The Quickest Way Entrepreneurs Can Measure the Value Of Their Product
Why Teaching Startup uses a bit of anecdotal data to measure progress
Over the last decade of my startup career, after learning lessons from a couple of windfall exits, I’ve become a huge proponent of something I call “value entrepreneurship.”
That’s not “value” as in discount, and it’s not “values” as in ethics. It’s actually a pretty simple concept in theory: Develop an offering that delivers more value to the customer than the price you’re asking them to pay, then make a market out of those customers. Then it’s like arbitrage and everybody wins.
That’s theory. In practice, value entrepreneurship can be maddeningly difficult. In order for value entrepreneurship to work, your startup has to offer the perfect packaging of the perfect features at the perfect price and cost. “Perfect” can be a relative term, and it becomes more relative as you add more customers.
So how do you measure something like that? How do you know where your priorities are, what comes next, and who you need to be selling to?
The best way is data — if you can get it
Make no mistake. I’ve been a true-believer in data longer than I’ve been a value entrepreneur. When your product has been on the market long enough that you can get an accurate cost to acquire a customer (CAC) and lifetime value (LTV), you’ve got a sound basis for most decisions regarding feature set, price point, and marketing channels.
Quantitative sales data, when you have it, will always trump anecdotal and vanity data. But if you don’t have quantitative sales data, and even if you do, there’s one anecdotal metric that can shine a light on the path to value.
How often are your customers and prospects thanking you?
It sounds so simple, but there is no greater sign of value or respect than a customer who pays for your product and also thanks you for it. I don’t mean telling you they like your product, or telling Twitter how awesome it is. The words “thank you” imply that you’ve done something they needed or wanted, something valuable.
And when they tell you why they’re thanking you, the value of that anecdotal data evolves from nice-to-have to super useful.
How to use thank you data
I originally started tracking thank yous as validation of a personal mission, and it was only later in my career that I realized how useful they were in terms of learning where value was discovered.
More recently, I started tracking thank yous as soon as the first version of Teaching Startup hit beta. There are no hard and fast rules — it could be thanks for great customer service or thanks for a particular bit of advice or an answer to a question.
But the most important data is thanks for the product itself existing at a time when the customer needed it and there was nothing else like it out there. When those come in, they usually have a reason attached that I wasn’t even thinking about, or describe the product’s value to the customer in a way that a million marketing professionals couldn’t invent for me on their own.
Most importantly, they tell me where my market finds the product to be worth more than they’re paying for it. That’s where I prioritize until the data tells me something different.
Start a quick document or spreadsheet and take the time to record when your customers thank you and why. When you do something that a customer or prospect thanks you for doing, do more of it.
Teaching Startup will lead you to answers and advice that are a bit more objective than this post. We’ve got answers to dozens of real-world member entrepreneur questions covering leadership, build, sales, operations, and growth. You can try Teaching Startup for free for up to 30 days to discover if it provides the value you need.