Value Proposition and Knowing What You’re Worth: Crash Course Business – Entrepreneurship #3

When we use the word “value,” we’re
usually trying to describe something’s worth, importance, or usefulness to us. I value your opinion. That’s nice. That hat seems like a great value for the
price. Cha-ching! He had nothing of value to say and completely
talked over the professor the whole time. Rude. And when it comes to entrepreneurship, value
is everything. Value is the core of any business, and it
directs all future decisions, innovations, and customers that get targeted. Even if we’ve thought about the big picture,
if we can’t explain how an idea makes someone’s life better, then why should anyone pay attention? So let’s talk strategies to answer the two
fundamental questions at the core of any business model: “What value do I deliver?” and
“Who are my customers?” I’m Anna Akana, and this is Crash Course
Business: Entrepreneurship. [Opening Music Plays] Sometimes business jargon can seem confusing,
but here’s the trick: the words usually have pretty literal meanings. Since value means worth, a Value Proposition
is the worth you offer to your customers. Typically, a value proposition is a sentence
or paragraph that clearly articulates what your service, business, or organization does,
who it brings value to, and why it’s valuable for those people. It should be clear why someone should choose
your company over the competition. Value can be something tangible like offering
products at a lower price or higher quality, or something more abstract like better customer
service. For example, Slack is a messaging app designed
to reduce email and streamline team communication — or, in their words, “make work life simpler,
more pleasant, and more productive.” Slack states the value for the customer right
up front with their value proposition: Be more productive at work with less effort. No matter the business idea, a value proposition
saves us precious time and money. Without thinking about value, we risk developing
something that customers don’t need or want. Cheetos lip balm anyone? No takers? You sure? Alright. And don’t get me wrong, creating a value
proposition can seem daunting. We have to be confident in ourselves and the
work we’ve done to develop our ideas. Anna 1: So… what are you worth? Anna 2: Excuse me? Anna 1: What are you worth? What’s your value? Why should people care about you and your
work? Anna 2: Uh, I guess… I tell stories with my art that help people
find meaning and feel less alone… but also, how do you even judge the value of a movie
or a song or YouTube video or ANY art, you know??? When we write a value proposition, we have
to think about two main things: first, the experiences of our customers and second, the capabilities of our product
or service. If we’ve got those down, it’ll basically
write itself! To make sure we’re covering our bases, we
can use the Value Proposition Canvas created by a company called Strategyzer. Half of the work is understanding customers. Gotta catch ‘em all! And to do that, there are 3 main questions
to ask: Number 1: What are their jobs? And this is a little confusing, but I don’t
mean their literal jobs. More like… what do they do at work and in
everyday life, and what problems do they have? Number 2: What pains do they experience, like
risks, obstacles, or bad outcomes? And number 3: What positive gains are they
looking for and receiving? Everyone is trying to maximize gains and minimize
pains, or at least strike a healthy balance. So we entrepreneurs can try to tip the scales
towards gains. After considering the customer experience,
we can turn the spotlight onto our potential business with 3 response questions: Number 1: What products and services are we
offering customers to help them complete jobs? Number 2: Is what we’re offering a pain
reliever that cuts out risks, obstacles, and bad outcomes? And number 3: Better yet, is what we’re
offering a gain creator? Together, customers and products help us define
our value! So let’s get down to the nitty-gritty details
of writing a value proposition, shall we? In order to figure out the jobs, pains, and
gains of our customers, we have to find them and get nosy about their lives. But keep it professional — this is entrepreneurship! Leave your Facebook stalking skills out of
it. Some might call this research finding your
target market, the people most likely to buy from you. There are lots of ways to connect with potential
customers, but industry favorites include: interviewing them one-on-one, holding focus
groups, or conducting surveys — either in person or through an online service
like SurveyMonkey. Remember, the goal is to learn from potential
customers to turn your idea into a top-notch solution to a problem, whether you’re working on spill-proof takeout
containers or more affordable childcare. So sleuth out the Who, What, Where, When,
Why, and How of your target market. Who do you think or know is experiencing the
problem? How old are they, do they have a family, or
do they speak different languages? Are they a cat? Please say they’re a cat. I understand them. What are they doing when they experience the
problem? Are they working at a desk job, crafting something,
or exercising? Maybe they’re hiding under a blanket away
from the world and their problems until they crumble into dust. Where are they experiencing the problem? Are they at work or at home? On a plane? A train? An automobile? When are they experiencing the problem? Is there a time of day, week, or year? Is it a seasonal problem? Maybe it changes with the phase of moon and
the flow of the tides — we can’t help it when Mercury’s in retrograde. Take it from a Leo. Why are they experiencing the problem? Why are others not experiencing the problem? And, like, why me? Why is it always me??? And, finally, how are different people experiencing
the problem differently? How are they learning to cope with the problem
or develop their own solutions? I mean, ignoring the problem is an option. But, uh, not always the best way to cope. Says my therapist. All these questions paint a picture of who
we’re dealing with, and give us a peek at their jobs. And when we’re dealing with value propositions,
customer jobs can be functional, social, or emotional. Functional jobs are what we’d traditionally
recognize as work that pays the bills. A big mistake when writing a value proposition
is only focusing on the functional jobs of our customers. But customers feel social obligations to look
good or support their community. And emotional jobs are all the work we put
in to grow as humans. The ultimate goal of understanding customer
jobs is to get into their heads. What they do illuminates what they value,
or what they’d like to value. Entrepreneurs want to change the status quo. So if we know what customers value, we can
figure out how to get them what they want in a new or better format. Remember the point of the value proposition:
why should people choose you over everyone else? Disruption is one strategy to give customers
value, and it’s a hot business vocab word. Instead of challenging existing markets and
trying to make our idea stand out in a field of others, why not create a new market (often
called a blue ocean) so our idea is like a seed sprouting a whole new garden? Here, we’re not talking about value that
comes from lower prices or faster delivery — we’re talking about letting customers
achieve the same jobs in a totally new format. Like once upon a time, radio was the cream
of the crop for media in everyone’s home. Radio listeners had two needs: one, to be
entertained, and two, to stay informed. And radio met those needs by broadcasting
different programs, from music to dramatic theater to news. Then, along came television — a new, disruptive
media format that entertained and informed people. Because TV achieved similar customer needs
in a fresh way, TV entrepreneurs didn’t have to compete within the world of radio. They built their own world, created new value,
and maybe even found new customers who weren’t interested in radio at all. Of course, we know jobs don’t come without
pains. We’re all human. The struggle is real. So when we think about our customers, we need
to consider what risks or annoyances are getting in their way. If we can address those pains, that means
we’ll create a better business with more value. If a customer’s job is applying to college,
some pains could be: the clunky admissions website from 2002, application fees and tuition
costs, a lack of family support, or the trade-off
between working to earn money now and shelling out money for another degree. And customers wouldn’t do jobs at all without
gains, which tell us what they need or want to experience before or after a job. Sticking with that college application example,
the gains might be: better career prospects, a higher salary after graduation, exposure
to new thoughts and ideas, a fresh start, or new friends. Now how are you going to help them – product Now that we’ve researched our potential
customers, we’ve filled out half of our Value Proposition Canvas. Or you can sort all that knowledge with one
of those conspiracy investigation walls with pushpins, multiple colors of string, and newspaper
clippings. You do you. It’s your value proposition. Using all this info, we can prune our big
entrepreneurial idea to make sure our products and services are truly alleviating pains,
creating gains, and adding value to people’s lives. Once we’ve done this, our value proposition
will be flourishing. To see how, let’s go to the Thought Bubble. Stitch Fix is a personal styling service that
sends clothes and accessories to people. It has customers all across the U.S. and soon
across the U.K. Those customers have many jobs to do, but
an obvious one is to shop for clothes. Let’s think of Stitch Fix customers as busy,
technology-savvy people ages 25-50 living in the U.S., of all genders, and working across
all fields. And they’ve been willing to consistently
spend some money on fashion. They might be pained by lots of things, like
no time as they try to juggle work and family, a limited budget, living far from clothing
stores, or having no idea what their “body type” is. Pear? Apple? …Pineapple? After exploring their target market, Stitch
Fix offers pain relievers like a mobile app for convenience, different packages for different
budgets, doorstep delivery, an easy return system,
and personally styled wardrobes for different body types. Now, these customers might shop for clothes
because they want gains of looking good and feeling confident in and out of the workplace. So Stitch Fix wants to deliver that gain. But they also create new gains using technology,
like their surveys for measurements and preferences, algorithms, and personal stylists to help their customers
feel good about the clothes they get and save time by not wandering around a mall. Combining all this information, Stitch Fix
came up with the elegant value proposition: “We save our clients time by doing the shopping.” If we were to get a little more detailed for
them, we might say, “Stitch Fix leverages technology to save working clients time by
using personalized measurements, preferences, and stylists to shop for clothes, which are
delivered straight to their doors.” Thanks, Thought Bubble! After all this thinking and research, our
value proposition is done. So when you’re asked “What are you worth?”,
squish down that panic. You put in the work, so show ‘em what you’ve
got. Anna 1: So… what are you worth? Anna 2: My audience values entertainment and
authentic connection. So I use writing, acting, motion graphics,
and music to tell stories that make people feel less alone and highlight the complexities
of the human experience. Also cats. Today, we learned about value and how customer-driven
thinking can help us show off what our business has to offer. By understanding customer jobs, pains, and
gains, we can make sure our products and services alleviate pains or create gains. And then — boom — we have a value proposition,
a statement basically saying why we’re better than anybody else. Next time, we’ll target the competition. Well, not target them like in target practice. But we will talk about how to figure out who
you’re competing with in this entrepreneurship arena, and what can be learned from observing
them. Thanks for watching Crash Course Business, sponsored by Google. And thank you to Thought Cafe for the graphics. If you want to help keep Crash Course free
for everybody, forever, you can join our community on Patreon. And if you want to learn more about how to
collect data to understand people, check out this Crash Course Sociology video about research

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38 thoughts on “Value Proposition and Knowing What You’re Worth: Crash Course Business – Entrepreneurship #3

  1. Value change overtime even if not edited in writings, lots of companies end up saying they value their customers, but end up having way too many to actually care for each one, or make a change that is asked but could represent some risks

  2. I don't think it's a good idea to put astrology in Crash Course. I don't know if it was meant as a joke or not but comments about astrology were made both here and in the Soft Skills course, and I think with the kind of audience you have it would be better not to spread wrong information about the universe we inhabit.

    I love Crash Course, I have watched pretty much every course and I support it on Patreon. This is meant only as constructive criticism. Thanks for all the work you do!

  3. If I'm being honest, the teenage meme type jokes and one-liners don't appeal to any age group. I've had a few of these videos shown in class throughout high school, and not even my freshman class got any laughs out of it. It just seems forced and bland. It's like your grandma trying to joke about sewing. I love CC and just want to see it improved.

  4. Truth is I've been consumming content on value proposition since 2015 at least. This one is definitely one of the bests, the very bests. Thank you Anna! Thank you to all the team @crashcourse for the great job so far.

  5. Talking about value, I once worked out that there's three reasons for anything to exist.

    First is that it's necessary. If you don't do it, nobody else will. This is the reason why you can't be too hard on microsoft for still existing. A lot of people are stuck using their products and if they don't make them those people are kinda screwed.

    Next up is that it's cheap. It might not be good but if it's good enough and people can actually afford it (and you can afford to provide it) then it still has value.

    Lastly is that it's the best. Luckily, this can be subjective and all art is intrinsically the best because it's art and if somebody likes it then it's done its job.

    So when you're wondering if something is worth doing just wonder if it satisfies (or could satisfy) any of those and if it doesn't then it sounds to me like you've got yourself a hobby. If it's a job then either do something to get to one of those three or just stop.

  6. There is a little error, the value proposition canvas whas not invented by strategyzer, instead who invented it whas Alexander Osterwalder the same that invented the business model canvas. Sorry for my english, greetings from Uruguay

  7. Very nice video. The challenge for many entrepreneurs is that they have what I call an "inside-out" perspective. They try to look at the world and impose their views on it. A better way is to have an "outside-in" perspective. To get their customers to impose their needs on the entrepreneur. The entrepreneur then looks at the needs and determines what would bring great value to some set of customers.

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