Inspiration

Proposition development part II: Lessons from practice

In our previous blog 'Proposition development; how to approach it successfully', we described the roadmap and some useful models. In this section, we share some lessons from practice. We do this using the 3 steps of proposition development as described in the previous blog:

  • Step 1: Start by finding out what your customers want
  • Step 2: Elaborate the ideas into a concrete proposition
  • Step 3: Test the proposition with your customers

Step 1: Start by finding out what your customers want

As mentioned in the previous blog, you develop new propositions not for yourself but for your customers. Your customers have to benefit from it so that they want to buy it. But how do you know what your customer wants? The simplest answer is: by getting in touch with your customer. Here we describe 2 different ways we regularly use:

By conducting interviews

The most direct contact with your customers is through interviews. For example, we conducted a market consultation for a grid operator in which we interviewed 20 customers.

Here, we asked about their wishes to, and own ideas for, new services from network operators. These 1-on-1 interviews lasted 45 minutes, which is long enough to delve into some topics and short enough not to make it too time-consuming.

The interviews were well prepared. We had read up on the company beforehand and a questionnaire had been prepared that we used as an interview guide. During the interview, we first asked openly for new ideas and then asked for reaction to 3 ideas we had prepared ourselves. A findings report was written immediately after the interview as we did not want to lose valuable (detailed) information. Finally, afterwards, we sent the interviewees a short feedback with our findings and follow-up actions. This way, we kept them involved and kept the possibility of approaching them again in the future.

The result of the interviews was twofold, no really new ideas received (which would be valuable) but wishes where already being worked on. The organisation's feelers were apparently well-tuned, which is a win: the insight that no important issues were missed.

By sending out surveys

Another way to gain insight into customer needs is by sending out a survey. We applied this to an energy supplier with the aim of finding out what perception existing customers had of Warmte; what they liked and disliked, and what we could do to increase appreciation. After first asking some general questions about the customer and his housing situation, we first asked openly about his wishes and ideas and then "pitched" 3 new proposition ideas.

One of the new propositions was the opportunity to co-invest in a local and sustainable heat generator at an attractive return. However, enthusiasm for this was very limited which was perhaps not very surprising given the socio-economic background of the neighbourhood. However, the municipality we worked with was convinced that such a financial product would catch on and has long pushed for its realisation. Thanks to the results of the survey, we were able to convince them otherwise.

The advantage of a survey over an interview is that you can approach a much larger group, allowing you to draw more reliable conclusions. The disadvantage is that you have less context to the answers and you cannot give explanations or ask questions. We therefore find surveys less suitable for getting really new ideas but more suitable for obtaining background information and testing interest in a new proposition.

Step 2: Elaborate the ideas into a concrete proposition

In the previous blog, we talked about Pains and Gains, what makes the customer happy? Once it is clear where the customer's needs lie, you can work towards a concrete proposition. Here, the Business Model Canvas is a useful tool. An important tip here is not to fill in the model only from your own perspective.

Even if you are very knowledgeable about your organisation, its processes and systems, it is always of added value to have conversations with internal experts from the departments involved. Through these conversations, a fuller picture of the impact of the new proposition is obtained.

In addition, internal alignment has the positive side effect that your proposition idea already becomes known internally and your colleagues can get used to the idea and let it sink in. Our experience shows that a good idea for a new proposition, even if it meets the customer's requirements, is not always enough.

You will also have to manage its realisation internally. For this purpose, it is advisable to draw up a stakeholder analysis that lists the people who should be involved in this new proposition. Either because the new proposition helps them (e.g. to achieve sales targets), or because it costs them time and effort to realise the proposition (e.g. an IT department or the customer contact department).

Our advice is to share the proposition in advance with as many stakeholders as possible to allow the idea to "mature" and limit any resistance (upon implementation).

Step 3: Test the proposition with your customers

Based on the previous steps, you have now worked out an outline of a proposition that, if all goes well, meets a customer need. Before you proceed with building and implementing the proposition (and thus spending time, money and effort), it is wise to first test your elaborated proposition with your (potential) customers. There are several possible methods for this, 2 of which we would like to share with you:

Proposition test through interviews

In this phase, we usually choose to test propositions through interviews. The aim is to ask for an explanation and receive initial reactions from customers directly. There should always be something concrete to test so that you receive very targeted feedback.

For example, we investigated the interest in a separate solar energy product (in addition to the already existing wind energy product) for an energy supplier.

For this, we wrote out the new proposition in a short, attractive, pitch as it could have been on the website. We made this as concrete as possible so including a rate, the ordering process and the most important conditions. We presented this to the interviewees and then asked whether the proposition was clear, attractive, distinctive and what, if anything, should be adjusted.

This gave us very targeted feedback on the attractiveness of the proposition (solar power has higher sympathy than wind power) and what needs to be clarified in the communication (what happens when the sun doesn't shine?).

This method also allows you to test multiple variants of your proposition.

Similarly, we tested whether a combined wind & solar energy product was attractive (no), whether solar energy could be more expensive than wind energy (yes, but preferably not of course) and whether the fact that the solar energy came from the Netherlands was important (yes).

This is a good way to test clarity and attractiveness. Be aware that this does not yet mean that customers will actually buy the product. After all, an interview is not reality; interviewees look at the pitch more consciously and longer and often give a more positive buying signal than is the case in reality.

Proposition test by pretending the proposition already really exists

An effective method is: pretending that the product already really exists. We do not tell the test subjects beforehand that they are participating in a study and let them actually order the new product. This works particularly well online, when only a (random) part of the visitors see the new offer. With an explanation, price and conditions and an order button. Only at the moment after ordering do you inform the customer that it is a survey about a new product. And you can ask some follow-up questions online.

We sometimes get asked whether this does not lead to dissatisfied customers because they do not get the product ordered in real life. However, we have never experienced this. If you explain it well, and make this group feel important, it will not lead to negative reactions.

Be careful not to make the group that receives the new offer too large (to minimise possible loss of sales) but also not too small (because then you can draw conclusions with too little statistical certainty). Depending on the number of visitors on your website, we usually recommend showing 5% a 10% of visitors the new offer.

We would love to hear if these practical guides help you develop new propositions.

Remember, as a solution provider, we at ICE-UP also like to help our clients develop and realise new propositions. Take contact with us if you want to know more about this!

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