Step-by-Step Instructions

Currency Testing: Will customers pay for a solution?

In this chapter I will explain what I mean by currency testing and tie it into the complete picture of the process of building your business.

Let's start where you've come from:

In Finding Early Adopters, you were answering the question: Is there a problem to be solved? Were there customers you wanted to serve, who were actively trying to solve a problem?

In Offer Testing, you answered the question: Are customers ready for you to solve the problem? By optimizing your marketing message and channels, were you able to find enough Early Adopters curious about a solution to the problem, that you have high confidence you'll be able to achieve your Victory?

In the Currency Testing phase of your development, you will ask: Will they pay for a solution? 

More importantly, will they pay enough for you to achieve your Victory?

---

Another way to look at Currency Testing, is the Reverse-Field-of-Dreams-Strategy.

It's tempting to fall under the allure that great products sell themselves; that "If you build it, they will come."

FOCUS is about turning "If you build it, they will come" on its head.

Currency Testing is where this idea really comes to life. In fact, we're going to change this paradigm completely.

If they come, you will build it.

Here you are going to determine, if it's actually worth building this grand vision that you have?

At the end of the day, you are answering the question:

Will customers "pay" enough for you to achieve your Victory?

Now, "pay" is in quotations because not all businesses are focused on money as their main form of currency. Currency may mean any number of things, depending on the structure of your business.

For example, in two-sided markets, where there are multiple types of customers that need to come to the table simultaneously to solve a problem, not everyone is "paying" with money. Take AirBnb where the renters pay in cash, while the home owners' currency is "usage" (e.g. using the AirBnb platform to post pictures of their places, responding to renters, etc.). Another example, Uber riders pay with cash, but the drivers again pay with usage.

Interestingly, Craigslist, another two-sided market, has both buyers and sellers, neither of which "pay" Craigslist with money - they both pay usage currency (i.e. sellers "pay" by posting ads and buyers "pay" by searching the ads).

So what are all the different ways to think about "paying?"

What is Currency?

Currency is anything that will help you achieve your Victory.

What are some examples?

• Cash: If a customer gives you money for your product or services, it's likely that currency will help you achieve your Victory.
• Usage: A customer can pay with their usage of your product. For example, if you are ad-based, the more "usage" customers give you, the more ads you can show them. This is another example of a two-sided market as one set of customers pay with usage, and another set of customers, the advertisers, pay with cash. Facebook, Google search, ad-based apps are all great examples of this.
• Attention: This is similar to usage. TV advertising or YouTube advertising is a great example of "attention" as currency: the more attention someone gives you, the more ads you can show them.
• Data: Sometimes you can achieve your Victory by collecting data about a specific group of people; data like contact information, spending habits, DNA or other information that is useful for your business model. You can either resell this data to others, or you can use it to achieve an impact-oriented Victory (e.g. reduce the spread of a disease, increase access to education, etc.).
• Referrals: Customers can "pay" you with referrals to other customers, for example if you offer free usage in exchange for telling their peers about your service. Any time you've shared a coupon code with your friends (e.g. Uber, Lyft, Groupon, etc.) you "paid" the company by sharing their product with others. Referrals are another form of currency.
• Evangelism: Similar to referrals, product evangelism may look like a testimonial or an enthusiastic, targeted referral - these are extremely valuable for B2B sales. If someone is excited about your product, it may be valuable to you because it can help you get through the red tape.
• Approval: Again, in the enterprise space, getting a decision maker's approval is currency in-and-of-itself. Even if that approval doesn't directly lead to a sale, you will often need a series of approvals to move your product through the sales cycle (e.g. IT Director's approval, Sales Manager's approval, etc.). It will be helpful to think about these approvals as currency as well.
• Leads: Opportunities to connect with new customers or segments and chances to expand your reach could be a very important form of currency.
• Press: If someone in the press is able to provide you with notoriety, publicity, or - again - expand your reach, this is also valuable.

You may notice large, successful businesses leverage many different sources of currency.

Facebook for example leverages multiple forms of currency: from users they get usage, attention, which generates tons of data, all of which they trade to advertisers in exchange for cash.

Over time, your company will also generate multiple forms of currency; but at this stage, at the beginning, you want to make sure you are focused on the right type of currency.

It can be very tempting to go grab anything that looks valuable, but not everything will be actually valuable to helping you achieve your Victory.

What is NOT Currency?

Very simply:

Anything that will not help you achieve your Victory.

Of all of the things that we mentioned above, each of them - in your specific case - could be currency or could not be currency.

For example, if you are running a non-profit and someone wants to give you money, it could be tempting to get distracted by the idea of turning your project into a for-profit venture. But this is not your Victory.

Keep your eye on the prize.

Same goes with usage currency. If getting a bunch of people using your product is not going to lead you directly to your Victory, then it is not useful currency to you.

Heads Up: If you're considering a Freemium revenue model, you are falling in the trap above and confusing usage for currency.

Freemium models trying to drum up usage by giving a product away for free, yet ultimately their Victory demands they generate cash currency. More on this in future exercises, but freemium isn't a business model, it's a marketing tactic. It can be a very successful one, but it's best used once you've proven you can generate your Victory currency as a scaling tactic.

You will have many opportunities to get distracted by false currencies.

The more people you talk to you about your product, the more different suggestions you'll get about how to generate some "currency." The trouble is, very few of those currencies will lead to your Victory. In fact, the more successful you get, the more distractions there are likely to be.

Stay focused on the currency that will lead you to your specific Victory.

What's Next

In this workbook you will answer two important questions:

1. What are your most valuable currencies?
2. Will customers pay enough of that currency for you to achieve your Victory?

In the chapters that follow, you will learn:

• How to run currency tests
• How to optimize your currency
• What to do if you are not getting the numbers you need to achieve your Victory

Next up, defining your Victory currencies...