VALUE ASSUMPTIONS

Accelerate your business with these expert tips on "Value Hypothesis". Analyse and discover this TIP!

An assumption of value in a new venture is an educated guess or a statement that seeks to respond to a specific need or problem in the marketplace through a unique product or service. This hypothesis is subject to testing through experiments, surveys and data analysis to determine whether it actually solves the problem and is of value to the target customers.

Example of Value Assumptions

• Company: a startup (+) which develops a mobile application to help people find parking in crowded urban areas.
• Market problem: In big cities, finding a parking space is difficult and time-consuming.
• Value Assumptions: We believe that by providing real-time information on available parking spaces nearby, we can reduce the time drivers spend looking for parking in a 50%.

How to Test the Hypothesis

1. MVP (Minimum Viable Product) (+): create a simple version of the application that shows available parking spaces in a small area.
2. Customer Segment (+): drivers in a specific city who regularly have problems finding parking.
3. Key Metrics: time saved in searching for parking, application utilisation rate, customer satisfaction, etc.
4. Experiment: launch the application to a small group of users and measure key metrics.
5. Data Analysis: collect data on the use of the application and see if it meets the initial hypothesis.
6. Iteration or Scaling: Depending on the results, iterate (+) and improve the product or, if the hypothesis is validated, consider scaling up the product to more areas.

By testing and validating its value hypothesis, the new company can make informed adjustments to its product and business strategy, thereby increasing its chances of market success.

HERE ARE SOME PRACTICAL EXAMPLES OF VALUE SCENARIOS IN DIFFERENT SECTORS:

HEALTHY FOOD DELIVERY SERVICE

• Value Hypothesis: "We believe that offering a healthy, pre-packaged meal delivery service will save busy professionals at least 5 hours per week in meal preparation."
• How to test: Create an MVP with a limited menu and offer it to a specific group of professionals. Measure hours saved, customer satisfaction and repurchase rate.

ONLINE LEARNING PLATFORM

• Value Assumptions: "By offering online courses with recognised certifications, we will increase the employability of our users by 20%".
• How to Test: offer a free course with certification. Follow graduates and assess whether they achieve employment more quickly than a control group.

BIKE SHARING APPLICATION

• Value Assumptions: "We believe that by having bike stations every 500 metres in urban areas, we will increase the use of our service by 30%."
• How to Test: implement more stations in a specific area and measure the usage rate over a given period of time.

MANAGEMENT SOFTWARE FOR SMALL BUSINESSES

• Value Assumptions: "We assume that by automating accounting and inventory management, small businesses will reduce their operating costs by 15%."
• How to test: offer a trial version of the software to small businesses and measure the operational costs before and after the trial period.

PORTABLE WATER FILTER

• Value Assumptions: "We believe our portable water filter will allow hikers and campers to access safe drinking water, eliminating the need to carry water bottles."
• How to test: distribute the product to a group of outdoor enthusiasts and measure how many bottles of water they carry on their next trips compared to before.

These examples show how the value hypothesis is designed to address a specific customer problem or need, and how it can be tested to validate or disprove the hypothesis.

IF YOU ARE LOOKING TO DEVELOP VALUE HYPOTHESES FOCUSED ON THE GROWTH OF A COMPANY, HERE ARE SOME EXAMPLES THAT MIGHT BE RELEVANT:

GEOGRAPHICAL EXPANSION

• Value Assumptions: "We believe that expanding into the Latin American market will increase our sales by 25% in the first six months.
• How to test: initiate a marketing campaign focused on Latin America and measure sales and customer growth in that period.

LOYALTY PROGRAMME

• Value Hypothesis: "By implementing a loyalty programme with attractive incentives, we can increase customer purchase frequency by 20%".
• How to Test: Launch a pilot loyalty programme to a segment of the existing customer base and monitor their buying behaviour.

DEVELOPMENT OF NEW PRODUCTS

• Value Assumptions: "By adding a related product line, we believe we can increase customer lifetime value by 30%."
• How to test: develop and launch a related product to a group of customers and measure the change in the customer lifetime value (LTV) (+).

CUSTOMER SERVICE

• Value Assumptions: "Implementing live chat on our website will reduce the shopping cart abandonment rate by 10%."
• How to test: Install live chat and measure cart abandonment rate before and after implementation.

PRICING STRATEGY

• Value Assumptions: "We believe that a demand-driven pricing strategy will increase our monthly revenues by 15%."
• How to test: implement dynamic pricing based on demand and availability and compare with revenues from the same period of the previous year.

UPSELLING AND CROSS-SELLING (+)

• Value Assumptions: "By offering up-selling and cross-selling options during the buying process, we can increase the average ticket by 8%."
• How to test: incorporate up-selling and cross-selling options into the buying process and measure the change in the average ticket.

These value scenarios are designed to address different growth strategies and offer a way to measure their effectiveness empirically.

ARTIFICIAL INTELLIGENCE CAN HELP YOU IN A NUMBER OF WAYS TO IDENTIFY AND VALIDATE HYPOTHESES OF VALUE TO YOUR BUSINESS:

IDENTIFICATION OF VALUE ASSUMPTIONS

2. Brainstorming (+): we can help you generate ideas and possible hypotheses from market trends, competitors, and more.
3. Customer Focus: We can help you structure surveys or questionnaires that you could use to better understand your customers' needs.
4. Review of Ideas: if you already have some hypotheses in mind, we can help you refine them, making sure that they are specific, measurable, achievable, relevant and time-bound (SMART(+), (for its acronym in English).

VALIDATION OF VALUE ASSUMPTIONS

1. Experimental Design: we can help you design an experiment to test your hypothesis. This includes deciding what metrics to measure, how to collect data and how to interpret the results.
2. Data Analysis: Although we cannot process the data in real time, we can give you guidance on how to analyse it. For example, we could tell you how to set up a control group and an experimental group for an A/B test (+).
3. Interpretation of Results: we can help you understand the results of your experiments, including whether the data support or refute your hypothesis.
4. Iteration Strategy: Based on the results, we can provide recommendations for next steps. This could include modifying your hypothesis, running additional tests or deploying a full strategy if the validation was successful.
5. Report Automation: We can give you examples of how to structure automated reports that measure the effectiveness of your hypothesis over time, although implementation would have to be done by a development team or analysts.

In this way, artificial intelligence can act as a complement to your efforts to identify and validate value hypotheses in your business.