episodes, hit movies, Hulu Originals, kids shows, and more."

In July 2022, streaming services outperformed cable and broadcast TV for the first time ever. However, as streaming becomes more and more popular, customers are at risk of getting fatigued by the overwhelming amount of on-demand content to choose from.

Hulu's value proposition aims to target TV consumers who are tired of having to pay for multiple streaming services in order to have access to all the content they want to watch. Each Hulu subscriber gets access to a vast catalog of exclusive series, popular movies, original content, and more.

One of the ways Hulu makes good on its promise of providing "all the TV you love" is by offering subscription bundles with ESPN+ and Disney+, which can save consumers money if they were to subscribe to each service separately. Hulu also has premium network add-ons that give users access to even more content without having to leave the platform.

Samsung's value proposition for its foldable mobile device is smart, well-targeted, and visually stunning.

You've seen some brilliant value proposition examples, now let's review some examples of value proposition canvases.

• HubSpot Value Proposition Canvas
• FedEx Value Proposition Canvas
• LG Value Proposition Canvas
• Subaru Value Proposition Canvas
• Samsung Value Proposition Canvas
• Imperfect Foods Value Proposition Canvas
• Hulu Value Proposition Canvas

1. HubSpot Value Proposition Canvas

Customer Profile

• Customer Jobs: HubSpot customers need to effectively enable their sales teams to do their best work while avoiding complicated workflows.
• Gains: Customers want to increase their sales rep productivity levels and boost sales.
• Pains: There are plenty of CRM options, but they're often over complicated and create silos.
• Gain Creators: The HubSpot CRM platform offers streamlined contact management software and productivity tools that will help sales teams do their best work.
• Pain Relievers: The user-friendly interface and unified platform offers ease-of-use and high visibility across systems.
• Products & Services: The HubSpot CRM platform includes Sales Hub, an enterprise-level sales software that's simple yet powerful enough to cater to the needs of businesses small and large.

2. FedEx Value Proposition Canvas

• Customer Jobs: FedEx customers want to share ideas and innovations with other individuals by shipping goods around the world.
• Gains: Customers want a hassle-free way to return online orders and are looking for a safe and secure way to receive their packages.
• Pains: Returning a package at a FedEx shipping center can be inconvenient, and managing home deliveries can be a hassle.
• Gain Creators: Customers can drop off their FedEx packages at places they shop most like Walgreens or Dollar General, and have peace of mind knowing where their package is at all times.
• Pain Relievers: Thousands of FedEx drop-off locations across the country, receive notifications when a package is en route and inform the driver where to leave the package.
• Products & Services: FedEx Drop Box locations make returning packages convenient, and the FedEx Delivery Manager reroutes or reschedules deliveries to work with the customer's schedule.

3. LG Value Proposition Canvas

• Customer Jobs: LG customers want simple, yet innovative technology that helps them achieve a state-of-the-art living experience.
• Gains: Customers have an intuitive and responsive experience with each appliance they interact with inside their homes.
• Pains: There are too many unnecessary buttons and features on appliances that get in the way of a simple living experience.
• Gain Creators: Customers can use technology to enhance their home experience without needing to read a manual.
• Pain Relievers: LG offers a simple design that focuses on the user and their lifestyle.
• Products & Services: LG SIGNATURE delivers an innovative product design that creates an exceptional living experience.

4. Subaru Value Proposition Canvas

• Customer Jobs: Subaru customers want to explore the world's most adventurous places in a reliable and safe vehicle.
• Gains: Customers want to explore the land in a stylish and spacious SUV and look for advanced technological elements in their vehicles that enhance performance and safety.
• Pains: The safest vehicles are not the most visually appealing, and some SUVs aren't equipped for all-weather or all-terrain environments.
• Gain Creators: Subarus have a stylish exterior and interior with ample ground clearance that protects the vehicle against damage from the environment and advanced technology to reduce crashes and make long road trips safer.
• Pain Relievers: Subarus have a rugged blacked-out trim for style and protection, 9.5-inch ground clearance for better stability and performance, and driver-assist technology that helps drivers see better, prevent crashes, manage cruise control, and brake automatically in emergency situations.
• Products & Services: The 2022 Subaru Outback with standard eyesight assist technology, automatic pre-collision braking, adaptive cruise control, and lane-centering.

5. Samsung Value Proposition Canvas

• Customer Jobs: Samsung customers are tech-savvy and follow the latest trends, driven by efficiency and aspirational lifestyles.
• Gains: Customers want an all-in-one way to enjoy media, work productively, and have a fun experience all in the palm of their hands.
• Pains: Common smartphones have size limitations that strain entertainment viewing, gameplay, and work capabilities.
• Gain Creators: Samsung offers a unique and expansive design with capabilities beyond that of an average smartphone, offering the most advanced technology to help customers perform tasks to fulfill work and play.
• Pain Relievers: Samsung provides a smartphone that displays content in tablet-like viewing and displays up to three apps simultaneously.
• Products & Services: The Galaxy Z Fold3 5G folding 6.2-inch smartphone with dynamic AMOLED 2X screens, ultra-thin glass with S Penfold edition, and super-strong lightweight armor aluminum frame.

6. Imperfect Foods Value Proposition Canvas

• Customer Jobs: Imperfect Foods customers want a simple and sustainable option for buying fresh produce.
• Gains: Customers prefer to have their groceries delivered rather than going to the store each week.
• Pains: Produce can go to waste easily, and grocery delivery is expensive.
• Gain Creators: Imperfect Foods sources and delivers food that would have otherwise been wasted because of minor imperfections.
• Pain Relievers: Waste is minimized by delivering area groceries in one trip and recycling packing.
• Products & Services: Imperfect Foods curated food selection includes produce, pantry staples, dairy products, snacks, plant-based foods, meat, and wellness products.

7. Hulu Value Proposition Canvas

• Customer Jobs: Hulu customers are overwhelmed by the amount of video streaming options and want a platform that has all of their favorite shows and movies in one place.
• Gains: Customers primarily watch movies and TV shows via streaming services.
• Pains: There is an abundance of streaming platforms, and customers can easily get overwhelmed with the amount of TV and movie options.
• Gain Creators: Hulu's streaming library features full seasons of exclusive series, popular movies, original content, and more.
• Pain Relievers: The different subscription plans and premium network add-ons allow customers to curate their streaming experience to their tastes and can help minimize the amount of services they subscribe to.
• Products & Services: All subscription plans include access to Hulu's streaming library, new episodes the day after they air, and ability to stream on different devices.
• Conduct research to determine the value proposition of your competitors.
• Explain the value of your products and services.
• Describe the benefits your ideal customer will experience when they choose your product or service over the competition.
• Develop a unique value proposition for each buyer persona you serve.
• Test your value proposition with your audience using various marketing channels.

1. Conduct research to determine the value proposition of your competitors.

Because your value proposition is the differentiating factor between your business and the competition, it's important to research the propositions of your closest competitors. You can use the value proposition canvas in this post to determine how each company meets the needs of your buyer persona.

Be honest here — it's tempting to focus on the areas in which your competition doesn't excel, but you'll have a better idea of where your product or service fits within the market if you key in on your competitors' strengths.

2. Explain the value of your products and services.

You're probably familiar with outlining the features and benefits of your product and service offerings. This tactic takes that concept a step further. By matching the benefits of your offerings to specific values that your customers have, you'll be able to align what your business provides with what your customers need.

3. Describe the benefits your ideal customer will experience when they choose your product or service over the competition.

When crafting this part of your value proposition, include details about how your product or service will benefit the customer and use examples where you can. Videos, photos, and live demonstrations are all effective ways to illustrate your value proposition because they show the customer exactly what they can expect from your business.

4. Develop a unique value proposition for each buyer persona you serve.

Ideally, you'll be focusing your marketing efforts on a specific target audience. You'll also find that this audience will have different needs based on their buying behaviors. Buyer personas can help you segment your larger audience into groups of customers with similar desires, goals, pain points, and buying behaviors. As a result, you'll need a unique value proposition for each persona. Different products and services you offer may solve certain customer pain points better than others, so developing a value proposition for each persona will better serve each one.

5. Test your value proposition with your audience using various marketing channels.

Each of these tactics will likely be developed internally by your team which means you'll want to validate your work with your target audience. Your value proposition will be communicated through various marketing channels like your website, social media accounts, video, audio, and in person. Test your proposition with members of your audience (both existing customers and non-customers) using each of these channels. Tools like UserTesting can help you streamline this feedback process so that you can implement changes quickly to finalize your value proposition.

We know the makings of a value proposition, so how can you make it a good one? Here's the last three tips we have for you.

What makes a good value proposition?

1. clear language.

Your value proposition should aim to address a primary customer need. This limited focus helps keep your value proposition clear and easy to understand. With just one main idea to comprehend, your audience will be able to quickly decide whether or not your product or service will be the best solution for them.

2. Specific Outcomes

Next, you'll want to communicate the specific outcomes your customer can expect to receive from your product or service. Will they save time? Demonstrate how. Will their workflow become more manageable? Show a before and after workflow diagram. The specific outcomes will be critical components of your value proposition as they'll exemplify exactly how your customers will use your solution to solve their problems.

3. Points of Differentiation

Not only are your potential customers evaluating your business's offerings based on their own needs, but they're also comparing what you offer against competitors. As a result, your value proposition will need to include detailed points of differentiation. These key points will help customers understand exactly what sets your company apart.

Value Proposition Frequently Asked Questions

What is the purpose of a value proposition? To effectively communicate the unique value and benefits that a product or service offers to its target customers to differentiate it from the competition and attract or retain customers.

What if the value proposition fails? If the value proposition fails, it can result in difficulties attracting and retaining customers, losing market share to competitors, and ultimately impacting the product's or service's success and sustainability.

Can you change your value proposition? Yes, a company can change its value proposition by identifying and addressing customer pain points or needs, modifying its product or service offerings, and effectively communicating the new value to its target audience.

Compose a Remarkable Value Proposition

The factors that influence a potential customer to become a loyal customer are limited. Whether your industry has a lot of opportunities to differentiate (like retail) or virtually no unique identifiers (like dairy), you'll find that a value proposition will help you understand your ideal customer and position your business as the best solution for their needs. Use the tactics, tips, framework, and examples in this post to craft your unique value proposition.

Editor's note: This post was originally published in June 2018 and has been updated for comprehensiveness.

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How to test value propositions like a business designer.

Value propositions are the north stars that guide your business. When you get them right, they can be key business drivers and help you reach and monetize your target customers. But developing value propositions that are insightful, unique, and targeted is no small feat. 

In this episode of the Creative Confidence Podcast , IDEO Senior Business Director Angel Annunciacao shares design tools for testing value propositions, how to understand willingness to pay, and how to uncover insights to help finetune your value proposition.

What is a Value Proposition?

Think of a value proposition (or value prop) as a simple statement that helps describe what benefit a potential customer might get from using a specific product or service over another. It sounds really simple, but it's incredibly invaluable and important in business design —both externally and internally. 

Externally, it serves as a foundation for any public communications and marketing that you might do. It's telling your customer clearly what your offer is and why they should choose you over a competitor. 

Internally, it's also important because it serves as a north star. It helps the entire organization, whether you’re in accounting or engineering or product, really align on what it is you’re trying to offer in the marketplace and move in the same direction.

How to Write a Value Proposition

At IDEO, we start with a simple fill-in-the-blank sentence:

For [target user] , who [user need] , [name of concept] solves/provides/helps [benefit].

First, you define who your target user is that you're going after. Then there’s the user need—what is that pain point that you're trying to solve for? The name of your concept is your offering, whether it’s a product or a service. And then the most important part is the benefit that your customer is getting by choosing your offering.

“A value proposition serves as a north star. It helps the entire organization move in the same direction.” Angel Annunciacao, Senior Business Director at IDEO

Value Proposition Examples

Strong value propositions

Angel gives an example to make it more tangible. Imagine you’re working with Shopify back when they were starting out. Something you might write is:

For the novice entrepreneur , who doesn’t know a lot about launching an ecommerce business , Shopify provides a step by step process to set up, grow, and manage their entire transactions .

 While this isn’t Shopify’s actual value proposition, it’s an example of what an effective one might look like. It doesn't get into the details of every single feature, but it's easy to understand and gives us enough information to understand what makes Shopify unique. When we’re thinking about value propositions at IDEO, we like to come up with a few initial value props. It's not about nailing a perfect one on your first try, but coming up with a couple of different hypotheses. 

Once we have a few value props that we feel good about, we dig into more questions to really flesh out the benefit. These questions can include: 

• How does the offer help create value for the customer?
• How is the offer unique to what's already in the marketplace? 
• What about our offer will really help us differentiate and make it harder for others to imitate? 
• Do we have the capabilities to actually bring this offer to life? 
• If we don't, what are those capabilities that we might want to invest in to really deliver on the promise that we're putting out in the world? 

As we explore these questions, we iterate on the value proposition statements and then often land on a few that we then take into research to get feedback.

Weak value propositions

Let's go back to the Shopify example. What would be not as effective? Here’s an example of a weaker value prop:

For business owners , who need help processing online transactions, Shopify helps owners manage their checkout process.

Angel says that this isn’t as strong as the other value prop for a couple of reasons. First, the target consumer that’s listed here is really broad. While we always want to make sure our target market is large enough that it makes business sense to go after them, we also want to make sure that it's specific enough so that we can really distill the unique needs that this target group has, and build an offering that's helping them solve those needs.

The second reason is the benefit. Helping manage the checkout process could be beneficial and might be a need that entrepreneurs have, but it doesn't really touch on what makes Shopify unique. What's making them unique to what else is out in the marketplace? The first example gets a lot more specific on what value Shopify provides to the customer. 

If you want to learn more about IDEO’s approach to business design, check out our online course Designing a Business

How to Test Value Propositions

According to Angel, organizations often feel pressure to rush and nail down the perfect value prop statement quickly. But at the end of the day, value propositions are about testing the consumer's needs , and that's something you want to do early and often. It’s about testing a few hypotheses to make sure that you’re going in the right direction. And what’s great is that you can do this pretty scrappily—and you don’t have to spend a ton of time or money.

A card sort activity

One of Angel’s favorite methods is a card sort activity, where research participants choose from two different options at a time to get to a short list of the benefits that are most important to them. 

Angel gives an example of a client that had developed a new technology to help people understand how different food groups would impact their bodies. They had an idea of who their target consumer might be as well as a value proposition that might resonate, but they weren't one hundred percent sure. Angel sat down with the clients and talked through the benefits that their product could offer, and turned them into simple sentences like “A product that shows me ____ about my body when I use it.” They then printed out 12 of them on small 2x3 cards.

To test these, the team would put two at a time in front of their consumers and ask, “Which of these two is more valuable for you?” They would take the ones that the consumer chose, and discard the ones they didn't choose. Along the way, they asked questions like, “Why this one? What's interesting? Why not that one?” After going from 12 cards to 6 cards, and from 6 cards to 3 cards, they had a discussion about the final 3 cards. They asked, “Why these three? What’s standing out to you? Would you change these in any way to make them even more valuable for you?” The team wanted the consumers to really edit them and share what they found valuable. 

The card sort activity mimics real life because every purchase out in the world requires a decision or a trade-off. In its simplest form, this activity is asking potential customers to consider these trade-offs and choose the product that would bring them the most value in their life. And in this particular example, the value proposition that the clients had come in with initially was not one of the top three that their consumers gravitated toward.

“At the end of the day, value propositions are about testing the consumer's needs, and that's something you want to do early and often.” Angel Annunciacao, Senior Business Director at IDEO

A Max-Diff Study

If you need to get to a larger sample size or if you have a shorter amount of time (qualitative research often takes a bit more time), you can run a Max-Diff study. A Max-Diff study essentially asks respondents to evaluate the potential benefits or options within a given set and choose the one that is most important to them and the one that is least important to them. 

Let's say you had six value props that you're trying to test. You could put it out into the world and ask the question, “On a scale of one to five, how likely are you to buy this product?” Angel says that the issue with that is oftentimes people will rank all six of the offers as really valuable or not valuable, or rank everything a three out of five. That makes it really difficult to understand which option is really rising to the top.

A Max-Diff, on the other hand, forces respondents to make tradeoffs and indicate a preference between the different options by selecting the most important and least important value props out of the group of six. When you get this kind of data, you're able to see how important the different value propositions are relative to each other, similar to the card sort activity.  If you don’t have experience running Max-Diffs and quantitative studies, most survey platforms like Qualtrics or AYTM will have this already built into their platform. 

3 Ways to Test Willingness to Pay

Angel says that when it comes to willingness to pay, there’s often a large “say-do gap,” where what people say they'll pay for something is very different from what they're actually willing to pay. She says it’s great to test willingness to pay because it’s a way to test your value proposition—you’re exploring with your consumers how much they value your offering, reflected by what they're willing to pay for it. Angel shares 3 effective ways to test willingness to pay:

1) Asking at the end of an interview

In a qualitative interview, Angel usually goes through and explains what the product or the offering is, has a discussion, and asks many questions. At the end of their time together, her team compensates respondents for their time and insights that they've shared. 

In this moment when they receive the money, Angel likes to say something along the lines of, “We actually have the product or offering ready today for you to sign up for or buy. How much of the money that I just gave would you be willing to give back to me in order to get access to it today?” When it comes to parting with real money, people start to put more thought into it, and you can see what the product is actually worth to the consumer.

2) Creating reference anchors

Another way to test willingness to pay is to use reference points to anchor people. This can be an especially effective method when your offering is groundbreaking, and when people don't have a quick idea of what the competition costs and what they would pay. To do this, Angel typically starts by explaining what the offer is then asking four questions:

• Is the value of this offer for you more or less than a cup of coffee? 
• Is the value of this offer for you more or less than a pair of new jeans?
• Is the value of this offer for you more or less than a new iPhone?
• Is the value of this offer for you more or less than a car?

This method is not going to give you the exact willingness to pay, but it really helps to define the bounds within which your offering can be. If you already know that it should fall within a specific range of these prices, you can make it even more narrow. For example, you can ask if the offering is closer to the cost of a cup of coffee at 7-Eleven or a cup of coffee at a Four Seasons Hotel bar. That can help you define what feels realistic for your offering.

Additionally, Angel says that you can also create reference points with services—you just want to be thoughtful about what you're choosing as the “cup of coffee.” If it's subscriptions, for instance, you could say more or less than a Spotify subscription. It’s about doing the research to see the offerings that people are most familiar with, and creating some quick reference points.

“When it comes to willingness to pay, there’s often a large ‘say-do gap,’ where what people say they'll pay for something is very different from what they're actually willing to pay.” Angel Annunciacao, Senior Business Director at IDEO

3) Observing real money and products

For testing willingness to pay, Angel also likes to see what people are doing in real life. And when there’s an offering that’s actually on the market, she says you can do this pretty easily through observation. 

Angel gives the example of a large e-commerce company that wanted to see how much Gen Z valued sustainable options. They had read reports about how Gen Z really cared about sustainability and wanted greener options, but on their platform, what they were seeing was that the products that were more sustainable weren't necessarily the ones that were selling as well as some of the other options.

To study this, Angel’s team brought together more than a dozen Gen Z consumers who used the platform regularly and were looking to buy some things in the next two weeks. They gave them each $30 to spend and asked them to walk them through their thought process. The team watched the Gen Z participants share their screens as they looked at and compared different products. 

About the Speaker

Angel Annunciacao Senior Business Director, IDEO

Angel is a Systems & Strategy Director at IDEO who specializes in launching new products, building new ventures, and crafting sustainable organizational strategies. Adept at oscillating between the big picture and the minute details, Angel is an expert in setting a vision for both clients and team members and designing the paths to lead them there.

At IDEO, Angel has partnered with clients across industries -- including food & beverage, health, financial services, technology, and NGOs -- in applying human centered research to tackle a diverse set of challenges. Angel earned her MBA at UC Berkeley (Haas) and her B.S. in Business and Communications from UNC-Chapel Hill. On the weekends, you can find her trying out new recipes, exploring a trail in the Redwoods, or immersed in a good mystery novel.  

Want to hear from more creative leaders and experts? Subscribe to IDEO U’s Creative Confidence Podcast .

If you want to dive deeper into value propositions and business design, check out our 5-week course Designing a Business .

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New Business Idea? How to Test It Before Launching

Table of Contents

Do you have an idea for the next big thing? You may think your idea is perfect already, but it’s wise to test it out before you spend too much time and money developing a business or product for which there’s no market. Ensuring your idea is something the world wants before you launch it is vital to business success.

How to test your business idea

Here are eight steps to test your business idea and determine its value proposition.

1. Contemplate your idea.

Although you’re no doubt excited about your new business idea, you might want to wait a while before fleshing out a potential company, said Greg Isenberg, CEO of product design agency Late Checkout. 

“After I’ve gone through the process of writing down a bunch of ideas, I don’t like to rush into building a business plan or recruiting the team,” Isenberg said. “I like to wait a few weeks [to] see which ideas really stick with me.”

Isenberg said he only moves forward if he has a burning feeling that the world genuinely needs his idea.

“Once I’m through that, the best way to test a business idea is to build some prototype and show it to people to get some honest and authentic feedback,” he said. 

2. Build a minimum viable product.

The lean startup model provides a great way to develop your business or a specific product before going to market. The most important part of that model is to build a minimum viable product (MVP).

An MVP is “the simplest form of your idea that you can actually sell as a product,” said Eric Ries, a Silicon Valley-based entrepreneur and the author of The Lean Startup . 

Using the principles of Lean Six Sigma, Ries’ book advocates having a version of your product to test and market early in the development process so that you can make any tweaks or changes in response to real feedback from your target audience.

3. Run it by a group of critics.

When your first prototype or test service is ready, present it to potential target customers.

“You should talk [to] and/or survey at least 50 potential customers to see if they identify with the problem the same way you do,” said Wayde Gilchrist, a senior technical manager at Amazon. “In other words, you need to find out if this is a real problem for a majority of your target market or just a few.”

However, to truly put your new business idea to the test, select your 50 potential customers or clients carefully.

“Identify people in that target [audience] you know to be skeptical and critical,” said Chip Bell, founder of business consultancy firm The Chip Bell Group. “These people could be irate customers from previous encounters or friends who always take the glass-half-empty perspective.”

Bell advised hand-picking your test group and then asking these people to pick your idea and minimum viable product apart. [Find out how to tell if you have a bad business idea and how to tell if you have a great business idea .]

4. Tweak it to suit your test market.

When Isenberg tested 5by, an internet video finder app he developed and has since sold, he and his team went to college campuses and showed mock-ups of what the product was going to look like. Feedback from students was invaluable in fine-tuning the original idea.

“We were able to quickly gauge that people … were frustrated that they couldn’t open an app and just be able to find the best internet videos in whatever they were interested in with just a tap of a button,” he said.

Isenberg realized that although his initial business idea and mock-up were a good start, they needed tweaking. Based on the feedback he received, his team made fruitful adjustments.

“We quickly knew we were on to something and then focused on building out the product, raising money, etc.,” he said.

5. Create a test website with social media tie-ins.

Once the word is out about your product or business, your target market needs a place to get more information about it or to show it to their friends. Building a simple website with a landing page specifically for the product and promoting it on social media are great ways to provide information and monitor how many people are interested in what you plan to sell.

Make sure your site features opportunities for interested people to join a mailing list to receive updates about the product launch date or to sign up for preorders.

“You’ll be able to tell if the idea will get traction from the number of click-throughs on the ads and the number of people who fill in your form,” Gilchrist said.

6. Create a marketing plan and use it.

All of your preparatory work means nothing if you can’t get a response from prospective customers. Once you have a viable product, you need to act on the interest in it. But while you may know your target audience at this point, you’re unlikely to know which marketing strategies have the best chance of converting their interest into future sales. For that reason, your initial marketing plan should cast a wide net.

Develop strategies to take advantage of different advertising, marketing and PR channels across mediums. As you execute the strategies and monitor the results over time, you’ll be able to sharpen your marketing plan based on what did and didn’t work. This is also another opportunity to gain feedback on what you’re planning to sell.

7. Adopt an experimentation mindset.

Too many businesses are afraid to fail, so they don’t put themselves in a position to succeed. Often, this manifests in either avoidance of pursuing new ideas or failure to properly test a product idea before launching it.

If you adopt an experimentation mindset, you’ll be more willing to make mistakes and test a variety of ideas. Your business model will unlock more long-term value, as you’ll give more ideas a chance to come to fruition. In this case, failure can also be a success, as it allows you to better understand what works and what doesn’t in the ever-changing business world.

8. Implement design thinking.

Design thinking involves the cognitive, strategic and practical processes of developing new ideas or products. It helps innovators redefine problems and create better, more creative solutions. In other words, it opens the door to more groundbreaking discoveries and inventions. [Read related article: Innovation Is Key to a Successful Business ]

To incorporate this strategy when developing your potential business, follow the five stages of design thinking: empathize (research/understand customers’ needs), define (state your customers’ problems and needs), ideate (brainstorm unique solutions to their problems), prototype (create the solutions) and, most importantly, test (try them out yourself).

The importance of testing your business idea

Testing a business idea is crucial to its success. If you blindly assume an idea will be a big hit, you’ll risk a great deal of time, money and other resources on a leap of faith. 

Entrepreneurs often skip testing because they’re in a rush to launch. The costs of doing so can be significant. Below are a few of the possible drawbacks of forgoing testing.

• Poor business plan: Entrepreneurs may struggle to create a solid business plan or a viable roadmap to reach profitability.
• No data: A lack of pre-launch feedback makes catering to your target audience’s needs far more difficult.
• Misguided marketing: Marketing efforts can fall on deaf ears if they’re misaimed, even if your idea has potential.
• Product defects: Product flaws may prevent initial customers from becoming repeat clients and spark bad buzz. 
• Damaged morale: Business partners may become doubtful and want to pull their investment if the product misses the mark.

What to do when your business idea tests poorly

Not every idea is going to wow your inner circle or initial focus groups. Don’t worry — that’s part of the process. Here are two options for what to do if your concept still needs work.

Iterate until you find an idea that tests well.

Business is a process of iteration. You figure out what works and then continually try to make it work better. It’s not supposed to be perfect at first, and it’s important you understand that from the beginning. The point of testing an idea is to make it as good as possible before committing substantial time and resources to it. 

Let’s say you want to start a gardening service that specializes in imported plants. Some of these plants need large amounts of water, while others thrive in dry climates. If you’re based in an area under the threat of drought, you might learn from initial testing and market research that your would-be customers are mainly interested in plants and grasses that don’t require much water. The imported plants that need a lot of water won’t serve your customer base.

By taking into account the feedback you received and adapting your business idea to existing conditions, you can pivot to a business that specializes in the plants sought after in your region. This will then inform your marketing and ordering efforts so you can focus on a specialty that will actually sell. 

This is a great example of taking an idea that won’t work in its original form and adjusting it so it will. In other words, follow the classic mantra: If at first you don’t succeed, try and try again.

Develop something new.

Of course, not every business idea is a winner no matter how much you tweak it. Ideas might not work for any number of reasons. A product or service might be too expensive, face too much competition or not solve a problem customers have. An idea that doesn’t work isn’t a bad reflection on you. Part of being a successful entrepreneur is recognizing what’s not going to work and moving on quickly to something better. It’s part of the process. 

Testing your ideas is the best way to ensure you don’t invest yourself in a concept that won’t succeed. With your newfound knowledge about what doesn’t work, you can use the data you’ve collected to generate a new idea. The time and effort you’ve spent needn’t go to waste if you know how to capitalize on what you’ve already accomplished.

Trial and error

A good idea is an essential part of starting a business, but it’s just the beginning. After that, you need to execute by turning your idea into an actual product . Testing and iterating on your idea is a critical step in the process of creating a viable company. If you’re ready to get started, check out our favorite low-cost business ideas and see if they could work in your market.

Alex Halperin and Marci Martin contributed to this article. Some source interviews were conducted for a previous version of this article.

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Value Proposition Canvas Template and Examples – Step-by-Step Guide

The Value Proposition Canvas provides a framework that centers your customers. It supports understanding the problem your customer is truly trying to solve so that you can design an elegant and effective solution.

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Table of Contents

Understanding and effectively communicating your value proposition to customers is important in business. One powerful tool for achieving this is the Value Proposition Canvas developed by Alex Osterwalder , a part of the Business Model Canvas that evolves dynamically, birthing new value propositions by uncovering unmet customer needs through the “Jobs to be Done” theory . The Value Proposition Canvas is a great tool serves as a framework to guarantee that a product or service aligns with the values and needs of the customer. By adopting a value proposition canvas approach , businesses can fill in the value and tailor their offerings to address specific customer pain points and desires. With a clear understanding of customers’ problems and needs, businesses can develop compelling value propositions that resonate with their target audience and differentiate themselves in competitive markets.

Understanding your customers’ desires helps you grasp what they want to achieve while addressing obstacles get in the way. In the circles of a successful value proposition framework, the value proposition is represented by the Value Proposition Canvas and Business Model Canvas .

In this complete guide, let’s take a look at the intricacies of the Value Proposition Canvas, providing a step-by-step template help you understand your customers’ needs trying to satisfy them and help them fulfill the gains. and real-world examples to illustrate its application. Whether you’re a seasoned entrepreneur or embarking on a startup journey, mastering the Value Proposition Canvas can significantly enhance your business strategy and success.

What is Value Proposition Canvas

The Value Proposition Canvas functions as a framework to guarantee that a product or service is strategically aligned with the customer’s values and needs. Developed by Dr. Alexander Osterwalder, the Value Proposition Canvas ensures a harmonious fit between the product and the market. The Value Proposition Canvas provides a structured approach to identifying customer pains, gains, and jobs to be done , as well as mapping how products or services alleviate customer pains and create gains.

In crafting a Value Proposition Canvas to map customer needs effectively, it’s imperative to start with a thorough understanding of your target customers’ profiles. This involves identifying the jobs they need to accomplish in their work or life, the obstacles they face, and the outcomes they desire. By recognizing the jobs customers need to fill and the outcomes they seek, you can develop products or services that address their specific needs and help them fulfill their goals. This process ensures that your offerings align closely with customer expectations and provide meaningful value.

The alignment between the customer profile and the value proposition map is essential for ensuring that businesses achieve product-market fit. This alignment involves identifying how each element of the value proposition map corresponds to specific aspects of the customer profile, thereby ensuring that products or services effectively address customer needs and deliver value.

Value Proposition Canvas Template For Mapping Customer Needs

The Value Proposition Canvas Template is divided into three key parts:

• The Customer Profile in the center allows you to get into your customer’s head and thus clarify their jobs to be done.
• The Product Value Map on the left helps you describe how you intend to create value for that customer. The ultimate objective is to achieve fit between the Customer Profile and the Product Value Map. You have achieved that fit once the product solves a clear Job to be Done
• The substitutes section outlines what people are currently using to solve their JTBD and identifies inertias that might prevent them from switching to your solution, even if it is superior. Most organizations struggle to understand the alternative solutions. Gaining a customer means not only serving their need but overcoming their resistance to trying something new.

Each part plays a crucial role in understanding and addressing customer needs effectively.

Customer jobs refer to the tasks, activities, or problems that customers are trying to solve in their work or life. These jobs can be functional, emotional, or social in nature. Understanding functional jobs helps you identify what customers are trying to achieve, while emotional and social jobs reveal deeper insights into their desires and aspirations.

• Main Jobs to be Done : This represents the primary goal or task the customer intends to accomplish. Sometimes, customers may have latent needs that they aren’t consciously aware of, which can be unveiled through exploring their jobs to be done.
• Functional Jobs : These are the practical tasks or requirements that customers need to fulfill. They often reflect rational motivations and can be mapped out in detail using a Job Map .
• Emotional Jobs : Emotional drivers influence decision-making by representing desires and aspirations for improvement in various aspects of life. These desires, while sometimes abstract, can significantly impact purchasing behavior.

Crafting the Jobs to Be Done Customer’s Job Statement model helps to distill the essence of the customer’s job into a concise and actionable statement. This model emphasizes understanding the customer’s Needs, Tasks, and Objectives, as well as the associated Context and Constraints. By utilizing this framework, businesses can gain deeper insights into the functional, emotional, and social dimensions of the customer’s job, enabling them to tailor their products or services more effectively to meet customer needs and desires.

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Customer pains in value proposition.

Pains represent the obstacles, challenges, or frustrations that customers encounter while trying to accomplish their jobs. These can range from tangible issues such as high costs to intangible concerns such as fear of change. By understanding your customers’ pains, you can develop solutions that address their specific needs and alleviate their frustrations.

Customer Gains in value proposition

Gains are the benefits, outcomes, or positive results that customers expect or desire from successfully completing their jobs or overcoming their pains. These can include functional gains like increased efficiency, emotional gains such as peace of mind, or social gains like enhanced social status. By exceeding customers’ expectations and delivering meaningful gains, you can create value and build lasting relationships with your customers.

2. Product Value Proposition Map

The product section of the canvas uses the widely accepted marketing syntax of features and benefits with the addition of a box for “experience” (taken from the fields of Design Thinking and customer experience architecture). Once businesses have a thorough understanding of customers’ needs and problems, jobs include proceeding to develop pain relievers and gain creators in the value map . Pain relievers are the features or solutions offered by products or services that alleviate customer pains and address the obstacles that prevent customers from achieving their desired outcomes. On the other hand, gain creators are the features or solutions that provide specific benefits or outcomes to customers, thereby fulfilling their needs and desires. Once you have a clear understanding of your customer profile, you can map out how your products or services address their needs and provide value. The Value Proposition Map consists of three key elements:

Pain Relievers:

Pain relievers are the features, attributes, or solutions offered by your products or services that alleviate customer pains and help them overcome obstacles in getting the job done. Whether it’s simplifying complex tasks, reducing costs, or saving time, pain relievers play a crucial role in enhancing customer satisfaction and loyalty.

Gain Creators:

Gain creators are the features, attributes, or solutions that deliver specific benefits or outcomes to customers, thereby fulfilling their needs and wants. By understanding your customers’ desires and aspirations, you can develop gain creators that exceed their expectations and provide added value. Whether it’s improving their emotional well-being, enhancing their social status, or fulfilling their existential needs, gain creators contribute to customer satisfaction and loyalty.

Products and Services:

This section of the Value Proposition Map outlines the specific products or services that your business offers to address customer needs, pains, and gains. It provides a tangible representation of how your offerings align with customer requirements and create value. Whether you’re introducing a new product or improving existing ones, focusing on customer wants and needs is essential for success.

We recommend starting the crafting of your Elevator Pitch immediately to provide yourself with an initial version to iterate. Embracing even imperfect drafts can be valuable! You can then refine it progressively. The Elevator Pitch typically adheres to a standard structure, streamlining the process for you.

Challenges of Value Proposition Canvas

The Value Proposition Canvas, while an invaluable tool for businesses, does present its fair share of challenges that organizations must navigate:

• Getting the Job Done: Effectively completing the Value Proposition Canvas process , from customer research to value proposition development, can be daunting. It requires dedicating time, allocating resources, and possessing the necessary expertise, all of which may be in short supply for some businesses.
• Asking the Right Questions: Asking the right questions during the customer research phase is critical. Without delving into the right inquiries, businesses risk missing out on valuable insights into customer needs, pains, and gains , hindering their ability to craft compelling value propositions.
• Customer Expectations: Meeting and exceeding customer expectations is a perpetual challenge, particularly in dynamic markets where preferences evolve rapidly. Businesses must continuously monitor feedback and market trends to ensure their value propositions remain pertinent and compelling.
• Competition: Standing out in crowded markets can be tough. Competing effectively requires businesses to differentiate themselves and communicate their unique value proposition clearly. This task becomes especially challenging when rivals offer similar products or services, necessitating constant innovation and creativity.
• Changing Landscape: The business landscape is ever-evolving, shaped by new technologies, market trends, and consumer behaviors. Businesses must adapt their value propositions accordingly to stay ahead of the curve and effectively address emerging customer needs.

Despite these hurdles, the Value Proposition Canvas remains a potent instrument for businesses aiming to understand their customers, articulate their value proposition , and carve out a distinctive identity in competitive markets. By proactively addressing these challenges and leveraging insights gleaned from the Value Proposition Canvas , businesses can bolster their strategic clarity, foster innovation, and achieve sustainable growth.

When you need value proposition canvas

The Value Proposition Canvas (VPC) is a versatile tool that serves businesses across various stages of development and industries. Here’s how it can be utilized effectively:

• Startup Validation: Startups can leverage the Value Proposition Canvas to validate their business concepts and ascertain product-market fit. By understanding customers’ problems and needs, startups can tailor their offerings to address specific pain points and gain creators, ensuring that their products or services resonate with their target audience.
• Product Development: Established businesses can use the Value Proposition Canvas to guide product development efforts and ensure that their offerings add value to customers. By mapping out the customer profile and identifying pain relievers and gain creators , businesses can prioritize features that enhance customer satisfaction and differentiate their products or services in competitive markets.
• Market Expansion: When entering new markets or targeting different customer segments, businesses can adapt their value proposition using the insights provided by the Value Proposition Canvas. By understanding customers’ unique needs and preferences in different market segments, businesses can tailor their offerings to maximize customer appeal and drive market penetration.
• Strategic Planning : Incorporating the Value Proposition Canvas into strategic planning processes enables businesses to align organizational objectives with customer needs effectively. By identifying key customer segments and developing tailored value propositions, businesses can drive innovation, sustain competitive advantage, and achieve long-term growth.

Value Proposition in the Business Model Canvas

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The UNITE Business Model Canvas

The Value Proposition Canvas plays a vital role within the Business Model Canvas, a strategic management tool widely utilized in various industries. Within the Business Model Canvas framework , the value proposition embodies the distinctive amalgamation of products or services provided by a business to meet precise customer demands and set itself apart from rivals. Through a deep comprehension of customer challenges and aspirations, coupled with the alignment of products or services to adequately address those needs, organizations can not only attract customers but also drive revenue and foster long-term growth. Let’s delve into the correlation between the value proposition and the business model canvas:

What is value proposition in business model canvas? And its importance?

In the Business Model Canvas, the value proposition represents the unique combination of products or services that a business offers to meet specific customer needs and differentiate itself from competitors. It serves as the core element of the business model, driving revenue generation and customer acquisition.

The importance of the value proposition in the Business Model Canvas lies in its ability to define the value that a business delivers to customers and articulate why customers should choose its offerings over alternatives. By clearly defining and communicating its value proposition, a business can attract customers, generate revenue, and sustain long-term growth.

The key measure of success for a Business Model is the ability to create and capture value. Many Business Model Innovations fail to capture enough value because their solution is poorly conceived. The Value Proposition Canvas is therefore a critical step in designing your overall Business Model.

The Value Proposition Canvas, alongside concepts like the Lean Canvas, serves as a comprehensive guide for businesses seeking to understand and address customer needs effectively. By focusing on how their product adds value and considering both positive outcomes and negative social consequences, businesses can better comprehend what motivates customers to buy and align their offerings accordingly. It’s crucial to always start with the customer, recognizing their desires and aspirations, while also acknowledging the challenges that may obstruct them from fulfilling those needs.

Through this process, businesses can identify the specific problems their customers are trying to solve and craft solutions that help fulfill their goals. By understanding the jobs customers need to accomplish and finding the right approach to satisfy those needs, businesses can create value propositions that resonate with their target audience. Ultimately, the Value Proposition Canvas provides a framework consisting of two essential components—the leftward square focusing on customer profiles and the rightward circle emphasizing value propositions. Leveraging this tool, businesses can develop a deeper understanding of their customers’ needs, refine their offerings, and ultimately achieve success in the marketplace.

Frequently Asked Questions

1. what are the 6 components of the value proposition canvas.

The six components of the Value Proposition Canvas include:

• Customer Jobs
• Customer Pains
• Customer Gains
• Pain Relievers
• Gain Creators
• Products or Services

2. What are the 9 elements of business model canvas?

The nine elements of the Canvas are:

• Customer Segments
• Value Propositions
• Customer Relationships
• Revenue Streams
• Key Resources
• Key Activities
• Key Partnerships
• Cost Structure

3. Why use a value proposition canvas?

The Value Proposition Canvas helps businesses gain a deeper understanding of their customers’ needs, pains, and gains , enabling them to develop products or services that address those needs effectively. It also facilitates communication and alignment across internal teams, guiding strategic decision-making, and fostering innovation.

4. Gain creators vs pain relievers, What is the Difference?

Gain creators are features or attributes of a product or service that deliver specific benefits or outcomes to customers, fulfilling their desires or expectations. Pain relievers, on the other hand, are solutions offered by a product or service that alleviate customer pains or challenges, making it easier for them to achieve their goals. While gain creators focus on enhancing customer satisfaction, pain relievers address obstacles or frustrations that customers encounter.

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Free eBook: Introduction to product concept testing

Concept testing is not a replacement for the ideation phase of a development cycle . Instead, it’s a means of testing out concepts that have been developed to some extent, but need further definition. This kind of market research helps you explore responses to potential features and benefits that you envision going into the finished product or service, and to get a more detailed understanding of your target customer’s requirements.

Concept testing is also different from brand testing, advertising, or marketing campaigns – these promote the product or service when it’s near-complete or fully developed.

For more information on concept testing methods and making an effective concept testing survey, read our eBook: Introduction to Product Concept Testing

Concept testing is an important aspect of market research, allowing the consumer to provide their feedback on whether or not a concept’s features and benefits fit their needs.

Concept testing is based on listening to the audience’s views and exploring how viable the concept is for them – without predefined parameters or expectations. It’s an open learning process where you can continue to engage with the same target audience and get their take on your product developments as they happen.

It’s also a means to exercise good Experience Management . At a product launch, your brand’s perceived value and the strength of your offering are directly linked to your profit and loss. Likewise, a disappointing loss can hurt internal staff morale, investor relationships, and future business ventures.

Special Event: The 3 steps of product concept testing

“Poor test-and-learn execution has been known to hobble a company’s fortunes for years to come.”

– Bain & Company

Concept testing is relatively cheap to do, and it provides feedback you can use to make the right decisions and prevent costly mistakes further along in the development process. It can also help steer the direction of later stages in research and development, because it gives you a clear picture of which criteria are being met and which ones need more attention. Here are 6 of the most appealing concept testing benefits.

• Concept testing can be a cost-effective and flexible solution

You can set up a simple and quick survey if you want high-level feedback, or you can delve deeper to understand more detail.

Concept testing is also a great money-saving technique as it prevents launching a faulty concept. And in comparison with the cost of outsourcing to external market research agencies, research for an internal concept testing project is cheaper.

• It helps you gain support for the concept at an early stage

If your plan for a product or service requires a lot of input from senior leaders or colleagues, providing them with a ‘first look’ at evidence can speed up the process and show the potential of the work they’ll be helping with. When a team is confident, there is more support and willingness to go the extra mile for you.

• Concept testing can help you optimize the concept before launch

You can uncover or identify information that will have a true impact on your product development process decisions. A few examples are:

• The concept’s weaknesses (E.g. Is there unclear communication, low customer value, or an unmemorable product personality?)
• The customer’s price perceptions , buying preferences, how relevant they find the features and benefits, and how they might use it
• The concept’s status relative to its target market competition
• How well the concept fits with the brand

In the early stages, you can also test multiple concepts at the same time to see which works best at solving your target customer’s problem. If a product concept doesn’t work, invest in the ones that do make a difference. For later stages, you can use preliminary forecasts to estimate demand.

• Concept testing acts as a quality-assurance check over time

Thanks to its low cost, concept testing can be iterated multiple times. This allows you to home in on multiple aspects of your concept and make sure all the requirements are covered. You can then repeat the analysis to see what effect your changes have made. For example – you changed the concept’s feature profile, and now you can investigate whether that has changed the value perception and potential revenues.

Concept testing programs also lay the foundations for future benchmarks. Service or product ideas that satisfy key criteria and land well with your audience can be used as barometers for new and/or similar concepts.

• Research can help you build solid customer relationships

You can build brand and customer loyalty ( find out more about customer loyalty ) and increase your brand equity value , by including your potential customers in the concept’s design and development.

As a brand, you look transparent and open to innovation . It’s also a great way to show you value the opinions of your customers. In addition to this, you should include a broader sample to understand if and how your concept appeals to wider audiences — you don’t want to innovate for just your current customers.

• Companies that product concept test can avoid costly consequences

In 1957, Ford spent the equivalent of $3.1 billion on the “car of the future,” the Ford Edsel. While Ford conducted consumer polls, they failed to implement feedback and many of the touted new features were unreliable.

Coors made a similar blunder when they attempted to enter the bottled water market in 1990. The packaging and branding of Coors Rocky Mountain Spring Water were similar to Coors beer, which frightened many of Coors’ target demographic.

Some brands have leveraged the testing process to make decisions that have tremendous payoffs. They can cover lots of areas, including:

• A product’s marketing strategy
• Design concepts
• Go-to-market strategy
• Positioning testing

A few examples include:

• Emerging fashion brand Shinola used customer research to verify which watches to feature in their spring 2018 collection.
• Yamaha used concept testing to make a product design decision about using a knob or a sliding fader in a new electronic keyboard. Understanding customer preferences has helped Yamaha maintain its position as the top keyboard brand in the industry.
• Creative agency Linney Group uses concept testing with conjoint analysis to gauge its clients’ preferences and priorities, as well as what would resonate with their audiences. Data-backed strategies are agreed before going ahead with creative projects, saving time and money for the agency and its clients.

We’ve put together a step-by-step guide to help you create the best concept tests for your products and services. We’ll cover these topics below:

• Choose the right concept testing survey methodology
• Choose the right survey components for your concept test
• Choose the right flow for your concept test
• Identify the most promising concept

Or, you can also identify your most promising product concepts using our Concept Testing Program Solution . It’s an expert solution that tests and reveals what people think of your company’s concept ideas.

Step 1. Choose the right concept test survey methodology

For a successful concept test, in the early stages, consider which methodology will best fit your needs. Some of the most common survey methodologies include:

• Single Concept Evaluation (Monadic testing) – Respondents complete a full evaluation of a single concept.
• Multiple Concept Evaluation (Sequential Monadic testing) – Respondents complete full evaluations for multiple concepts. This method often includes a preference question to determine which concept is preferred, so it can be considered proto-monadic.
• Concept Optimization using conjoint analysis – respondents evaluate possible bundles of features to determine the most appealing.

Each product testing methodology comes with its own positive and negative trade-offs. Get a closer look at our pros and cons table.

Decide whether you want to optimize a single promising concept that you’re confident in, or if you have a range of possible features and price options that you’d like to combine in the optimal way. In the latter case, conjoint analysis may be a better option. In the former, single concept optimization may be a better choice.

Step 2. Choose the right survey components for your concept test

Once you’ve determined your methodology, you need to decide what you’ll cover in your survey questionnaire. These will vary according to your purpose and the type of evaluation you’ve chosen.

Carefully consider the objectives of your concept testing to make sure the measures used will successfully answer your team’s questions.

As a general rule, you’ll want to measure the overall reaction to the concept in terms of acceptability, desirability and interest, plus the likelihood to purchase. A pricing component is also likely to be important for most concept tests.

Think about how the product might be used, and how it will fit into the respondents’ lives. Is it an innovative new category, or does it replace an existing solution? What situations might it be used in? How would the customer expect to buy it, and what would be their preference?

Consider the market segments of your target audience that you’re most likely to use, and order and prioritize them.

Step 3. Choose the right flow for your concept test

The flow of your concept test survey ensures that your target audience understands and buys into the survey they’re taking.

In the introduction section, make sure to introduce your survey in clear language .

Next: The main section. Here you can start to add in the core survey questions that introduce your concept and invite the respondent to evaluate its perceived value, relevance and appeal. Find out if the respondent sees the concept as a luxurious purchase or a functional necessity, whether its features seem well-thought-out, and whether it seems innovative. You may also want to establish a baseline of respondent’s buying history, asking about brands they have purchased in the recent past, quantities and usage frequencies.

End the survey by thanking the respondent. You could also use this opportunity to remind them that their data will be stored securely, and it’s only accessed by the research team.

Check out one example of a concept testing survey below. You can access this template for free

Step 4. Identify the most promising concept

When you carry out concept testing, you’ll receive a lot of data back. If you’re using a turn-key system like the Qualtrics Concept Testing Program , you can explore and filter it using visual dashboards. If you’re sorting the data by hand, use spreadsheet software like Microsoft Excel to begin to sort, filter, compare and pivot-chart your results. You can also try to pull information into a visual format with the in-built charting tools.

We recommend splitting your analysis into two sections:

• Overall results will give you a high-level view of which concepts performed the best.
• Individual results will let you dive into each concept and understand how they performed and why. Here you can apply your psychographic segmentation to uncover more from your results.

Where qualitative analysis for open-ended questions has been captured, try parsing out common themes, strengths, and weaknesses. Using a tool like Qualtrics Text iQ can make this analysis quicker.

Check out one example of a concept testing survey below. You can access this template for free, and begin using it immediately here.

Mistake #1: Running concept testing on one concept in isolation

You might choose to run a test to get your initial insights, but then you stop there. This might provide you with the answers you wanted, but you may be missing out on the full benefit of comparing research data over time.

Solution : In advance, think about what you’re measuring and how you’ll use that information when you get it. This might direct you to use a different methodology or suggest whether you need to repeat the exercise to see if your product’s development is on the right track.

Mistake #2: Testing too many concepts in one survey

You may want to use the tool to compare lots of concepts in one survey and ask a long list of questions for each, to save time. Even if you explain this in the introduction, it could make your target audience’s experience long, tiring, and confusing.

Solution : It’s important to respect the time and energy of the targeted respondent. To get an unbiased view of each concept, use the Monadic approach, which goes into depth on a single concept. For earlier stages of development, you can test multiple concepts in a single survey using the Sequential Monadic approach. Either way, keep in mind how many questions it’s reasonable to ask of your respondents.

Mistake #3: If you don’t get the answers you wanted in the concept test, you automatically cancel the idea

You find out that there is no demand or interest for your product ideas with your target audience. That could be a reason to stop investing your time and energy into the product’s development. However, this may be short-sighted as there may be potential profit in changing it.

Solution : The purpose of the research is to see what target customers think and feel about the idea. If it’s negative, then it could mean that the target audience is not interested at this time, or they are not the right audience. You may find more by testing more widely or trying again after some time, or consider adjusting the concept based on the feedback you’ve gathered. A bad result doesn’t mean it’s a bad idea. This is also where an early adopter question is useful — especially if you feel your new concept is ahead of its time or the market.

Mistake #4: You assume the audience thinks like you do

You’ve got an in-depth understanding of the product idea, and you want to share this in the survey introduction. You may also want to share marketing and brand ideas now, as you’ve been thinking of them already.

Solution : Avoid using technical jargon or acronyms that won’t be immediately understood by your audience. They can be intimidating and confusing for survey participants.

Also, avoid making a strong marketing pitch. Adding this information now can suggest the idea is set in stone – remember that marketing and brand activities come in at a later stage when the idea is close to or fully formed and you don’t want to prevent getting honest feedback.

Mistake #5: You don’t adjust the survey to cater to all geographies

You may have an audience you haven’t considered. Trial your test in different countries to avoid missing out on expanding your product idea’s reach.

Solution : Where you want to widen your audience pool, consider translating the survey into the native language. In addition, you can use images as survey answers, displaying them together to see which is preferred.

As we’ve seen, concept testing is more than getting feedback using a Likert scale. It involves considering the methodology, components, and flow of your survey for maximum impact.

It can be tricky to do and lots of companies are looking for support. Here are a few customers that turned to Qualtrics with their concept testing issues, and here’s how we helped them:

• Under Armour : This sports clothing and accessories brand struggled to scale its product testing with its current technology. By implementing the centralized Qualtrics Experience Management solution , they were able to increase product testing from 100, to 10,000 testers.
• Pinterest: This image-sharing and social media platform was trying to find out what would make their platform number 1 with their customers. Feedback on potential product developments was the starting point for an entirely new feature set.

When concept testing is done right, it saves a lot of time, money, and energy. Most importantly, this essential, money-saving tool gives you the opportunity to optimize the concept before development, based on the concept test feedback.

Free eBook: Introduction to Product Concept Testing

Related resources

Product testing 13 min read, usability testing questions 17 min read, concept testing questions 10 min read, product analysis 13 min read.

Pricing Research

Product Price Optimization 12 min read

Product presentation 11 min read.

Buyer Personas

Customer Targeting 12 min read

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A value proposition, in the business realm, articulates the unique value a company promises to deliver to its customers. It’s a clear statement that explains how a product or service solves a problem, fulfills a need, or provides benefits that are unavailable elsewhere. For startups and established businesses alike, crafting a compelling value proposition is crucial. It not only distinguishes them from competitors but also directly impacts their ability to attract and retain customers. This concept is central to the value proposition canvas, a tool that helps businesses identify and communicate the unique value they provide. A strong value proposition, or “value prop,” goes beyond generic benefits to highlight specific advantages, making the customer value proposition not just a tagline, but the essence of a brand’s promise.

Key Takeaways

• Clear, User-Centric Differentiation: The foundation of a compelling value proposition lies in its ability to clearly differentiate a business from its competitors. This differentiation should not be based on features alone but on the unique benefits and value delivered to the customer. A user-centric approach ensures that the value proposition resonates deeply with the target audience, addressing their specific needs and challenges.
• Understanding the Competitive Landscape: A well-defined value proposition is informed by a thorough analysis of the competitive landscape. It requires an understanding of what rivals are offering and how they are positioning themselves. This knowledge enables a business to articulate a unique value proposition that stands out by offering something better, different, or more relevant.
• Early Definition and Specificity: Defining a value proposition early in the business planning process is essential. It provides a clear direction for all marketing, sales, and product development efforts. Being specific about the benefits and outcomes customers can expect makes the value proposition more compelling and easier for potential customers to grasp.
• Addressing Unmet Needs: A successful value proposition speaks directly to the unmet needs of its target audience. It clearly communicates how the business’s offering solves a problem or improves the customer’s situation in a way that no other product or service can.
• Quantifiable Benefits: Whenever possible, a value proposition should include quantifiable benefits. This could mean specifying how much time or money customers can save, how much efficiency is gained, or any other measurable impact. Such specificity makes the value proposition more tangible and believable.
• Relevance and Clarity: For a value proposition to be effective, it must be both relevant to the target audience and clearly communicated. Avoiding technical jargon and ensuring the message is easily understood are critical for broad appeal. The use of a value proposition canvas can be particularly helpful in aligning a business’s offerings with customer needs and preferences.
• Continuous Refinement: The business landscape is always changing, as are customer needs and competitive dynamics. A value proposition is not a static statement but should evolve based on ongoing customer feedback, market trends, and competitive moves. This continuous refinement ensures that the value proposition remains compelling and relevant over time.

Relevance to Different Audiences

Business school students.

For business school students, both at the undergraduate and graduate levels, understanding the concept of a value proposition is crucial. It lays the foundation for courses in marketing, entrepreneurship, and strategy, teaching students how to communicate the unique value a company offers to its customers. Courses like Marketing Management, Entrepreneurial Ventures, and Strategic Management often delve deeply into the art and science of crafting compelling value propositions. These courses encourage critical thinking about how businesses differentiate themselves in the market and meet the unique needs of their customers.

A recommended read for students eager to explore this concept further is Value Proposition Design: How to Create Products and Services Customers Want by Alexander Osterwalder, Yves Pigneur, Gregory Bernarda, and Alan Smith. This book offers practical insights into identifying and meeting customer needs, complementing academic learning with actionable tools and frameworks.

Pre-revenue Startups

For startups in the pre-revenue stage, forming an initial value proposition is a critical hypothesis that underpins their business idea. This hypothesis is crucial for conducting Pre-Vision Interviews , which are based on the Jobs-to-be-Done theory . These interviews aim to understand potential customers’ functional, social, and emotional needs, as well as their behavior and unmet desires, by engaging with competitors’ customers to discover opportunities for innovation. This approach ensures that the product or service being developed aligns perfectly with customer needs.

The initial value proposition serves as a guide for these conversations, focusing on what the startup believes it can uniquely offer. As startups move through the Pre-Planning Process , incorporating insights from Core Cost Analysis and continuous customer feedback, the value proposition should be refined. This iterative process helps startups avoid investing in unproven concepts and ensures their offering resonates deeply with their target audience.

For Small and Medium-sized Business (SMB) owners, the value proposition is not a set-it-and-forget-it part of the business model. As customer needs evolve, so too must the value proposition. The constant refinement and updating of the value proposition are vital for maintaining a competitive edge. This requires SMB owners to stay in close contact with their customer base, monitor market trends, and anticipate changes in customer preferences.

The agility to adapt the value proposition ensures that SMBs remain relevant and continue to meet their customers’ changing needs effectively. This ongoing process may involve tweaking product features, adjusting service offerings, or even rethinking the target market. By making the value proposition a central focus of their business strategy, SMB owners can ensure long-term growth and success in a competitive landscape.

Building a Compelling Value Proposition: A Step-by-Step Guide

Crafting a value proposition that resonates with your target market is a pivotal step in defining your brand’s identity and competitive advantage. A great value proposition communicates the unique benefits your company offers to its ideal customer, distinguishing you from the competitor. Here’s how to create a value proposition statement that captures the essence of your offering and why a potential customer should choose you.

1. Identify Your Unique Selling Proposition (USP)

Your USP is the cornerstone of your value proposition. It highlights the unique benefit or feature that makes your product or service better than the rest. To identify your USP, conduct thorough market research to understand your competitive landscape. What do you offer that your competitors don’t? This could be anything from a unique feature, a specific benefit, superior quality, or an exceptional customer experience. Your USP should align with your mission statement, reflecting your company’s core values and objectives.

2. Adopt a User-Centric Approach

Understanding your target customer is crucial. Develop a detailed customer profile that goes beyond demographics to include psychographics, pain points, and aspirations. What does the ideal customer value? How do your offerings alleviate their pain points or enhance their lives? Your value proposition should articulate how your product or service enriches the prospective customer’s life or business. This user-centric approach ensures that your value proposition resonates on a personal level, making your offering not just a choice but a solution.

3. Quantify Your Benefits

Concrete, quantifiable benefits make your value proposition more compelling. Instead of vague promises, specify the exact benefits a customer can expect. This could be in terms of time saved, percentage increases in efficiency, cost reductions, or other measurable outcomes. Quantifying benefits helps cement your competitive advantage, making it clear why a potential customer should prefer your offering over others.

4. Understand and Articulate the Customer-Brand Relationship

Your value proposition should reflect the relationship you aim to build with your customers. It’s not just about the transaction but about the ongoing interaction and the experience your brand provides. How does your offering fit into the broader context of your customer’s life or business? Your value proposition statement should convey a sense of partnership and commitment, indicating that choosing your brand is a step toward a mutual goal.

5. Refine Based on Feedback

A good value proposition is not set in stone; it evolves. As you gather feedback from your target market, be prepared to refine your value proposition. Listen to what your customers and potential customers say about your product or service. What aspects do they find most valuable? Are there benefits you hadn’t considered? Use this feedback to hone your value proposition, ensuring it remains relevant and compelling as market dynamics shift.

Creating a value proposition is an iterative process that involves deep understanding of your target market, clear articulation of your unique selling proposition, and continuous refinement based on customer feedback. By following these steps, you can develop a great value proposition that clearly communicates the unique benefits your company offers, setting you apart from competitors and resonating with your ideal customer.

Frequently Asked Questions

• What is a value proposition and why is it important?

A value proposition is a statement that summarizes the unique benefits or value that a company promises to deliver to its customers. It’s essential because it communicates to a customer segment why they should choose your product or service over competitors. In essence, it defines the main reason your offering is the best solution to their problem or need. For small businesses and professional services, a clear value proposition is crucial for focusing marketing efforts and guiding business strategy.

• How can startups differentiate their value proposition from competitors?

Startups can differentiate their value proposition by conducting thorough market research to identify gaps in the market or unmet needs within their target customer segment. Emphasizing unique selling propositions (USPs), such as innovative features, superior quality, or exceptional customer service, helps create a competitive advantage. Tailoring the value proposition to address the specific “customer job” or need can also make it more compelling and relevant to the target audience.

• What role does customer feedback play in refining a value proposition?

Customer feedback is invaluable in refining a value proposition. It provides insights into what aspects of your product or service are most valuable to your customers and identifies areas for improvement. Engaging with your customer segment through surveys, interviews, or direct feedback can reveal whether your marketing effort resonates with their needs and expectations. This continuous loop of feedback and adjustment helps keep your value proposition aligned with customer needs and market trends.

• How can quantifiable benefits enhance a value proposition?

Quantifiable benefits, such as specific time savings, cost reductions, or performance improvements, make a value proposition more concrete and believable. They provide clear evidence of the value your product or service delivers, making it easier for a potential customer to understand the return on their investment. For small businesses, highlighting quantifiable benefits can be a powerful tool in marketing efforts, as it offers tangible reasons for customers to choose their services over others.

• When should a startup begin defining its value proposition?

A startup should begin defining its value proposition as early as possible in the business planning process. A well-crafted value proposition is foundational to developing business strategy, branding, and marketing efforts. It helps ensure that all aspects of the business are aligned toward delivering unique value to its intended customer segment. Starting early also allows for the incorporation of customer feedback into the value proposition, ensuring it remains relevant and compelling as the business grows.

Related Terms

Social Proof: Social proof is the psychological phenomenon where people conform to the actions of others under the assumption that those actions reflect the correct behavior. In marketing, social proof can be leveraged to reinforce a value prop by showcasing testimonials, reviews, endorsements, and case studies from satisfied customers. It addresses customer pains indirectly by demonstrating real-life successes and customer satisfaction, thereby validating the value proposition.

Customer Pains: Customer pains refer to the specific problems, needs, or challenges that potential customers face. Understanding and articulating how your product or service alleviates these pains is a crucial component of an effective value proposition. It directly ties your offering to the customer need, making your value prop more relevant and compelling to your target audience.

Marketing Strategy: A marketing strategy is a comprehensive plan formulated to reach and convert leads into customers by communicating the benefits of your product or service. A well-defined value proposition is a cornerstone of this strategy, guiding the messaging and positioning that will resonate with the target market. It helps in aligning marketing efforts with the customer need and differentiating from a competitor.

Customer Need: Customer need refers to the desire or requirement of consumers that drives them to seek out and purchase goods or services. A value proposition must clearly address a specific customer need, providing a solution or benefit that meets or exceeds expectations. Identifying and responding to these needs is vital for creating a value prop that attracts and retains customers.

Value Proposition Canvas: The value proposition canvas is a strategic tool used to ensure that a product or service is positioned around what the customer values and needs. It helps businesses to more clearly understand their customers’ pains and gains and how their offering alleviates those pains or enhances those gains. This canvas is instrumental in refining the value prop to ensure it’s aligned with the target customer’s priorities and expectations.

Competitor: A competitor refers to any business or entity that offers a similar product or service to the same target market as yours. Understanding your competitors and their value propositions is critical for differentiating your offering. Competitive analysis helps in identifying gaps in the market that your value proposition can fill, thereby offering a unique selling proposition to your customers.

Also see: Elevator Pitch , Marketing Plan , Jobs-to-Be-Done Theory

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6 ways to test out your business idea before spending money to officially start it

• Having a business idea is easy, but putting that idea to the test is where the real work comes in.
• Entrepreneur Jen Glantz says aspiring founders should test ideas thoroughly to vet their viability.
• Write out a business plan, research competitors, and ask your target audience for feedback.

When I first had the thought seven years ago of starting a business where strangers could hire me to be their bridesmaid , I wasn't sure if it was a good idea. So before putting any money down, I decided to figure out if people would actually hire a stranger for their wedding day.

I did competitor analysis and couldn't find any similar businesses online, so I took it a step further and asked my potential audience. After posting an ad on Craigslist, I received hundreds of messages from people all over the world who wanted to hire a professional bridesmaid. 

I decided to invest in making a website, build a business plan, and create a list of different services I offered. Fast-forward, I'm now running a successful business that works with hundreds of clients every single year. Here are six ways I recommend fellow aspiring entrepreneurs test out new business ideas. 

1. Write out a business plan

Map out a business plan that includes details about your target audience, industry analysis and research, how you could scale the business in six months or a year, and what your competitive advantage would be. 

As you go through this process, your idea might pivot as you find out about similar companies or emerging industry trends.If you're not sure where to start, download a free business plan template and brainstorm how you'd fill in each section.

2. Figure out the problem

Ask yourself two questions: What problems does this business idea solve, and do people actually care enough to spend money to solve these problems?

This a brainstorming gut-check to see how urgent of a business idea you have.

Related stories

For example, I was thinking about starting a business around a glove for carrying a cup of hot coffee, rather than a cardboard sleeve or a cup that traps the heat that may burn your hand. But after writing down my answers to the two questions, I realized it was unlikely people would buy something new like this when other solutions out there fixed the problem well enough.

3. Research industry trends 

As you're building your business idea, keep a pulse on what's going on with the industry. What new technology is being introduced? What does customer behavior look like this quarter? What new companies are emerging?

Read industry blogs or publications weekly, subscribe to podcasts from industry experts, and set free Google Alerts to get a daily recap of what's happening.

4. Eyeball potential competitors 

When I was thinking about my coffee glove business, I made a list of competitors who were also solving the problem of coffee cups being too hot to hold. 

I researched each company, noting things like their branding, marketing efforts and social media, user design flow on their website, and customer experience. I made a list of what each company did well, what they did that wasn't so great, what my company could do that was better, and any other competitive advantages.

5. Ask questions to your audience

Getting feedback, suggestions, and even hearing excitement from your potential audience is a great way to gain perspective on your business idea.

Find where your potential audience is having conversations online and join in. For example, I use Quora , Reddit , and Facebook groups to locate my audience, browse the questions they're asking, and use that insight as a way to enhance my business.

6. Find beta testers to test out your idea

This step requires that you have something for people to test, whether it's a sample of the product or a soft-launch of the website or mobile app you're creating. 

Set up a way for them to give real-time feedback during every step of the experience. This information will help you fix any holes in your process and get your business ready for more consumers to enjoy. 

Having an idea for a business is a powerful and exciting moment. Before you put money behind the idea and launch it, spend time experimenting to see if it's a viable business that will be as successful as you want it to be.

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Planning, Startups, Stories

Tim berry on business planning, starting and growing your business, and having a life in the meantime., the value of business plan assumptions.

Identifying assumptions is extremely important for getting real business benefits from your business planning. Planning is about managing change, and in today’s world, change happens very fast. Assumptions solve the dilemma about managing consistency over time, without banging your head against a brick wall.

Assumptions might be different for each company. There is no set list. What’s best is to think about those assumptions as you build your twin action plans.

If you can, highlight product-related and marketing-related assumptions. Keep them in separate groups or separate lists.

The key here is to be able to identify and distinguish, later (during your regular reviews and revisions, in Section 3), between changed assumptions and the difference between planned and actual performance. You don’t truly build accountability into a planning process until you have a good list of assumptions that might change.

Some of these assumptions go into a table, with numbers, if you want. For example, you might have a table with interest rates if you’re paying off debt, or tax rates, and so on.

Many assumptions deserve special attention. Maybe in bullet points. Maybe in slides. Maybe just a simple list. Keep them on top of your mind, where they’ll come up quickly at review meetings.

Maybe you’re assuming starting dates of one project or another, and these affect other projects. Contingencies pile up. Maybe you’re assuming product release, or seeking a liquor license, or finding a location, or winning the dealership, or choosing a partner, or finding the missing link on the team.

Maybe you’re assuming some technology coming on line at a certain time. You’re probably assuming some factors in your sales forecast, or your expense budget; if they change, note it, and deal with them as changed assumptions. You may be assuming something about competition. How long do you have before the competition does something unexpected? Do you have that on your assumptions list?

The illustration below shows the simple assumptions in a bicycle shop sample business plan.

Sample List of Assumptions

Thanks for the good read, Tim. This will be helpful to small businesses to minimize and manage future risks.

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Home › What is Agile? › What is Product Management? › Validating and Executing on Value Propositions

Validating and Executing on Value Propositions

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Previously, we dove deep into creating a value proposition that is based on both meaningful customer research and thoughtful consideration of the benefits and costs that your organization will offer. In this article, we’ll discuss how to validate your value proposition before actually building against it. Then, we’ll show how you can execute faithfully against your value proposition.

Validating Your Value Proposition

To validate your value proposition, put it in front of your proposed customers and users. There’s nothing better than live data to confirm your hypothesis . Be sure to select only customers and users who fit within your target segments . In my experience, the easiest way to get started is to ask the same people that you interviewed when you were originally identifying your target customer segment. When looking for interviewees, f ocus on fidelity over convenience . For example, if your product is targeted at Salesforce administrators at companies larger than 10,000 employees, find these people specifically because they will give you the most meaningful feedback. Tell your interviewee about your proposed value without bringing up the cost: what is the benefit that they would get in using your product, versus some alternative? Your first check is to see whether your proposed value actually captures their attention. Don’t worry about the cost yet. If you get lukewarm responses at this stage, then your value proposition already doesn’t have legs. After all, a value proposition contains two parts: the benefit and the cost. If the benefit isn’t compelling at zero cost, there’s no way your full value proposition will resonate with your customers. One key factor to keep in mind is that when you share ideas with others, they will tend to say that they are more positive than they actually will be. People don’t like to let others down, and it costs them nothing to tell you that they’d love your product or that it seems cool. This is a well-researched bias called the social desirability bias , and you need to account for it as part of your validation. Actually check for genuine excitement – if you don’t have genuine excitement, then your value proposition needs additional work on the value side. I know that someone is genuinely excited when she says phrases like, “This is an amazing idea! I wish I had come up with it!” or “Can I buy this right now?” Furthermore, if they start telling you immediately about all of the ways in which your product would make their life better without you needing to prompt them, you know that you’ve struck a chord with them. The other key insight to capture here is what your proposed customers perceive the benefit to be. Even though you just told them what your proposed value is, they’ll perceive it through their own lens. This perception is critical to understand as it enables you to refine your value proposition to better solve their pain. Here’s an example. I’ve had value propositions where my proposed value would save the customer money, but what she was really interested in was the feeling of security that she would get from my product. Knowing that my customers care more about security rather than savings enabled me to refine my value proposition to focus on security.

A Step-by-Step Guide to Value Validation

What does value validation look like in practice? My favorite framework looks something like the below. By giving your interviewee a piece of paper with your value statement written on it – plain white paper and plain black font is fine. Then, ask your interviewee to read the value statement out loud, and to tell you their thoughts out loud. This step enables you to check for any confusion. You don’t want your interviewee to tell you about how amazing your offering is, only for them to find out that it’s not really what you’re offering in the first place! After they finish reading the statement out loud, ask your interviewee about their initial reaction. You want to check for their immediate gut reaction. Don’t let them filter it out or try to be rational. At this step, you’re looking for instinctive concerns such as “this seems too good to be true” or “I don’t trust what you’re offering.” Many products fail in the market because they seem like scams. Remember that part of the cost of your value proposition is trust – if your value statement incurs an immediate trust cost, you need to refine your value statement further. From the start, ask your interviewee about how they feel your value statement would apply to their life. As mentioned before, what you think your value is can be very different from what your customers think your value is. Finally, ask them why they feel it applies or doesn’t apply to their life, and what the benefit means for them. At this stage, use a 5 Why’s methodology – dig deeper and deeper until you get to an answer that is part of Maslow’s hierarchy of needs .

Validating Willingness to Pay

Now that you have data around the value component of your value proposition, probe your interviewee on what costs she’s willing to pay for it. Begin by proposing a cost that is higher than what you would actually want to charge. Your goal is to be reasonable but to cause pushback. When (not if!) your proposed customer flinches, ask her what she believes a reasonable trade-off would be. Because you started high, you’ve anchored her – and she’ll likely provide you an answer somewhat closer to reality. Remember that customers will likely tell you a lower cost than they’d actually be willing to pay in the real world.

Customers know that you are using this data to determine a price point , and of course they would prefer that you charge them as little as possible.

Never ask a customer directly, “How much would you be willing to pay?” You don’t want to be anchored by a low price – and your customers have every incentive to encourage you to price cheaply!

Iterating on Your Value Proposition

Bring back the insights that you’ve captured in the field around the value and cost components of your value proposition. Are you on the right track? Are you solving a problem that people actually about, and are willing to pay you for? Refine your value proposition and come up with alternative value components and alternative cost components. Test these alternatives in the field and identify which set gives you the greatest fit from your future customers. Use a test versus control methodology . For example, say you wanted to test out 2 alternative value statements. Place all 3 versions (the original and the 2 alternatives) in front of your interviewee, then ask them to rank the 3 versions from highest to lowest desirability. Remember to switch up the order for each interviewee you speak to so that you prevent the serial position effect (where the first and last items tend to do better than those in the middle). If you’re testing 1 alternative value statement and 1 alternative cost statement, then you need to test all 4 versions with the same interviewee: 1) original value and original cost, 2) new value and original cost, 3) original value and new cost, and 4) new value and new cost. You know you’re in good shape when additional iterations wind up providing worse results versus the original instead of better results. Now that your value proposition has been refined and optimized, you can finally execute against it.

Value Proposition Execution

Just because we have identified a value proposition doesn’t mean that we’ve delivered it. Your entire product is an expression of your value proposition. You will lose your customers’ trust if you fail to execute, and you will gain their trust if you execute well. I’ve found that creating artifacts centered around the value proposition focuses my team and my stakeholders to execute faithfully on the value proposition, as it aligns us to think about the world from the perspective of the customer. The first artifact you should create is a mock press release . If your company would publish something about your product, what would it publish? As you go through the press release, think about how potential customers, users, employee candidates, and competitors would react to the press release. Based on just the press release alone, would you come closer to achieving your objectives? Here’s an example of an actual press release from Amazon about a kid’s tablet. Notice how clearly the press release defines the user (children) and the customer (parents), and how each of the features specifically ties to user pains and customer pains. You want your mock press release to be just as crisp as Amazon’s. Then, create 2-3 mock testimonials in the voice of your customers and users. Even better, if you have actual testimonials from your test customers and users, use those! Your goal is to think about the world from the vantage point of the customer/user, ensuring your product is built on their personas. Now that you have your press release and your testimonials, you can finally dive into evaluating your proposed features. List out every feature that you believe should be part of the value proposition. As you and your team analyze each one, check to see that each feature satisfies the press release and the testimonials and that you are staying true to the value proposition. Once you’ve completed your evaluation, break down each feature into more granular components. For example, you might have a search utility as part of your proposed product. Break it down as granularly as you can: search involves an input action, an output screen, the ability to suggest results, the ability to auto-complete, speed to result, comprehensiveness of results, fuzzy matching, etc. Identify which ones align best to the value proposition – then, place them as highest priority, and ship those first . Leave the rest behind for a future iteration. Remember, in most cases, if you ship only when you’re ready, you’re shipping too late . The only exception is when your customers wield a lot of power and may cause you to go bankrupt if you don’t ship a fully baked product with all features included. As you ship iteratively, ask customers and users for feedback . Does their feedback sound like your mock press release and your mock testimonials? If not, work with your customer to learn why they don’t perceive the value that you thought they’d perceive, and learn why your customer is perceiving more pain than you thought they’d perceive. Fix these gaps in your next product iterations. Another great way to identify whether your feature would be perceived as valuable by your users is to conduct a fake door test , which is where you ship the “visual entry point” of the functionality without building the whole thing out. From there, you can actively measure user engagement on your proposed functionality!

Value propositions are powerful frameworks that enable you to deliver maximum value in minimum time . To succeed with a value proposition, validate it with customers and users, iterate on it, and execute against it. Always use your customers and your users as your true north. In our final article in this series, we’ll discuss additional insights around value propositions , so that you can maximize the value that you deliver.

Have thoughts that you’d like to contribute around validating and executing on value propositions? Chat with other leaders around the world in our PMHQ Community !

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A Beginner’s Guide to Hypothesis Testing in Business

• 30 Mar 2021

Becoming a more data-driven decision-maker can bring several benefits to your organization, enabling you to identify new opportunities to pursue and threats to abate. Rather than allowing subjective thinking to guide your business strategy, backing your decisions with data can empower your company to become more innovative and, ultimately, profitable.

If you’re new to data-driven decision-making, you might be wondering how data translates into business strategy. The answer lies in generating a hypothesis and verifying or rejecting it based on what various forms of data tell you.

Below is a look at hypothesis testing and the role it plays in helping businesses become more data-driven.

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What Is Hypothesis Testing?

To understand what hypothesis testing is, it’s important first to understand what a hypothesis is.

A hypothesis or hypothesis statement seeks to explain why something has happened, or what might happen, under certain conditions. It can also be used to understand how different variables relate to each other. Hypotheses are often written as if-then statements; for example, “If this happens, then this will happen.”

Hypothesis testing , then, is a statistical means of testing an assumption stated in a hypothesis. While the specific methodology leveraged depends on the nature of the hypothesis and data available, hypothesis testing typically uses sample data to extrapolate insights about a larger population.

Hypothesis Testing in Business

When it comes to data-driven decision-making, there’s a certain amount of risk that can mislead a professional. This could be due to flawed thinking or observations, incomplete or inaccurate data , or the presence of unknown variables. The danger in this is that, if major strategic decisions are made based on flawed insights, it can lead to wasted resources, missed opportunities, and catastrophic outcomes.

The real value of hypothesis testing in business is that it allows professionals to test their theories and assumptions before putting them into action. This essentially allows an organization to verify its analysis is correct before committing resources to implement a broader strategy.

As one example, consider a company that wishes to launch a new marketing campaign to revitalize sales during a slow period. Doing so could be an incredibly expensive endeavor, depending on the campaign’s size and complexity. The company, therefore, may wish to test the campaign on a smaller scale to understand how it will perform.

In this example, the hypothesis that’s being tested would fall along the lines of: “If the company launches a new marketing campaign, then it will translate into an increase in sales.” It may even be possible to quantify how much of a lift in sales the company expects to see from the effort. Pending the results of the pilot campaign, the business would then know whether it makes sense to roll it out more broadly.

Related: 9 Fundamental Data Science Skills for Business Professionals

Key Considerations for Hypothesis Testing

1. alternative hypothesis and null hypothesis.

In hypothesis testing, the hypothesis that’s being tested is known as the alternative hypothesis . Often, it’s expressed as a correlation or statistical relationship between variables. The null hypothesis , on the other hand, is a statement that’s meant to show there’s no statistical relationship between the variables being tested. It’s typically the exact opposite of whatever is stated in the alternative hypothesis.

For example, consider a company’s leadership team that historically and reliably sees $12 million in monthly revenue. They want to understand if reducing the price of their services will attract more customers and, in turn, increase revenue.

In this case, the alternative hypothesis may take the form of a statement such as: “If we reduce the price of our flagship service by five percent, then we’ll see an increase in sales and realize revenues greater than $12 million in the next month.”

The null hypothesis, on the other hand, would indicate that revenues wouldn’t increase from the base of $12 million, or might even decrease.

Check out the video below about the difference between an alternative and a null hypothesis, and subscribe to our YouTube channel for more explainer content.

2. Significance Level and P-Value

Statistically speaking, if you were to run the same scenario 100 times, you’d likely receive somewhat different results each time. If you were to plot these results in a distribution plot, you’d see the most likely outcome is at the tallest point in the graph, with less likely outcomes falling to the right and left of that point.

With this in mind, imagine you’ve completed your hypothesis test and have your results, which indicate there may be a correlation between the variables you were testing. To understand your results' significance, you’ll need to identify a p-value for the test, which helps note how confident you are in the test results.

In statistics, the p-value depicts the probability that, assuming the null hypothesis is correct, you might still observe results that are at least as extreme as the results of your hypothesis test. The smaller the p-value, the more likely the alternative hypothesis is correct, and the greater the significance of your results.

3. One-Sided vs. Two-Sided Testing

When it’s time to test your hypothesis, it’s important to leverage the correct testing method. The two most common hypothesis testing methods are one-sided and two-sided tests , or one-tailed and two-tailed tests, respectively.

Typically, you’d leverage a one-sided test when you have a strong conviction about the direction of change you expect to see due to your hypothesis test. You’d leverage a two-sided test when you’re less confident in the direction of change.

4. Sampling

To perform hypothesis testing in the first place, you need to collect a sample of data to be analyzed. Depending on the question you’re seeking to answer or investigate, you might collect samples through surveys, observational studies, or experiments.

A survey involves asking a series of questions to a random population sample and recording self-reported responses.

Observational studies involve a researcher observing a sample population and collecting data as it occurs naturally, without intervention.

Finally, an experiment involves dividing a sample into multiple groups, one of which acts as the control group. For each non-control group, the variable being studied is manipulated to determine how the data collected differs from that of the control group.

Learn How to Perform Hypothesis Testing

Hypothesis testing is a complex process involving different moving pieces that can allow an organization to effectively leverage its data and inform strategic decisions.

If you’re interested in better understanding hypothesis testing and the role it can play within your organization, one option is to complete a course that focuses on the process. Doing so can lay the statistical and analytical foundation you need to succeed.

Do you want to learn more about hypothesis testing? Explore Business Analytics —one of our online business essentials courses —and download our Beginner’s Guide to Data & Analytics .

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Give Your Customers the “True Value Test”

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Figure out what really matters to your customers, and how you can help them.

Business leaders often express frustration with what they see as a disconnect between their company’s perceived value and its true value — a disconnect that’s impeding growth. They’ve got great people, great products and services, they say, but their organizations aren’t selling as much as they should, and aren’t appropriately valued.

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What is a Test Plan? The Complete Guide for Writing a Software Test Plan

In this article, what is a test plan complete guide with examples.

Creating a software test plan is one of the most foundational concepts in software testing. However, with the advent of streamlined life cycle processes, such as Agile and DevOps, the idea of taking the time to create test plans and other forms of test documentation is often minimized or ignored altogether. This is unfortunate because there is much value in a test plan that can greatly benefit all projects, regardless of lifecycle.

It is not uncommon to hear testers and test managers say things like “We don’t do test plans because we are Agile” or, perhaps the statement is “We don’t have time for test plans.” The reality is that no matter the lifecycle approach, a test plan is a valuable tool to ensure the right resources are in place to meet the test objectives.

Even in test techniques such as exploratory testing , test charters are used as a way to outline the focus of a period of testing, along with defining who will perform the tests, and how much time will be allocated to the testing effort.

Planning is essential in any endeavor in life and business. For example, a bank will not loan money to a business without a business plan. Without a marketing plan, a business will lack focus and direction in reaching new customers. Without a project plan, any initiative will dissolve into chaos.

However, for some reason, in testing, the importance of test planning is overlooked.

Keep in mind that a test plan that is not followed has little value. If you invest the time and effort to create a test plan, then follow it while evolving the plan if needed, but don’t forget it.

It is a well-known fact that any plan will need to be adjusted once the work starts to occur. The solution is not to abandon the plan but to adapt it to the situation at hand. This especially holds true for test plans.

What is a test plan?

Think of a test plan as a project plan for your testing process.

This means that the test plan conveys how testing will be performed at a particular level (such as system testing or user acceptance testing ), or for a particular type of testing (such as performance testing or security testing).

The Test Plan (sometimes also referred to as a QA Test Plan) can be seen as the instruction manual or guide for your testing effort. It describes the objectives of testing (what are you planning to verify and/or validate), the scope of testing (what will and will not be tested), together with the general and sometimes detailed schedule of the activities you want to perform (how and when are you testing).

Test plans should list the risks foreseen in the project and their respective levels so that testing can be prioritized by risk.

Perhaps the most important part of a test plan is the definition of resources needed. Resources can be seen as human (such as the people involved in the test) and technical (such as test environments, test tools, and test data).

Test Plan vs Test Strategy

A test plan and a test strategy are not quite the same thing, as we will now explain. The test plan conveys how the test will be performed. This includes defining test objectives, test approach, test tools , test environment, test schedules and team responsibilities and composition. However, before the right test approach and other planning details can be defined, a larger view of the organizational and project objectives must be defined first.

It is possible to have a great test plan in terms of formatting, but miss the critical objectives of defining what is actually needed from the test. This is where the test strategy becomes very important in defining major test objectives and making sure the test approach is in alignment with organizational needs and goals. The organizational perspective of testing is often found in a test policy.

A test strategy describes the uniqueness of the test and is a “big picture” view of the test. You might think of a test strategy as the description of the “what” and the “why” of the test.

In practical application, it is often best to define the test strategy first so that the general nature and objectives are understood. Then, you have the basic information available to create the more detailed test plan.

A very good early project activity is to get the stakeholders together and brainstorm the test strategy. It may seem odd to have a test-oriented activity so early in a project, but it gets people thinking about how one of the most critical project activities, testing, will be conducted.

Early on, details are not needed in the test strategy. In fact, that is the great thing about a test strategy – you can define it even before requirements or other specifications are defined. Details will emerge as the test plan is created.

Typical items covered in a test strategy are:

• Uniqueness of the project, such as usage and technology involved
• Critical success factors, such as reliability, correctness, usability, etc.
• Risks, such as business, project, product, and technical
• Roles and responsibilities (not necessarily by name)
• General timelines and schedules
• Levels of testing (component, integration, system, acceptance)
• Types of testing (functional, security, usability, etc.)

You have much freedom in writing a test strategy. Although a standard does exist for test strategies (ISO/IEC/IEEE 29119-3), you can still make it your own. It’s possible to have a one-page test strategy that is very effective and takes less than an hour to create.

Test strategy template example

Test strategy case study example

How to Write a Test Plan

The first test plan you write might be the most difficult. This is because you are assimilating information for the first time. The more test plans you write, the better you get at the investigation of details and the phrasing of things.

Writing a test plan is typically a test management or leadership responsibility. Others on the test team and in the organization (such as users and developers) may have input and review tasks, but it is generally up to the manager to actually write the test plan.

As mentioned above, a great starting point in creating a test plan is the definition of a test strategy. A software test strategy helps in understanding the broad objectives of the test and how a particular project or release is unique. With a test strategy in place, now you are ready to start creating a test plan.

It is typical to have gaps and vagueness in the first draft of a test plan. Many times, the information needed in a test plan will emerge over time. In fact, there may be some details of the test that do not become clear until shortly before the test. For example, details such as the features to be tested may be changing even up to the time of release.

As you write the test plan, you will discover that the writing effort becomes one of investigation as you seek to learn the details needed in the plan. A good practice is to assign certain parts of the test plan to members of the test team to investigate and document. As the author of the test plan, you can then compile and edit the information.

Perhaps one of the most important tasks in creating the test plan is to review it. The first review should be a team review involving members of the test team with knowledge of the content.

After making any needed changes, the next review should involve knowledgeable stakeholders such as project leaders, test team leaders, technical test analysts, business analysts, subject matter experts and any other people that can provide helpful perspectives in the review.

Writing the Test Plan With The Audience in Mind

One of the golden rules in writing any kind of document is to write with your audience in mind. Failing to do this will result in a document that fails to convey the kind of information needed by the readers, and will likely be ignored.

Obviously, a business-oriented audience will get lost in technical jargon and technical readers will find the plan lacking if few technical details are provided. The balance is found in being able to express technical information in ways that are understandable by the business. This has been a great need for over forty years in all areas of information technology, not just testing.

When it comes to test plans, consider that only part of the test planning details will involve information heavily based on technical details. The rest of the test plan will contain information that should be easily readable by all stakeholders, regardless of role. This is another compelling reason for conducting test plan reviews, especially the reviews involving stakeholders.

Key attributes of the test plan should be:

• Conciseness – People today do not read, they scan. Keep your sentences short and to the point, bullet points help.
• Organization – It helps to start the test plan with a general introduction, then get more detailed in the body of the plan. Good test plan templates and standards help with organizing the content. Numbered sections and sub-topics help when referring to items in the test plan.
• Readability – Use plain language understandable by most of the audience. Avoid heavy use of acronyms if at all possible.
• Adaptability to Change – Plan for change. Extreme levels of detail in the plan will require the plan to be changed more frequently in response to project changes.
• Accuracy – People should be able to rely on the information contained in the test plan as being accurate. If errors are discovered, they should be reported and corrected as soon as possible.

Keep in mind that a major goal of the test plan is to communicate details of the test to readers in all areas of an organization. Therefore, anything that enhances communication in the test plan helps connect with readers.

Sizing the Test Plan

A common question when it comes to writing a test plan is, “How long should the test plan be?”. In fact, there is no definitive answer to that question since the length of the test plan is driven by the specific context of the project.

Obviously, projects that are large and complex will require more information to convey details of the testing effort than simpler and smaller projects. A principle that is helpful to remember is that the longer the test plan, the less likely people are to actually read it. As mentioned earlier, many people scan instead of read. In addition, the longer the document, the more prone people will be to scan it.

If the test plan is perceived to be too lengthy, people may ignore it entirely. My personal guideline for test plans is to keep them less than fifteen or twenty pages, if possible.

How To Create Or Find A Test Plan Template

It is very helpful to have a software test plan template or standard with which to start. If your organization doesn’t have existing test plans or standards, there are test plan examples in books and other industry publications devoted to software testing.

However, I often advise caution in following just any test plan example you might find online. Test plans, like any document, can be flawed – in some cases, greatly flawed. So, when using a template, make sure it meets your needs and doesn’t omit important information.

The primary international standard for test documentation such as test plans, test cases , and test procedures is ISO/IEC/IEEE 29119-3. In this standard, you will find both traditional and agile test plan standards, as well as examples of both types of test plans.

While some people feel standards are constraining, standards can also be your friend. Standards can provide guidance and examples based on many years of industry experience and practice, while eliminating the need to start your test planning efforts from a blank page. Standards must be tailored to meet your needs. Therefore, it is perfectly fine to tailor and adapt the standard.

Sometimes, industry groups also share test plan templates. It is worth the time to investigate this possibility if you are in an industry such as defense, finance, automotive, or medical.

Textbooks on software testing can also be a source of test plan templates.

Here you can find an example for a test plan template:

Test plan template example

How to Deal With Changes to The Test Plan

One reason why people may tend to avoid test planning is that they know any plans will likely change. Test plans are no exception. However, the prospect of changes should not deter you from creating a test plan.

The key is to write the plan to be resilient and flexible to changes, so how does one do that?

The answer is actually based on a simple principle. The more detailed and specific the plan in terms of things like names, dates, risks, and technical details, the more brittle the test plan becomes when changes occur.

But, what about the details that need to be conveyed in a test plan? What value is the test plan without details?

When it comes to things like test objectives, scope, other more solid details, those things typically survive change better than other details. For schedules, people and other details that are more change-sensitive, a good practice is to reference them in a way that changes can be recorded without prompting a new version of the test plan.

Today, many people create test plans in content management systems that allow easy references to other items, such as schedules and estimates. If referencing the details is not feasible in your case, just try to find the balance with “just enough” detail to guide the test while also minimizing the impact from changes.

Final Thoughts

Test planning is an essential activity of testing, regardless of the project lifecycle approach. A test plan is like a project plan for testing.

In many aspects of testing, a degree of planning and preparation is needed to get the needed resources in place when you need them. Some resources, such as people and environments, may require significant preparation. The test plan is where those resources are defined and the needs of testing are expressed.

A major goal of the test plan is to communicate to the rest of the organization, and perhaps other organizations, how testing is planned to be conducted. Without a test plan, communication about testing becomes very dynamic and people may not know at any given time the goals and expectations of testing.

Just remember that no test plan is perfect, but the more experience you gain in writing test plans, the easier the planning becomes.

Other articles on test planning:

• The Role of Stakeholders in Software Test Planning
• Test Planning Fundamentals (Includes an outline and template)
• 35 Software Test Plan Templates & Examples
• IEEE Test Plan Template

Randall W. Rice

Randall W. Rice is a leading author, speaker, consultant and practitioner in the field of software testing and software quality, with over 40 years of experience in building and testing software projects in a variety of domains, including defense, medical, financial and insurance. You can read more at his website .

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The Business Plan Quiz: Test!

Business is not as easy as it seems when you just imagine it. The test in front of you is "The Business Plan Quiz." This quiz will see your understanding of the concept of the business plan. This will also provide extra information to you that will help you in the future. Get ready to take this fun and informative quiz that is here. Best of luck with this!

Which section is completed last?

Finance detail

Marketing budget

About your business

Executive summary

Rate this question:

According to research, without a business plan, firms are more likely to close down.

You should describe your products and services and discuss the market that you are ..., if you wish to interest investors, you need to emphasize the company's profit ......... ., the preparation of a business plan is optional for some small businesses., why complete a business plan.

To get finance

To impress your mum

To set out clear goals for your start-up.

To make sure you know what you are doing.

The business goals and competitive advantages can be described by...

Mission statement

Core values

None of these

......... the strong and weak points of any firms in competition with yours and look for marketplace opportunities.

Investigate

SMART means:

Success, Measurable, Achievable, Realistic, Timed

Specific, Measurable, Achievable, Realistic, Timed

Smart, made-up, actual, real, true

You should examine customer... and the benefits of your products and services.

Quiz Review Timeline +

Our quizzes are rigorously reviewed, monitored and continuously updated by our expert board to maintain accuracy, relevance, and timeliness.

• Current Version
• Mar 22, 2023 Quiz Edited by ProProfs Editorial Team
• Oct 01, 2012 Quiz Created by MrsGabell

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