The goal of Jetpack for Changemakers Step 3 is clarity on your solution concept and how to test the riskiest assumptions and pricing options. In other words, now that you are clear on who your customers are and the problems they’re struggling with, you’ll need to test your idea and find out whether people are prepared to pay.
This is where the process starts to get really interesting and what you learn can be challenging. Be open to learning. You might learn that there’s already a solution in play. That’s OK. Everyone has a competitor. In this step, you’ll find out who they are. This will set you up to answer one of the standard ‘gotcha’ questions that startups get pinged on whenever they share their idea with friends, family and supporters.
You’ll have to ask for money – gulp! This is where people often balk because they’re simply not comfortable asking for cold, hard cash. Bad news. Your startup needs it. You have to ask.
Good news. It’s easy to ask for money, when you set up the ask properly.
Set yourself up for a win
Go back to your lean canvas and update it based on your learnings from the previous step (if you haven’t already). Now, do the same with your Gaddie pitch and Golden Circle. It’s a good discipline to keep all of your fundamental documents up to date. That way, whenever you create a pitch deck or a proposal, you have one to hand them.
On the lean canvas, answer the following questions:
- What’s your solution: pay attention to the features. Which ones really address the customer problems and create the most value?
- What’s your unique value proposition: what really sets you apart from all of the other solutions that are out there? Is it enough to make someone really want to move from how they currently address their problem to adopt your idea?
- Will customers value it enough to pay: how much are customers willing to pay to receive that value?
Take the same approach you followed to identify your assumptions.
Test your solution and price
Design another experiment to test the solution idea. To do this, you’ll need to either describe the solution (if it doesn’t yet exist) or demonstrate it somehow. You’ll have to use your creativity here. The important thing is to be super-brief. Avoid any description that takes more than 2-3 minutes and don’t include every detail, just enough to understand the idea and how it solves the customer’s problem and the value that it creates.
Ask them about the features. Specifically ask:
- What features are must-haves?
- Are there any features you could live without?
- Is anything missing?
When it comes to testing the price, chances are you have a price in mind. Go with that. Although, before you ‘reveal’ the price, you should ask how much solving the problem today is costing your customer (and the cost might include time, hassle, stress, and other non-monetary ‘expenses’). Be open to learning what the going rate is in the market and what competitors are charging.
Before you ask about price
Be careful not to:
- Just ask customers how much they would pay (chances are they’ll shoot low or won’t know and will get embarrassed)
- Worry about your costs. At this point, you don’t need to have detailed costings.
So, make your best guess, present your cost and simply ask this question:
I’d like to ask you about cost. I’m asking because I find that it helps to provide a benchmark. I’m not trying to sell the idea to you – so please just answer honestly, when I show this cost to you.
Then show/ask them if they would pay the amount you have in mind.
A word on ‘payment’
People pay for things in different ways. Don’t assume that ‘payment’ implies that money changes hands (although a sustainable revenue stream is a given if you want your startup to become more than just an idea). Payment for value provided, can be made in any number of forms, including but not limited to:
- Trade in kind
So, think about the kind of payment that’s most valuable to you and that the ‘payee’ is likely to have at their disposal.
After they answer, ask ‘why’
Whether they say yes or no, ask them why they responded in that way. You’ll uncover some really interesting information. If they are not forthcoming, don’t press too hard, although a good follow up question is:
Fantastic, thanks for being so honest. Can you tell me what you might be comparing this to?
This will uncover more information and can be a great way to learn about features that really matter.
Remember, this is an experiment. That means you need to establish your assumption, the proof you need to validate it and have a pass/fail threshold. In other words, don’t just give up if the first person you talk to says ‘no’ or worse, they validate your idea and say they’d pay anything to have it.
Look and listen
It’s really important to listen carefully. Don’t try to justify your idea. Try your hardest to learn. Pay attention to body language and nonverbal cues.
The most important thing in communication is hearing what isn’t said.
– Peter Drucker
Of course, you should provide clarification if you sense that your description of the idea or your question was misunderstood. If you get a surprising answer and you don’t really know what to say next, you can choose to prompt gently for more information. Or just say nothing.
There is a difference between listening and waiting for your turn to speak.
– Simon Sinek
So now that you’re prepared to learn, get out there and run your experiment.
Step 4: Sustain Your Business. Learn how to gain clarity on the elements of your financial model and what would be required to reach your monthly break even.
These articles are written to capture the essence of the six steps of the Jetpack for Changemakers program. We’re sharing them to provide a guide of what we have found to be most effective for purpose-driven startups. If you are interested in gaining a more in-depth understanding, along with the accountability and personalised guidance from experienced coaches to complete each step, please get in touch with us. We would love chat about your options.
Upcoming Jetpack dates
- Step 1 & 2 – Thursday, 16 November 2017 (Booked Out)
- Step 1 & 2 – Friday, 1 December 2017
- Step 1 & 2 – Thursday, 14 December 2017
- Step 1 & 2 – Thursday, 18 January 2018
- Step 1 & 2 – Friday, 2 February 2018
- Step 1 & 2 – Thursday 15 February 2018