A product-led go-to-market aims at helping a business grow at a low-touch, hands-off manner. While this is the best thing that you can do for your business, it also holds some risk: are your website and product ready to be under so much pressure for delivery?
Bridging the Value Gap will help you get ready for a successful Product-led transformation or will optimize your existing Product-led Go-to-Market.
9/10 software companies suffer from the same problem: the Value Gap. The Value Gap is the discrepancy between what users expect and what they actually experience and can be caused in lots of different ways. In this talk, we will deeply explain what the Value Gap is and how can we close it. After the talk, you will be able to:
Understand why your marketing campaigns do not work as expected
Figure why your churn is high
How can you attract more users that will become power users instead of churned users
Ramli John:
Hey everybody. I am excited to have Aggelos here, He is the growth product manager at Growth Sandwich. And he's going to be talking about the value gap today. I'm super excited. But, before we do we jump into that, how's it going Aggelos? How's your afternoon going?
Aggelos Mouzakitis:
My afternoon is, as we were discussing before, is busier than expected, on a pre-Christmas period. So I'm kind of freaked out by that. But yeah, hopefully we will find some chilled days to relax before this damn year ends.
Ramli John:
It's almost over man. Everybody was talking about how crazy this year really has been. But, one of the things you said, I love asking questions about something you're passionate about. And you said that you do road trips with a caravan. What is that about? And I'm curious what your favorite road trip has been so far?
Aggelos Mouzakitis:
To be honest, I'm a road trip amateur, so my answer won't be that exciting. I haven't road tripped to Costa Rica, for example. But I was living on the border between France and Germany a while ago. So I would say one of the best road trips, if someone likes to do road trips is the mainland of France, especially if you're a wine lover or a cheese lover. The mainland of France is very versatile, and 10 times better than Paris, my view.
Ramli John:
Okay. I've never actually been through Europe. My wife and I were supposed to do some traveling before this whole craziness happened, but I'll make sure to make a trip there. I love wine. Let's jump and talk about you. Can you share a little bit about how you became the growth product manager at Growth Sandwich?
Aggelos Mouzakitis:
Absolutely. So originally, I was a marketer. I was a traditional marketer before the days of growth, before all the things that we are working on discussing nowadays. At some point I started realizing that my marketing, the same marketing, the same quality of marketing that I used to do wouldn't work as much and as well as it used to work. And that led me to product realizing that the core of a go-to market strategy is the product itself. And that led me to research because in my view, even small businesses, even a small startups nowadays, they need to be surgically accurate in what they do.
Aggelos Mouzakitis:
And one of the best ways to do that is to be research driven. So I was working for a big corporate as a marketer. I had freaked out a little bit by the corporate culture there. And I started my own business, Growth Sandwich. It's been four crazy years, not years with the expectations that I had that I would work from exotic places all around the world and stuff and it would be very fun and crazy, but still very good years full of research.
Ramli John:
Okay. Very research focused. And I think that fits right into what we're going to be talking about is about, I feel like user reach is a big part of that. You're going to talk a little bit about what it is and why companies go through that. Did you want to jump into that or whatever your topic is or your presentation is about?
Aggelos Mouzakitis:
Okay. Yeah. There is a very big problem in the market and a very frequent problem that I'm experiencing, and this problem is called a value gap. So what is the value gap? The value gap is the discrepancy between the perceived value and the actual value in a few very simple words. It's when users expect something, but they experienced something different and it can be beautifully represented by two circles, semi circles that don't breach the one to the other. So the value gap isn't a very complicated problem, but it can be caused by lots of different reasons. And in most cases, founders and social companies do not realize that they have a value gap problem, but they see the result of it, a symptom. So random symptoms, your performance campaigns are not performing or not going well, or your conversion rate is low.
Aggelos Mouzakitis:
And pretty much these three problems are covering the whole funnel. But if for example, you misrepresent your solution and you have a fuzzy and confusing positioning that leads users into your software with the wrong expectations, that might cause drop into the conversion rates and an increase in churn. On the other hand, if for example you undersell your solution, but your solution is a way better than the way that you are selling it through your digital assets that might cause struggle into bringing your users in your ads. Your campaigns are not really performing, but on the other hand, you seem to have happy customers. That's a very common thing that happens to me. A client comes to me and tells me, "Hey, we cannot bring more customers."
Aggelos Mouzakitis:
And we don't know why, because we have happy customers. We have a good product and other very common thing. You oversell a product. Well, that's also very frequent. So you have amazing landing pages and call to actions and homepage and great copy, but the actual product doesn't deliver upon expectations. And in that case, the value gap is expressed through again, churn or a lower conversion rate. So the value gap most in most times is expressed in different ways. And one of the biggest problems is that if we do not identify it early, and if we treat the symptom, then we just spend money. We just burn cash.
Ramli John:
Interesting. You're burning cash here between those symptoms incorrectly. Let's talk about how to fix that then, like we've talked about now, don't just focus on the symptoms. What should companies be doing to try and get out of that problem? You mentioned they have happy customers and they're having a hard time trying to get customers out the door or the other one where like, you're overselling something that's bad, but you have some customers that are paying for it, but you don't really know that you're overseeing it too much. How do you fix that value gap?
Aggelos Mouzakitis:
Let me actually share my screen to show you something for the people that are listening, I will describe it as best as possible. Oh, actually you can see my Slack now. So can you see my screen?
Ramli John:
Yes.
Aggelos Mouzakitis:
Perfect. This is a Value Gap Canvas. So what you see here is on the left side, there is a circle that represents the expected value. And then there is another circle, semi circle, that overlaps the first circle, but this is the experienced value. So you can name it the way you want, expected value it can be, I expect the best solution in the world or expect not something very cool, or I just expect something different than the thing that you deliver. So it can be either better, worse, or just different. On the right side, we have the experienced value, which is your product, the value that your product is actually delivering.
Aggelos Mouzakitis:
When the expectations of the user do not match the actual experience of the user, then we have a value gap. Now, how can we fix that? And how can we identify it first before we fix it? The way that we identify the value gap typically, if we are not a research driven business already having the setup and the research projects in place to reveal that there is a value gap, typically, we experienced the problem, the symptom. So we might have a low conversion rate and a churn, but our performance campaign is performing like a charm or the opposite, not being able to bring new customers. But on the other hand, actually having a product that has managed to find product market fit, we have a segment with a reasonable segment of the market. So there's antithesis between what's happening on our acquisition.
Aggelos Mouzakitis:
And what's actually happening into our product from the perspective of growth metrics actually reveals the value gap. Now, can we actually bridge the value gap entirely and simply and practically, can we have fresh users expecting exactly the same things that power users are reporting that they are experiencing? No, we cannot have fresh users that are saying exactly the same thing are as our power users. Why? So, because of that fresh user always comes with some biases from the past, they have experienced other solutions or similar solutions or competitive solutions. When they join our solution, they might be influenced by something else, or they might be influenced by their subjective biases. On the other hand, power users are sophisticated within our product. They know our product in and out. And in lots of these cases, power users discover new use cases of our product, which fresh users cannot.
Aggelos Mouzakitis:
We cannot expect them to know them in advance. Let me give you an example. Slack. Slack is now used for communities as well. Can we expect from a fresh user of Slack that has no idea about communities to expect to build a community from Slack? Not really. What we can expect from a fresh user that joins Slack is to expect an easy, straightforward, simple communication with his team. A realistic expectation that actually Slack can deliver upon. If a fresh user expected something totally different from Slack or Slack would confuse fresh users into expecting a different value proposition or a slightly different value proposition, then the metrics, the growth metrics and the products metrics of Slack wouldn't be the same. Is that clear?
Ramli John:
Yeah. Super clear. It makes sense.
Aggelos Mouzakitis:
Even though I didn't answer you how we fix it?
Ramli John:
Yeah. It makes sense.
Aggelos Mouzakitis:
I explained to you how we identify it, but how we fix it, there's a different story and how we fix it is a matter of comparison. It's a matter of comparing data and comparing evidence. And what I mean by that, we have different touch points with customers and users. The first physical or digital touch point is when users come in with theirself or they sign up. And it's the first time that we get to have an interaction with them. The second very important touch point that we have with a user is when they live. At this point, we might have customer success speaking with them, or we might actually have a cancellation experiences that asks them why they're living. In the middle, we might have some interactions with users if they have problems, or if we are a research driven business and we want to have some research.
Aggelos Mouzakitis:
Now, the way to fix the value gap is basically by comparing what power users are saying, establish what needs to be the value proposition that users need to perceive, and then comparing that with what fresh users are actually telling you and why. So if you speak with 10 or 20 power users and they tell you, I expect an orange, and then you speak with 20 fresh users and half of them tell you, I'm actually expecting lamp, we have a problem Houston. And when you realize that you have people living and churning here out or not never activating because they were expecting chicken and you gave them an orange, then you have a problem, Houston. So by setting up evidence sources, either through user interviews or through qualification questions and cancellation service, and being into the mindset of comparing what people expect and what they get and how they report it is the basis, the high level basis of fixing and bridging the value gap of trying too much what users tell you that they expect and what they actually get.
Ramli John:
That's good. That makes a lot of sense. You're getting data, what are you expecting? And what are your power users actually using or realizing the value of your product? And if they don't match, then you do have that gap. So that's a way to gather data, to identify that, let's say you do find a mismatch, what your fresh users are expecting versus what your power users are actually experiencing is different. What do you do? What's the next step after that, once you figure out there is a gap?
Aggelos Mouzakitis:
You fix it. That might initiate a slight repositioning, or that might initiate and retargeting. So the value gap isn't only a matter of you presenting your solution in a different way. It might be a matter of focusing on the wrong people. So bringing their own people in that are wired with different expectations, but want two different things. For example, I stretched it to make my point by telling you about lamps and oranges. But in reality, we have industries that differences are not that distinct. We have, for example, the collaboration vertical of software, we have dozens and hundreds of solutions that are doing almost the same thing. And all of them have a small difference, the one with the other, and they kill each other into competition. So all of these solutions are trying to find their niche or trying to find the segment that their value proposition becomes a priority for users.
Aggelos Mouzakitis:
But sometimes they fail to do that. They fail to explain how they are different and why they are good. So it's more subtle than oranges and lambs. But yeah, if people do not understand what is your main value proposition and what differentiates you and why you are good, it's either because you are not as good as you think, or because you don't present it the right way, or because you focus on the wrong people. So when you identify it and you ask why through research, you get some reasons, and these reasons initiate projects, either that is features, either that is positioning or that there's different type of marketing. I don't really know because it's a problem that can be expressed, as I said, across the funnel in different ways. So there is no silver bullet to fix the value gap.
Ramli John:
Interesting, that makes a lot of sense. What do you do in a case that you're intending your product to be something you position in this, and then you find out that people are using it for something completely different now, like you mentioned Slack where this is a messaging tool, but now communities are built upon that. That wouldn't be a gap per se. Would you say that? Or is that something that you kind of roll with and launch a completely different positioning and landing page for that new use case? Let's stick with Slack, should they do landing pages for communities that are built on Slack?
Aggelos Mouzakitis:
That's an amazing question. And I know why you were asking me that because your experience is mostly focused into that part, into the repositioning through research, and we come from similar worlds on that. And I have been involved in such projects and there are actually cases where a solution builds a product, a company builds a product, and then we might have some research on power users and realize that the way that they describe the product or the use cases that they have actually are different. And that might again initiate a repositioning. That is again, a value gap issue. And why is that a value gap issue? Because we are not aligning our thoughts of value proposition. We are aligning the whole business with what our power users are saying.
Aggelos Mouzakitis:
This is pretty much what we are doing again, but in that case, it's not us that decide what is right or wrong for the users to [inaudible 00:00:18:40]. And I have been in similar projects. Although, sometimes it can be tricky because again, if you are lucky enough to do your research and find out that the vast majority of power users are using software in a totally different way than things are simple, you have your answer, you deliver it, you have done your job well, but sometimes things get a little bit more complex because you might realize that there are a lot of different use cases. And some of these people pay, some others don't want to pay. Some of these people want features, some other people want different features. So it's a very delicate balance between picking the direction of the business that actually has financial benefit without giving a product direction that will follow you in the future. I know I haven't explicitly answered how you do that, but just to sum up, this is also a value gap issue just from a different angle.
Ramli John:
That's really fascinating. It seems like you can fix the value gap. And then all of a sudden, like a few months later, it's a new totally value gap that you haven't experienced, just because users are using it for a different purpose. It's really good.
Aggelos Mouzakitis:
Definitely. And the example that we were discussing with Slack, as we discuss about Slack, because Slack has a more disruptive approach in the market. It actually started as a disruptive tool and now tends to become a dominant tool. So every dominant tool in the market attracts everybody. And as a result, it's very natural that it will have lots of different use cases because it's not yet a tool that changes the industry. It has already changed it and it's mainstream. So it has lots of different use cases. Just the way Trello's working. Trello is also used as a product road mapping tool, as a project management tool, as a sales CRM. It's because it's a dominant solution in the market at the moment.
Ramli John:
I'm laughing at what you said about Trello, because that's literally what it do it. Like when I write, I use Trello to organize my thoughts when I'm project managing, I use Trello. It's totally funny. We've talked about this concept of value gap. And I haven't really asked you how big this problem is. I think something that you told our team is that it's nine out of 10 companies that you work with has this problem. How big is the value gap problem? Like how many companies have you worked with where oh, that's the reason why this marketing or that tactic, or you're not acquiring user conversion sucks is because you have this value gap. How big is that problem?
Aggelos Mouzakitis:
Literally 95%. And let me explain what I mean. Most businesses it's either that, or my confirmation bias or I attribute everything to value gap. But most businesses that I happen to work with come with a request. They tell me, we want to become product [inaudible 00:22:00], or we want to improve our acquisition, or we want to reduce our churn. That's when I realized there is a misalignment between what they say and what they deliver. And we are discussing it loud. Like it's a very specific problem, but we are not discussing a very specific problem. We are discussing a very huge problem, which is universal is that you have something, but you sell it in the wrong way or the opposite. This cannot be 95% of the business problems out there. But the thing is how you approach it.
Aggelos Mouzakitis:
If you realize that the reason you have churn is because of that, or because you don't have a good cancellation experience and you need to hire a churn expert to tweak your cancellation experience, the second might be a symptom treatment, and that might just push the problem further, but not eliminate it.
Ramli John:
That makes sense.
Aggelos Mouzakitis:
The most common thing actually is the opposite. These companies might suffer from low performance in their acquisition campaigns, and they hire an ads agency, a performance ads agency, and they just spent six months burning cash until they realized that it wasn't the ads. It was something else.
Ramli John:
Interesting. So 95% of the companies you work with has this problem. What is the 5% doing? Like tell me about the minority companies that you work with, who were like, oh, there's no value out here. What are they doing differently that resulted in them not having this kind of a problem?
Aggelos Mouzakitis:
The businesses that do not have that problem, they are either lacking and it happens. So they had an amazing idea. They implemented it at the right timing and they managed to describe it in a simple way. They managed to overcome the being too close to the product disease. Therefore, I'm describing it in buzzwords. So they managed to overcome all of these typical problems and they succeeded, or they are customer led. They are research driven, they have empathy, and they treat research as something important within their operations. So few companies that I've worked with didn't have that problem, the value gap. And it's because they were doing their homework when it comes to research or they were just like ...
Ramli John:
Oh yeah, let's talk about the research. You mentioned that earlier, how often should they be doing research, and what's involved in that? Like, some people say, oh, I can just sign a survey and I've done my research. Do you agree with that? Like certain situations where surveys are okay and certain situations where you do have to talk to the customers, what would you suggest to companies about making sure that they're doing the research so that they don't get this value gap?
Aggelos Mouzakitis:
Every research tactic has its role and its place and its timing. And ideally, you don't want to stick to one research tactic. It's not all about surveys. It's not all about interviews. And it's not all about data analysis, not all about qualitative or all about quantitative. My view on that is that businesses need to, at first, they need to know what they don't know. And as soon as they have the awareness of what they don't know, the first thing before they start any research, before they hire any researcher, before they outsource any research is just to take advantage of the existing digital and physical touch points to perform subtle research. For example, you might perform demos, use the first five or 10 minutes to do some questions, work on these questions. And that's why you might do constellation interviews. Or you might just genuinely want to speak with customers that are important for you and they canceled, use this opportunity to ask them a couple of things.
Aggelos Mouzakitis:
On the other hand, digital touch points. You have some bandwidth for friction during the onboarding, you can deliver a qualification page asking a couple of things. How do you identify? What do you expect? What is your role within the business? You have some bandwidth there from the perspective of the user, ask it. Then on the other hand, you have some bandwidth when they cancel. Ask something, treat this whole thing as one project, consider, I have people coming in and then coming out, it would be great if I could have data here, data here, and data there so that I could have a bigger picture of the journey of the user. So this is, in my point of view, the biggest advice on how to do that, how to solve that. And the second one is asked quite a bit.
Aggelos Mouzakitis:
The second major problem that I encounter is that a company stake users and customers answers at their face value. For example, why are you churning? I'm not using it anymore. Or why are you churning? Because it's too expensive. Too expensive compared to what? You're not using it anymore because of what? You used to use it, now you don't. What happened? So just performing changes with face value feedback, like it's too expensive. Okay. Let's reduce the price, might actually cost you more than performing a little bit of research. So ask why and treat your digital and physical touch points with customers as a whole, and as research opportunities.
Ramli John:
So good. Yeah. That's such good advice in terms of that. As I wrap up, like all of this, we've talked about so many things so far about the value gap. If you can summarize what we talked about, or you can even share any other piece of advice that you have, what would be one or two pieces of advice you'd like to share with the product-led growth founders or marketers or product people that they should be doing today?
Aggelos Mouzakitis:
Yeah, definitely. Actually I would want to direct my advice to both people that are both companies that are product-led, but also companies and especially companies that want to be product-led. Being product-led is amazing. It's the best thing that happened in the last 15 years in the industry, but it's not a silver bullet and it puts too much pressure to your product. So you need to be ready to display your product without hand-holding. So just being product-led, just sticking on onboarding and low touch onboarding, or just replicating things that other companies have done might actually backfire on you. Because if you do not have the product that can do the job without the human factor, hand-holding users might actually backfire on you. So before you become product-led, make sure that you have shorted out basic things like positioning and UX, because if you haven't, they're scalable marketing tactics that you want to use.
Aggelos Mouzakitis:
And that's why you're becoming product-led for scalability. They will backfire. And on the other hand, if you are product-led, keep in mind that when you are product-led, the importance of data and qualitative evidence is 10 times bigger. So double down on data, double down on evidence. This is the reason that in the product-led, there are customer support becomes customer success because we need people that are more product sophisticated and can actually perform research. So everybody in a product-led business needs to be a little bit curious as a researcher.
Ramli John:
That's so good. I really love that point. Customer support becomes customer success. So great. I think I'll leave it at that. Thank you for sharing all of that advice. Just one final question, if people wanted to know more about what you do, do you want them to follow you on Twitter or LinkedIn? And also if they wanted to know more about Growth Sandwich, where can they go? This is essentially your call to action to plug anything in.
Aggelos Mouzakitis:
Okay. My call to action. I need to make good use of that. My call to action. So they can find me on LinkedIn and ask me anything, just have a chat about cool things that we both enjoy, like the value gap or research or stuff. They can visit my website, but that's a very old school call to action. I would prefer just casual chats about geeky stuff, geeky topics, like the one we are discussing at the moment.
