Starting a business for the first time is not easy but the rewards are worth it. You might have the best business model or entrepreneurial mindset but none of that will mean a thing if your product doesn't sell.
So before you start your new business or startup and invest time, energy, and money into making it a success, it is always best to do market validation.
This is a good idea to see if there is a demand for what you are selling. More often than not market validation can help you avoid costly mistakes that could have been prevented with more research before going all in.
It’s important to discuss the different market validation methods available to you so that when the time comes to make that big decision whether or not to launch your product or service, you'll feel confident in knowing that the market actually wants your idea.
What is an Idea Validation Process?
Market validation is checking market demand to see if there are people out there who want, need, or will even buy your product. It is a market research process that must be done before launch if you want to be successful with your business.
You want market validation methods to be as reliable and accurate as possible, so you're not wasting time or money on what's not going to sell.
The market validation methods you choose will depend on your product type, market size, how much funding you have, and market type but it’s an important part of the process to still go through.
To help you understand the market better before investing in your product or service idea. It can help you answer questions like:
These are all great questions to ask because having a proper market validation process provides a more realistic answer rather than just guessing whether or not a customer will like what you're offering.
How to Validate Your Business Idea.
1. Identify Your Target Market.
Your target market is the customer you want to buy your products and services. Identifying your target audience will help assure you that what you're offering is something they'll be interested in or need.
If you don't know who your target market is, then it's best to research first before proceeding with the next step of market validation.
To identify your market, use the following steps:
2. Know What Your Target Audience Wants.
Doing market validation is making sure that the people who buy your products/services are getting what they want and need.
This means understanding all of their desires to make them happy with your product or service in order for you to be successful in business.
To know what prospective customers want:
Once you've identified who your target audience is from the information your interviewees gave, you can now know what their needs are and why they buy products/services like yours.
From there you can then launch into market research to make sure that what they want from your offer is something that's worth investing in and going ahead with development.
3. Get Feedback From Potential Customers.
Getting feedback is a process of finding out what they think about the product or service you're offering. By using target customers it can give you a lean market validation into your startup idea. It can help answer questions like:
To get feedback from a target customer you can always go into focus groups and invite people who meet the target market demographic and ask them questions about what they want. Inside you can use interview-type questions such as, "Would you be interested in buying this product?" and then follow up with "Why or why not?"
Conducting customer interviews is also another great way to get product validation. It gives you a greater understanding of your user’s minds and allows you to see any trends or patterns happening.
Before rushing in with the production of the product, it is essential to know how the product could be better for what they need and if any changes need to be made.
On the other hand, sometimes the market validation process just doesn’t go your way. That’s ok. If you're having trouble getting feedback, try using these tactics:
It’s vital to get this type of market validation with potential customers so you can address any potential issues and make improvements to ensure it's the best possible product for your target market.
One thing I don’t advise of however is asking friends and family for comments on your idea. It is simply too easy to fall into a false sense of security thinking you might be onto something great. Unless they are your perfect demographic I would highly advise against it.
4. Sneak up on Your Competitors
One of the best ways to validate your product/service is by checking out what's on the market already. I like taking a lot of time to research what other successful business owners are doing already because it involves real people and what they are saying.
Doing a competitive analysis using the search engines (Google, Amazon, etc) will show you where there are opportunities for improvement and also give you an idea of the pricing and features available.
To do a competitive analysis:
Once you've done this process, use the metrics and adjust any areas that need attention before going into production. This is so it stands out from all others in its category as being the most sought-after product to purchase.
Use the competition’s reviews to see where improvements could be made. Chances are if the same issue keeps popping up this is a quick win for you to fix.
Doing this research upfront can save you money and time on production later down the line when things might not be improving or being taken care of correctly because nobody wanted them.
5. Build a Proof of Concept
A proof of concept is a prototype that demonstrates the feasibility of an idea. It can be used to validate you have a viable startup idea or business.
It refers back to the original definition of "proving" which means testing something thoroughly and showing evidence it is true.
In this case, when we say "prove," we mean proving your product works as intended by either demonstrating its potential in some way (like with drawings or software products) or creating a test version (prototype).
To get answers from potential customers about what they want out of your perfect product, build a demo and ask them questions like:
Test out different versions of your product to see which one gets the best criticism.
While it may not be necessary to build a prototype first, think about the risks to your business if you didn’t do it.
Let’s say you’re launching a physical product and you decide to go with the first sample you get back from the manufacturer because it’s cheaper and quicker just to launch it.
It is a huge risk in taking this kind of approach because that increases your chances of getting returns. Returns equal unhappy customers. If your customers are then unhappy they leave a negative review and spread it through word of mouth to other potential users.
By now you’ve got all this unsellable inventory because you didn’t spend the time testing every single touchpoint of your customer’s journey and potentially putting a black mark against your business.
Unfortunately, I’ve seen many entrepreneurs fall into this trap all too often and it was because they couldn’t be bothered interviewing people and getting their first reaction to the product.
Having a clear vision of the direction you’re taking your business is key to your startup success.
6. It’s Time to Finally Launch!
Once you have completed all of the validation steps and have a product that is ready to be launched, it's time for the final step.
This will involve getting feedback from your target market (there’s no such thing as conducting too many interviews). Get their thoughts on what is still missing from this new product before you give the green light and commence production.
Try to get as many comments as possible from paying customers. One way is to launch with an email list campaign or other types of advertisement (Facebook ads or Google Adwords) which has been proven to work in similar situations in your niche (based on previous research).
This can help grow anticipation for when the release date comes around so people are more interested in purchasing or downloading whatever it is you're selling because interest was already there beforehand due to advertising.
When this happens, any future revisions can also then be made based on customer needs and wants instead of what you think would work because the feedback is already there when you had launched to help guide your decisions.
This is a process that will take time and patience. It's worth taking note of all of these steps and potentially creating a template so that if you hand off this task to someone else in the business, they know exactly what needs to be done in the market validation process before launching into the next idea.
7. Rinse and Repeat the Market Validation Process
While it's possible to validate your idea before launch with just one or two of these different tactics, you want to continue testing until there are no more changes that need to be made.
This is because if you don't have enough evidence either way and continue moving forward blindly, the chances of things not working out increase by a large percentage. That means by putting in all this time into something only for it to not work could lead to major losses down the line which isn't worth risking at any point during validation.
Once all of the changes have been made based on reactions from real users, paying customers, and other forms of market validation (such as website traffic), you can then always go ahead and update what they've helped make happen to be even better!
Whether you are an entrepreneur launching a startup or just have a business idea in mind, it is important to conduct market validation before spending time and money on product development.
It’s important to remember that you’re not just a small business looking to build an MVP for a quick win. You need to be providing a solution to someone’s problem with your awesome business idea and be in it for the long haul.
By learning more about who your customers are through in-depth interviews and plenty of testing to find out what they like or don't like and how you can better serve them, it will help ensure that the product you develop has a wider appeal across the different demographics and provides real value to them.
From here on out it’s a continuous process to experiment with new upgrades of your product which will continue to solve problems and pain points for potential buyers for you to reach maximum success.
Last Updated on August 18, 2021 by Hanson Cheng