Now let's take a minute to prioritize needs, solutions, and value-adds. Reference the Value Map Part 1 that you just completed. We are going to use the needs, solutions, and value-adds that you were able to connect between your customers and your business. The only needs, solutions, and value-adds that we are going to use now are the ones that you drew a line connecting in the last exercise. If you offer it, but your customer doesn't want it, then it can't be used in part 2 of the value map. The same applies to customer needs and both of your value-adds.
Start with the upper land hand box and begin ranking the customer's needs based on how much it will increase their willingness to pay. Look at the Value Stick in the middle of the page; what needs that the customer has do they want to solve the most? The top end of the Value Stick is Customer Willingness to pay; the more a customer wants a solution, the more the company can charge and the higher the margin is. Rank the customer needs starting with the needs they will pay the most to have met and work your way down to needs they will pay the least to have met. We are not asking what costs the most; we are asking what the customer wants the most.
Now do the same thing with customer value-adds in the bottom left-hand corner. What extras does the customer want that would increase their willingness to pay? Rank the value-adds from top to bottom, with the most valuable at the top.
Now we are going to add one more dynamic to the business side that will make it slightly more complicated. We are going to rank your business's solutions on two factors.
Factor 1 - What solution are your customers most willing to pay for? This is a different question than what costs the most. We are asking which of the solutions you offer are your customers the most willing to pay for.
The first factor, your customer's willingness to pay, is the most important. So start by listing your solutions in the top right-hand box in the order that mirrors the top left-hand box. List the solutions customers will pay the most for at the top and the solutions they will pay the least for at the bottom.
Factor 2 - What solution costs your business the least to offer? (cost = fully weighted per unit cost when sold at a reasonable scale).
Now rearrange your list as needed to reflect both factors. It will be helpful to print out or draw a partial value stick to simulate the cost, price, and customer willingness to pay for each solution. Now your solutions should be ranked with offerings that the customer will pay the most for and cost the least to offer at the top. The solutions customers will pay the least for and cost the most to produce will be at the bottom.
For some businesses, the second factor will not affect the order of their solutions. Other businesses might discover that they haven't been prioritizing their most valuable offerings. We know that there are lots of factors that can affect the unit cost of an offering, so this isn't a science. Use your judgment and experience to guide how you order the list of solutions.
Now your solutions list should be a direct reflection of your most valuable offerings in order. The most profitable solutions are at the top, and the least profitable at the bottom.
Now repeat the same process for your value-adds in the bottom left-hand corner. What value-adds are most valuable for your business to offer?
Keep reworking the list until you have an order of priority that you feel is accurate.
Now let's take a minute to prioritize needs, solutions, and value-adds. Reference the Value Map Part 1 that you just completed. We are going to use the needs, solutions, and value-adds that you were able to connect between your customers and your business. The only needs, solutions, and value-adds that we are going to use now are the ones that you drew a line connecting in the last exercise. If you offer it, but your customer doesn't want it, then it can't be used in part 2 of the value map. The same applies to customer needs and both of your value-adds.
Start with the upper land hand box and begin ranking the customer's needs based on how much it will increase their willingness to pay. Look at the Value Stick in the middle of the page; what needs that the customer has do they want to solve the most? The top end of the Value Stick is Customer Willingness to pay; the more a customer wants a solution, the more the company can charge and the higher the margin is. Rank the customer needs starting with the needs they will pay the most to have met and work your way down to needs they will pay the least to have met. We are not asking what costs the most; we are asking what the customer wants the most.
Now do the same thing with customer value-adds in the bottom left-hand corner. What extras does the customer want that would increase their willingness to pay? Rank the value-adds from top to bottom, with the most valuable at the top.
Now we are going to add one more dynamic to the business side that will make it slightly more complicated. We are going to rank your business's solutions on two factors.
Factor 1 - What solution are your customers most willing to pay for? This is a different question than what costs the most. We are asking which of the solutions you offer are your customers the most willing to pay for.
The first factor, your customer's willingness to pay, is the most important. So start by listing your solutions in the top right-hand box in the order that mirrors the top left-hand box. List the solutions customers will pay the most for at the top and the solutions they will pay the least for at the bottom.
Factor 2 - What solution costs your business the least to offer? (cost = fully weighted per unit cost when sold at a reasonable scale).
Now rearrange your list as needed to reflect both factors. It will be helpful to print out or draw a partial value stick to simulate the cost, price, and customer willingness to pay for each solution. Now your solutions should be ranked with offerings that the customer will pay the most for and cost the least to offer at the top. The solutions customers will pay the least for and cost the most to produce will be at the bottom.
For some businesses, the second factor will not affect the order of their solutions. Other businesses might discover that they haven't been prioritizing their most valuable offerings. We know that there are lots of factors that can affect the unit cost of an offering, so this isn't a science. Use your judgment and experience to guide how you order the list of solutions.
Now your solutions list should be a direct reflection of your most valuable offerings in order. The most profitable solutions are at the top, and the least profitable at the bottom.
Now repeat the same process for your value-adds in the bottom left-hand corner. What value-adds are most valuable for your business to offer?
Keep reworking the list until you have an order of priority that you feel is accurate.