You have a brilliant idea for a startup that you think will solve a problem, fill a gap, or create a new market. But how do you know if your idea will sell? How do you validate your assumptions, test your product, and find your customers? In this article, we will explore some methods and tools that can help you answer these questions and increase your chances of success.
Your value proposition is the core benefit that your product or service offers to your target customers. It is what makes you different from your competitors and why people should choose you. To identify your value proposition, you need to understand your problem, solution, and market fit. You can use frameworks like the Lean Canvas or the Value Proposition Canvas to map out these elements and refine your idea.
Your idea won’t work. Own that statement, embrace it. Ideas are for inventors, not entrepreneurs. Focus instead on execution. The advantage you have against your competition isn’t that you have a better idea (you don’t), it’s that you can be more nimble and outmaneuver the lumbering giants that are locked into their ideas.
Keep your ears close to the ground....keep listening to your customers. If your idea is failing or facing challenges, listen to your mentors, observe your competition as well. If your idea is winning, listen to your competition more closely. No framework can give you the perfect answer, so use the frameworks for directional input. Actual market play is better than perfect secondary research.
You need to validate your great idea with prospects, but you must dig deeper than just "isn't this a great idea?" I watched a CEO recently get tons of affirmations on his idea, but he failed to ask, "how much will you pay and how much will you save when you implement this idea?" He spent 9 months developing a product that his current customers saw as an add-on to their existing service. When you network with prospects, make sure you find as many detractors as you find supporters. I have found that detractors often spark the best ideas and provide more insight into their and their industry's true pain points. Don't be afraid to be challenged!
"Discovering your value proposition is a compass that points you towards uniqueness in a crowded landscape. It's what sets you apart, whether it's solving a specific problem or meeting a need. If." when you're successful, it empowers you to shine and connect with your audience on a meaningful level.
Value Proposition of your idea is the differentiator between you and your existing competitors. In-depth secondary and primary research, tested and vetted is the start point. Frameworks such as Business Model Canvas should be utilized to ask meaningful questions. Good questions result in identifying right USP which will click with your customer segments. Observation and KYC is the key to understanding the gaps in requirements, usage, utility, packaging, delivery, pricing, availability or any other critical pointer which makes the idea a good fit. Never assume. Always test the gap before voicing it as your USP.
Market research is the process of gathering and analyzing data about your potential customers, competitors, and industry trends. It helps you validate your problem, solution, and market fit, as well as identify opportunities and challenges. You can use various methods and sources for market research, such as surveys, interviews, focus groups, online platforms, reports, and articles.
When analyzing competitors with a similar value proposition, it is common for entrepreneurs to be discouraged. Don't be! it is too early to abandon an idea because there is already embedded competitor. Instead, changed your mindset in the following ways: 1.) Look at competitors as validation of product market fit. 2.) Learn. Competitors spent significant time & money finding their customers. Fortunately for you, you can take advantage of their hard work & have a clear blueprint of their marketing strategy with various tools ie: similarweb.com or semrush.com. These platforms provide insights of a competitor's marketing tech stack driving their sales funnel, ad placement/budget, who, how & where they target obtainable market segments.
Results from your survey are as good as the questions that were asked. It is essential to ask questions that will drive real customer insight. To gather the best insight, ask "'Open ended" questions & follow those by questions that clarify the rationale behind customer choices. For example, "If you had a magic wand, what would you change in our maintenance service package?" (And after the customer responds)..." Why is the change you mentioned important to you?"
Trust Your Intuition: Believe in your great idea, but also seek validation and feedback from experts in the field. Elevator Pitch and Model: Craft a concise elevator pitch and create a prototype or model of your product. A video can help illustrate your idea's potential. Networking: Discuss your concept with friends, family, and industry connections. Choose your confidants carefully to protect your idea. Professional Video: Develop a detailed video explaining the "why" and "how" of your product's functionality and benefits. Trust Your Intuition: Rely on your instincts and have a long-term perspective. Persevere through challenges and setbacks.
Understand how your customers are currently dealing with the problem you are trying to solve. What are the hacks they use? What are the best and worst things about the hacks? Your solution could intersect the current hack and your new additions. You may need to be in the shoes of your customer for a while to understand the problem better. Hence founders with deep backgrounds in the industry seem to have an upper hand.
A market research strategy should emphasize distinction while dealing with intense competition. Determine where there are product gaps, identify unique selling features, and target underserved client categories. To understand customer preferences, pain areas, and specific needs, one must gather information through a mix of surveys, interviews, and online research. Examine the advantages and disadvantages of your rivals to identify areas where your product can excel. Efforts at product development and marketing should be guided by meticulous examination and analysis of this knowledge.
A minimum viable product (MVP) is the simplest version of your product or service that can deliver your value proposition to your early adopters. It allows you to test your assumptions, get feedback, and learn from your customers. You can use tools like landing pages, prototypes, mockups, or demos to create and launch your MVP quickly and cheaply.
An MVP can be highly beneficial to startups since it allows startups to co-create their product with the customer & improve it based on feedback loops. This helps avoid a situation where the startup invests alot of time & resources to perfect a product that the startup later realizes the customer wanted a much simpler & more affordable version of.
Sometimes the easiest way to get your product out there may be to skip the tech platforms and go directly to the customer with the value. Once you've nailed down the value prop, you can scale with technology.
When building an MVP and bootstrapping your company, I’ve found success in pre-selling the product at a highly discounted price. This allows you to build relationships with customers who really trust you and will become your biggest referral sources- but you need to under promise and over deliver!
Build an essential business process (or software) that delivers a real solution to the pain you learned in the previous phase. Don't over-develop or add reports, integration, or other distractive things. Start solving the core pain.
Creating an MVP is about finding the balance between core functionality and speed to market. Focus on the essential features that address the primary needs of your target customers. Utilize customer feedback and agile development practices to iterate quickly. Keep the design simple but effective, and align it with the users' main problems you're solving. The practical value for business owners is in testing a product idea with minimal investment. Continuously gathering user feedback and being prepared to pivot or refine the product is a must.
Experiments are the best way to test your hypotheses and learn what works and what doesn't. You can use frameworks like the Build-Measure-Learn loop or the Experiment Canvas to design and run experiments that can validate or invalidate your idea. You also need to measure the results of your experiments using metrics that matter, such as customer satisfaction, retention, revenue, or growth.
Running accurate and meaningful experiments requires clear objectives, relevant key performance indicators (KPIs), and a well-defined hypothesis. It's crucial to ensure that the sample size is large enough for valid insights and that control groups are used to compare results. Implement tools that track and analyze data precisely, such as Google Analytics. Continuously monitor and adjust as needed, recognizing the importance of adaptability. The practical value lies in the ability to make data-driven decisions and enhancements in areas like marketing and operations. It's vital to integrate these principles into an iterative process for continuous improvement and growth.
Based on my thought about involving consumers to help build your MVP, your experiments can take place in a small community of prospects. Just be honest with people as to what you'e trying to accomplish and show your cards. There's this huge, huge separation between businesses/brands and the people they're selling to. Why? Make it like a giant farmer's market and I think you can make friends from the beginning. Friends with money!!
Based on the results of your experiments and measurements, you need to decide whether to persevere, iterate, or pivot. Persevere means sticking to your idea and continuing to improve it. Iterate means making small changes to your idea based on feedback and data. Pivot means making a significant change to your idea, such as changing your target market, value proposition, or business model. You should always be open to learning and adapting to the market needs and demands.
When considering a pivot or iterative change, start by analyzing current data, customer feedback, and market trends. Recognize the underlying issues or opportunities that are driving the need to change. Maintain a flexible mindset, and be prepared to shift resources or strategies accordingly. Communicate changes clearly with stakeholders, including team members and clients. Monitor the effects closely and continue to adapt as necessary. The ability to respond to market dynamics ensures relevance and competitiveness. Foster a culture of continuous learning and improvement, being ready to make informed changes when they are most beneficial.
In my experience, the pilot phase is extremely important as well as the A-B testing of the “idea/solution” that yields a product. You need to select a diverse group of clients or potential users to give you honest feedback in the pilot phase. Overall I also agree with Jeff Stibel's point of view because it all boils down to one’s ability to execute the idea, turn it into a product, and deliver it to customers + end users.
I would add that it is a crucial and very normal thing of any startups journey to pivot. I don't know any startup that offers exactly the same product // service they initially started out with.
Launching an MVP is merely your initial step in an ongoing journey of refinement, guided by invaluable user feedback. This phase gives you the platform to fine-tune your product and the underlying problem you're set on solving. Adapt, iterate, and keep your mission aimed at making a measurable, scalable impact.
Again, all this is way easier if you're building this thing of yours with people you hope will want it. Yeah, Steve Jobs said people don't know what they want, but I bet if you show them what they want, they can help you make it better.
Product-market fit is the stage where you have a product or service that satisfies a large and growing market. It is the ultimate goal of any startup and the indicator of your idea's potential to sell. You can validate product-market fit by looking at signals such as customer loyalty, referrals, retention, revenue, growth, and market share. You can also use tools like the Product-Market Fit Canvas or the Net Promoter Score to measure and improve your product-market fit.
Running experiments and measuring results should be the top priority because I believe unless we test the results after our POC/MVP, we can proceed to validate our product-market. They provide the tangible evidence needed to make informed decisions and steer strategies toward triumph.
The founders need to have a very clear understanding of what they call as Product Market Fit. A common fallacy I've seen sometimes is that entrepreneurs sell their products at steep discounts and to people within their own network (or network of networks) and believe it to be PMF. The true sign of PMF should be when you command the right price (what market rates usually prevail) as per top competitors in the industry, customers are outside of the usual network but definitely falling in the Ideal Customer Profile (ICP). When a few unrelated buyers are willing to pay the industry standard for the problem you are solving for them, you are closer to knowing how far your startup idea will go.
You have reached product-market fit when you have more sales than you can handle. It's that simple. ?? The hardest part before that is to actually generate sales. Starting with family & friends might sound meaningful but if strangers start to buy the products you can take it serious.
From a startup's perspective, product market fit is often measured in 1m+ revenue and//or a very significant amount of inbound interest from potential customers vs. paid acquisition. An additional helpful resource to mention is the Sean Ellis test.
Fall in love with the problem but not the solution. This means being committed to a problem for a specific initial customer profile (ICP) but being super flexible with how you solve the problem Listening to your customers is the only way
Here's the truth, if I may be so bold. YOU have to be able to sell your product. The old maxim - people sell to people. Of course, your product has to be the solution that your niche of customers want but in the early days it's you that's going to be converting customers - with whatever authority, wit, charm, insider knowledge, trust etc. that you can build. Don't expect the product to do everything. That's 'Build it and they will come' mentality. Doomed.
While it may be tempting to skip or shortcut the market validation process (been there, done that, and paid for it!) the ideas and processes outlined in this article should instead be considered as fundamental skills in your entrepreneur toolkit. The more expensive, complex or risky your idea, the more importance you should place on validating it. As doing this hard work upfront will greatly mitigate the risk of you building a product that the market just does not want. It's also important not to mistake market research for market validation - market research is just the beginning of the process. Remember, in the words of Steve Blank, the best market validation starts by the founders getting "outside of the building!"
It is crucial to perform market research for your startup idea. It will save you thousands of dollars in the future and will de-risk your startup making it more attractive to investors. This is why the National Institute of Health and the National Science Foundations in the USA, sponsor customer discovery for startups (up to $50,000) Like this? upvote it!
I would add a section about timing. It's THE biggest reason why startups fail. While you cannot influence timing, it's crucial to think about where you stand in terms of a new adaption or cycle and whether you are right on time or maybe also too early and need to stay in the game for a bit longer until timing will eventually find you. I think timing is probably the most underrated factor when finding out if your startup idea will sell.