Page 446 - Value Proposition Design: How to Create Products and Services Customers Want - PDFDrive.com

Testing the Rectangle

Test the most critical assumptions underlying the
business model your value proposition is embedded in.
Remember, even great value propositions can fail without
a sound business model. Provide evidence showing that
your business model is likely to work, will generate more
revenue than costs, and will create value not only for
your customers but for your business.

Provide evidence showing that the way you intend to
create, deliver, and capture value is likely to work.

Don’t neglect testing your business model

You can fail even with a successful value proposition if your business model
generates less revenue than it incurs costs. Many creators are so focused on
designing and testing products and services that they sometimes neglect this
obvious equation (profit = revenues - costs) resulting from the building blocks of
the Business Model Canvas.

A value proposition that customers want is worth little if you don’t have the
channels to reach customers in a way they want to be reached. Likewise, a
business model that spends more money on acquiring customers than it will earn
from revenue from those same customers won’t survive over the long term.
Similarly, a company will obviously go out of business if resources and activities
required to create value are more costly than the value they capture. In some
markets you might need access to key partners who might not be interested in
working with you.

Design experiments that address the most important things that have to be
true for your business model to work. Testing such critical assumptions will
prevent you from failing with a great value proposition that customers actually
want.