Market validation is an essential step for any entrepreneur about to embark on their start-up journey. You may wonder what market validation is and if it’s even necessary, but it’s truly an essential thing to get right as it centres around gauging interest in your product or idea.
A market validation will give you indispensable information from interviewing and assessing the opinions and interest of the very people who will be your future customers. It will help you identify your key target demographics, and how to appeal to them specifically. That way, you can know when and how to invest your money when equipped with this knowledge. It will give you a realistic overview of whether your product is financially viable, and whether your financial projections are realistic. You’ll find out whether that problem that you want to solve, really needs solving.
Beginning your journey into entrepreneurship can be as daunting as it is exhilarating, especially if you’ve never done anything like this before. That said, it doesn’t need to be a difficult or arduous process to go through, lean market validation can help you expedite getting your product to market. I have laid out some key steps that will help you get started while keeping them simple, practical, and mostly inexpensive.
Step 1: Write an Outline of The Concept of Your Product
The process of writing out a rough outline of your key concept or concepts can help line up the ideas in your mind and will also help you polish the idea further. This exercise can help you realise things that may seem simple, but that you may have missed when thinking about the bigger picture.
This isn’t about laying out a formalised business plan, but more of a brainstorming exercise. The process is more useful when creating a creative start-up rather than setting up a traditional business since the foundation of your plan will rest on the market validation that you haven’t yet completed at this stage and which will already exist for an existing business model.
It’s easy to create this outline by identifying a few key points:
- You should ask the following questions
- Is your product aimed at individuals, or being sold to businesses? If it’s individuals, how old are they?
- Does your product appeal to men and women, or just one of them? What other brands are they likely to be interested in? What’s their average socioeconomic status?
- Who are you competing with? If it’s a business, what is the scale of that business? Which employees of that business will you be dealing with directly?
Step 2: Manage Your Time
No matter how precise and thorough you are while gathering data, you will never be able to predict the future. The fear of moving forward because everything isn’t a 100% accurate is only going to delay your success. Time is your greatest resource, and a decisive attitude is what you need to focus on.
Lean market validation will give you just enough knowledge from your customers to move forward within the correct amount of time. Once you think you’re about 80% of the way there, then it’s the time to be bold and move forward with what you have.
Step 3: Understand your Assumptions are Not Facts
You’ll spend a lot of time with your team hashing out ideas, making plans, and imagining the customer that’s going to be buying your product. You may have spent hours, days or weeks debating every minute detail. However, in the initial planning stage, these are only assumptions. The ideas that come up in brainstorming sessions may not necessarily be based on reality.
Be humble enough to change course if you realise your predictions or assumptions are slightly (or completely) off. Don’t get overly attached to any one idea or assumed outcome, without testing the idea first.
Step 4: Take Advantage of Your Existing Contacts
You might not think that you know where to start in finding people to interview or survey, but many people don’t realise those people are already there. Utilise your existing network of people, whether that consists of your personal friends, professors and mentors, or those who have already agreed to invest in your company.
One thing to consider is there may be a bias in this case. These people may already be amenable to your ideas, and in the case of friends or even family, may be reluctant to give you more negative feedback. However, that doesn’t make their contribution worthless. It’s still a good place to start out, get some practice in knowing how to ask the right questions, and get people talking about your product.
Step 5: Test Your Ideas
Your ideas and assumptions are all based on what you think that potential customers will want, lean market validation will help you achieve that by going out and talking to those people. To test out what you’ve planned, you can consult industry experts and leaders to gather other valuable information, such as people with extensive industry experience, financial analysts, previous employees, and even previous businesses who have failed can help you succeed. Learn from other people’s mistakes.
Online marketing can also give you a relatively cheap way to test your ideas in the form of Facebook ads, landing pages, and various social media accounts.
Step 6: Use the Five Whys
The Five Whys, the questioning technique involves iterative questioning to identify cause and effect behind each step. For example, a customer needs your product to complete a task, why does that task need to be completed? Why can’t they do it with the existing tools? Why are these tools inadequate for the job? Why will this new tool be better? It will drill down to the core reason behind why they are really attracted to a particular feature or why they may not be attracted to another feature, and so on.
If you’re getting answers from your customers, their initial response may not be enough to truly get to the root of their desires. An off the cuff response may need to be probed further to discover what they actually mean. If your customer says, “Yes, I’d like that feature,” ask them what they’d like about it, how would it help them, what benefits would it give them, etc? Not everyone will give detailed and extensive reasons why they’re answering the way they do, especially when put on the spot, so it’s important to lead them with, “Why?”
Step 7: Develop Your Interview Technique
Remember, even if you are talking to a friend or someone you know well, in the context of testing your ideas, you are a stranger and an interviewer trying to see what a customer needs. Approach the conversation with a genuine interest and motivation to find out how you can serve what they want, what they’re missing in this type of product, what features they have always wanted to see, and so on.
You’ll get the best insight from people if you’re genuinely curious about their thoughts. You can narrow down their true desires rather than what may seem flashy and attractive at the moment. If you’ve prepared questions, don’t be afraid to stray from that outline. As your interview progresses, you’ll need to adapt what you’re asking in response to what the customer tells you.
Step 8: Discover Your Customer’s Expectations
When speaking to a customer, you’ll need to identify what their expectations are in terms of how they’ll benefit from your product. This is known as the value proposition. This could be a tangible benefit that’s easy to measure objectively, such as saving them money, automating some task, or saving them time.
However, this value proposition can also encompass more subjective benefits for the customer. These aspects may not be as easy to quantify as things like finances, but they are equally important in terms of understanding what your customer wants. These benefits could be improving their quality of life, increasing comfort, or decreasing pain. They could also be lifestyle benefits, like home improvement, better entertainment during leisure time, or improving their appearance.
Step 9: Understand That Interest Doesn’t Equal Sales
Many initial ideas will generate a lot of buzz and interest, especially if they seem novel and innovative. Young start-ups may be initially excited at the interest their ideas create, only to be quickly confused and disappointed when none of that translates into sales.
Unfortunately, at the end of the day, talk is only talk, it’s easy for people to do that. Getting them to put their money where their mouth is, is a different story entirely. This will always be a subjective area, and difficult to measure precisely. People generally want to be kind about your ideas in polite conversation. However, you can avoid false positives when identifying customers by returning to Step 6, and always asking them why they like it? Is it actually a viable idea that they can see working for them, or does it just sound good ‘on paper’?
Step 10: Remember to Enjoy Yourself
All of this can be a daunting prospect, but it’s important to remember to have fun with it. If you’re participating in a Start-up Weekend, it’s an opportunity to let loose and let go of fear, while sharing your ideas with a wide audience, maybe for the first time. You can also talk and network with other budding entrepreneurs who are in the same boat as you and share in the excitement of starting a new business.