We recently hosted a webcast conversation between Lars and Elliot about implementing lean product development into your organization and how to choose the right value proposition.
Don’t have time for the full webcast now? Catch the webcast highlights and tips from their conversation in our companion blog below.
If you’d like to read the full transcript of Elliot Susel’s conversation with Lars Lofgren, you may download it.
Lean Product Development And How To Choose The Right Value Proposition
Senior Director of Growth at I Will Teach You To Be Rich, a company that builds online courses for people to help them achieve their dreams and improve their lives, Lars Lofgren, spoke with Lean Startup Co. Faculty Member, Elliot Susel, about why he puts so much emphasis on getting the right value proposition and not trusting his intuition.
Stem the Waterfall
When Lars came on to I Will Teach You To Be Rich, the company was engaged in a waterfall approach to product development where they released a bunch of courses at once and hoped they’d make “a bunch of money,” he said. The process had some hits, but just as many misses, and he knew it was time to make some changes.
As his role shifted from generating new leads to product development, he realized that it was important to drive new products to maintain the growth of the company but the process had to be significantly refined toward a lean approach. “I didn’t throw out the entire process,” he explained, “but I did throw out huge chunks of it. Now I’d say 80% of the cycle is completely different even than a year ago.”
Polish Your MVP
Lars quickly realized that while an MVP is an important part of the customer testing and validation process, especially for established companies, “it needs to be polished. You can’t really de-scope the final product at all in order to get it out faster.”
Lars said this means you have to come up with “creative ways to get customer feedback during your product cycle even before you go out with the full launch.”“I strongly advocate that you spend the bulk of that product cycle time getting that value proposition, even on a single feature, right.” Click To Tweet
Positioning is Key
While the MVP is important, Lars said they spend the vast majority of their validation on their product cycle, particularly on what he calls “positioning.” In a nutshell this comes down to: “How are we selling? What is that core headline, that core value proposition…they’re going to get when they buy it?”
When they get that single sentence right, the vast majority of their work is done, Lars said. “That’s the single most important decision we ever make.”
In fact, Lars has found that getting that value proposition right can generate as much as four times the revenue. “I strongly advocate that you spend the bulk of that product cycle time getting that value proposition, even on a single feature, right.”
Don’t Trust Your Intuition; Talk to the Customer
Lars then offered a surprising admission when he said that he has learned not to trust his intuition in this process. In fact, relying on intuition has led him astray. “Every time I try to shortcut the process, I always get burned.” Trusting one’s intuition often means not listening to the customer, he explained. “Until I’ve gotten hands on…I try not to make too many assumptions about what would work…[have] zero expectations and figure out who I’m talking to.”
He recommends starting with “blanket research” to get to know your customers.
From there he starts with a generic survey and generic customer reviews, “The kind of stuff that you do if you were trying to build a company or you’re running a start-up for the very first time,” he said.
Use AB Testing and Ranking Surveys
Lars has learned to put a lot of faith in the customer’s ability to determine what products or features are good. He utilizes AB testing, putting a couple of different options in front of customers, and asking them which ones they’re most excited about and willing to pay for.
“People are a pretty good judge of whether or not…it’s good enough,” Lars said. Moreover, what they like is often counterintuitive. “I am continually surprised about what wins.”
Lars has had a lot of success offering what he calls “ranking surveys,” which he called a “really easy way to get real data behind these value propositions.” In them, they offer 5-7 options of value propositions for new features they’re considering.
There’s no magic answer to getting that value proposition right, except to keep doing customer interviews, which Lars said is easier than it may seem. “My team has done literally hundreds, if not thousands, of these things…and I have never had a problem getting people to agree to a call.”
Soft Launch an MVP
Once they have a solid idea, from customer interviews, what the product needs to be, they create a limited MVP that he compared to “an early access program or a soft launch that a tech company might do.” For example, instead of the full 8 week course, they’ll offer a two-hour, paid webinar on the same basic curriculum, dramatically de-scoped to a limited audience of around 20 people.
“The main thing we’re always looking for…is how fast does it sell out?” When the value proposition is right, the spots “just go out the door and instantly sell out.” If not, they reassess.
He suggested that other companies can try this same approach with upgrades or add-ons to a small number of customers.“We don’t consider anything done until it’s done. In other words, we don’t know if something’s shipped until it’s shipped and it’s gotten great feedback from customers.” Click To Tweet
Waterfall at the End of the Process
When products are close to release, Lars said there is still a use for the waterfall approach. “We start writing all the scripts for the final version of the product. We start putting together all the PDFs.” But even there they validate by inviting a select group of customers to be on an advisory council to provide feedback on the products. “We make sure there are no kinks, anything critical that people are stumbling over that’s going to get in the way of the final launch.”
After that last pass, they ship, but that is not the final stage of the lean process, Lars said. “We don’t consider anything done until it’s done. In other words, we don’t know if something’s shipped until it’s shipped and it’s gotten great feedback from customers.”
Thanks to Jordan Rosenfeld for contributing this piece. If you seek to bring the entrepreneurial spirit to your organization, Lean Startup Co. can help.