Step By Step Ways To Validate Your Startup or Business Idea
In our previous article, we were introduced to the concept of idea validation. We also talked a bit about idea generation which naturally precedes idea validation. Then we looked at some preliminary steps in the validation process. These first steps are crucial, so make sure you have considered them before investing your valuable time moving ahead. In this article, we will advance and examine concrete methods to help you validate your idea.
The Interview Method
This is a tried and coherent way to see if your idea will stick. You simply target people to interview to get their opinion about your product or service. There is some controversy here about whether or not to include friends or family. For example, Omar Zenhom’s opinion is that you should never include friends and family in the interview process. He believes their bias skews results. Perhaps the best advice is not to rely on close contacts alone – a maximum of 15 – 20% of your total number is probably safe. Remember, you want to be able to sell to a wide audience.
Make sure you prepare your pitch and survey questions beforehand. Write out, word for word, what you will ask during the survey. Go with plenty of yes and no type questions as these are easier to analyze. You should also consider including questions like:
- How much would you be willing to pay for a product (or service) like this one?
- Do you think you would like to know more about the product (or services) discussed in this survey?
According to Meghan Lockwood your survey should:
- Avoid leading questions. Try to make the wording as objective as possible.
- Prevent assumptive closes like, “How much will widget demand grow in 2014?” The problem with this question is that you are assuming that widget demand will grow. The better question would be, “Do you think widget demand will go up or down, and by how much?”
- Pay attention to scale. For some questions the yes or no option might not be sufficient. Considering trying: “completely agree”, “somewhat agree”, “somewhat disagree” and “completely disagree”
- Keep question language as simple as possible.
Once your survey script is written,start contacting people to get them to commit to at least 5 minute survey about your product. You want to tap real potential customers. So if you are selling a tech product, you won’t be setting up pet shop owners for interviews – unless of course it’s a high-tech dog leash.
Also, don’t hesitate to modify your survey along the way. The first 2 or 3 calls should be used as a means to improve your survey question structure itself.
Finally, make sure you carefully save all the contact data of each interview. When you actually launch your product these will be part of your initial contact list.
Landing Page Testing
In this beta phase, all you want to do is see if you can get a response or positive action. As per advice from CyKho Blog, you can do this by setting up a landing page that looks identical to what your business website will look like. Then just ask people for their Emails. You will have to spread the word about your landing page on forums and social media (as we mentioned in our 1st article in this series).
Landing page testing is a great way to test your idea before you go all in. If you can’t get people to give you their Email, there is no way you are going to get them to part with cash.
The Bootstrapped Blog gives us this advice about landing pages: make sure it includes a clear call to action, like “Sign Up Now”. If all you have is information, you might not get any attention, and you can’t measure results.
Bootstrapped also recommends the tactics of driving traffic and testing conversions. You can do this by using AdWords, Bing or Facebook to drive targeted traffic. You want to shoot for around 100 hits on your landing page before you analyze the results.
The 5% Rule
After you have set up your landing page and have accumulated 100 visits, see how many of these visits have translated into people submitting their Emails for more info. If you have over 5%, then your idea has a fighting chance. If you can combine this with good feedback from your interviews, then your chances of success are even better.
This form of testing, as per CyKho Blog, digs a bit deeper. Depending on your product or service, try to set up a prototype that you can send to people that sign up on your landing page. It doesn’t have to be a polished finished product, but it should be something that adds value. Send it out to your beta list and see what happens. Make sure to follow up and get feedback. If you find that these early clients are actually using your product, this is a huge validation because people are investing time with your product.
One way to get this kind of testing done is to offer the prototype for free. This type of product testing is conducted all the time by big companies. When you follow up you can get an idea of how well your product stands up to the “test of time”.
Check Google Keyword Planner
Sean Ogle says on his blog:
“If you can find ideas for keywords related to your product with relatively high traffic and relatively low competition, then it becomes feasible you can use search as an effective way to find customers and sell your product or service.”
So make sure to run some tests on keywords surrounding your product. If no keywords exist, then rethink your product or packaging.
Cash is King
Once you have completed the initial steps outlined here, you can convert your landing page into a cash collecting page. This is obviously the ultimate validation test. If you can get people to open up their wallets, not only have you passed the testing phase, your idea may well be a bona-fide business.
Crowdfunding is one of today’s best testing grounds available. The reason for this is that you must convince people to support your cause or product. So if they think it is worth it they go above and beyond just purchasing. Crowdfunding is no cakewalk, but if you can get your idea funded, it has a great chance of becoming a stand-alone business. Make sure you take a long look around at other projects that are competing for funding.
The most popular crowdfunding websites are:
Just because you have a great idea, it does not mean that it will translate into a viable business. Do your best to take the emotion out of it. Go through this validation process as objectively as possible. Think like a scientist. If you can prove your idea is going to work, then the chances are very good that you have a viable business idea.
One last bit of advice: make sure you record all your data from this validation process. Write up a 1-2 page summary of your results. In the future, it might end up being part of a pitch to sell your idea to investors.