Evaluating Product Concepts with CVP and Engagement Data
Four elements to consider when evaluating product concepts part 1: core value proposition and engagement data
Introduction
Once you've found a profitable market and understand your target audience, you may have generated a massive list of product concepts using a method like SCAMPER. You obviously won't be able to build and validate every single product concept. One of the most helpful frameworks I use to narrow down my list of ideas is Brian Balfour's (angel investor and CEO of ReForge) "four-element framework for product hypotheses." The four elements are (1) core value proposition, (2) hook, (3) time to value, and (4) stickiness. This post will delve into what core value propositions (CVP) are, what makes a good one, and how it continues to be valuable when examining engagement data post-launch.
Core Value Proposition
Your core value proposition (CVP) is a "promise" your business makes to solve a specific problem for a customer or market segment. The CVP is written as a simple to understand statement (usually a headline and a description) explaining your product or service's core benefit and why your target customers should choose you over existing competitors. Sometimes you may see the terms “unique value proposition” or simply “value proposition” floated around. These are also related terms; the difference is CVP being the main value proposition you build your product around.
Sometimes a CVP is confused with a mission statement, a vision statement, and an elevator pitch, but there's a significant distinction. A mission statement is "your business' goal—it's the reason for existing." The vision statement is "where the business sees itself in the future after fulfilling its mission — the impact it has on its customers and the world." The elevator pitch is a short explanation of your business to a potential investor. Notice how these are all at the "business" level, whereas a CVP is at the "product or service" level.
Good CVPs have a direct link between your product and service and the customer's jobs, taking into account their gains and pains and how you plan to address them. If you need help articulating your CVP, a great tool to use is the Value Proposition Canvas.
Example
Let's look at some examples of great CVPs by successful companies. Uber's CVP headline is "tap the app, get the ride," and its description is "Uber is the smartest way to get around. One tap and a car comes directly to you. Your driver knows exactly where to go. And payment is completely cashless."
Let's break this down. The headline, "tap the app, get the ride" highlights the product's value proposition of being convenient since it's an app. The word "tap" makes it feel effortless. There's a clear link between the customer's job of "getting a ride from point A to B" and the product's purpose of "summoning a driver to help you reach your destination."
The description itself packs in many compelling points that address the pains and gains of the customer. It serves as a powerful contrast for the existing "taxi" alternatives.
For instance, "...comes directly to you" addresses the pain points of trying to coordinate the pickup location with a taxi driver over the phone. These pain points are eliminated by Uber's location tracking and map view features.
The "...your driver knows exactly where to go" addresses the pain point of explaining your destination to the taxi driver, the potential time wasted, the need to provide them with directions, and the language barrier in foreign countries. These pain points are eliminated with the in-app pickup and dropoff input fields.
The "...payment is completely cashless" addresses the pain points of cash transactions: carrying cash around, not having the right denominations for change, and wasting time. These pain points are eliminated with the in-app payment system.
During the process of generating CVPs for your product concepts, you may want to run surveys with prospective customer segments asking them to rank or order how relevant a CVP is to them. CVPs help ensure your product or service provides actual value and solves a real painkiller problem. It’s also beneficial when writing content for landing pages, app store screenshots, ads, etc. Here are some other great examples of CVPs and how they’re used in context.
Engagement Data
Once you've launched your product, a strong indicator for product-market fit (PMF) is the engagement data related to your CVP. Some inexperienced teams may only look at usage metrics like "daily active users (DAU)," sessions per users, session duration, etc. However, this paints an incomplete picture. It tells you whether users are using your product or service but doesn't explain what they're actually doing. Not considering engagement data results in incomplete insights that may skew your product development roadmap towards features that don't truly resonate with your users.
Therefore, the best practice is to supplement your usage metrics with CVP engagement data. The engagement data must be aligned with user actions (views don't count) and related to your CVP. Let's consider Instagram as an example. Instagram was first launched as Burbn with a feature set allowing users to "check-in," "post their plans," and "share photos."
If they hadn't examined their engagement data, they wouldn't have discovered that most of their users primarily used Burbn for photo sharing and filters. In a parallel universe, they may have continued down their original path of expanding their "check-in" and "plan sharing" features and failed to maintain PMF.
At the time, Burbn's best strategic decision was removing features that no longer aligned with their CVP and focusing on the features that provided users with the most value. Once you've acquired a stream of retained users, it's always a good idea to study your engagement data and adapt your product development roadmap accordingly.
In the next issue, we'll talk about the second product validation factor, the "hook."
P.S I did a Youtube interview this week, where I discuss design niches, profit centers, positioning, personal brand, and pricing your design services in more detail. Click the link below to check it out!
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