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By Yashika Sharma.
29 September 2020
Google planner with keywords This is a platform that advertisers often use to buy keywords on Google and plan promotions. But it's also a gold mine of wisdom for businessmen! Only type the keywords to solve the problem and check the competition and the search volume for the area of interest. The higher the values, the more validation you have for your idea.
Amazon If you think of a physical product, it is your place to evaluate quickly. We also met several entrepreneurs who have made a fortune just by looking at Amazon's unfulfilled customers' feedback and using their knowledge to create a better product to sell it. Whatever the issues the product solution can fix, see if consumers are actually disappointed with this issue by using rivals or similar products.
Tumblr, Quora or other vertical platforms are an incredibly helpful place to discuss the consumers' complaints with a product or service. These sites gather an incredible wealth of insights, often quite experts and early adopters spend time helping the group or reporting on issues. Validate your assumption with fast browsing using these methods. Social networks It is futile to list all social networks that offer insights into your consumer segments and the issues you would like to address. Hashtags will help to narrow your research tremendously. You will pursue high volumes and/or rising trends as usual. ·
Use this test: verify easily if your idea solves a problem with your customers. It's a perfect point of departure. ·
When to use: you've just got an idea, nothing else. ·
Time and money needed to set up: no excuses, because no planning is necessary and probably only one night's surfing is necessary. ·
Level of evidence: You may not generally depend on data from third parties relevant to your customers.
Use this test to: verify consumer expectations and target audiences for a new product or business concept and obtain insights for a competitive value proposal. ·
When to use: you've just got an idea, nothing else. ·
Time and resources to set up: from only a few days to a few weeks, depending on how well, the initial assumptions are established and how easy access is given. If you offer bonuses and rewards to interviewees, a few hundred pounds might be needed. ·
Level of evidence: small. After all, it's a chat, customers don't buy something-particularly because you won't sell. Customer Exploration interviews are the simplest and best way to find out if we're incorrect or incorrect about our proposal and the needs behind it, if well performed and based on past experiences instead of hypothetical acts in the future.
Use this test to: verify a value proposition for a new product or business model and take the following steps. ·
When to use: A competitive value proposition based on consumer insights has already been established. ·
You can easily do this at home with the camera of your cell phone, hardcopy figures and your voice just like Drew. You may ask a designer or an illustrator to do this for you if you wish to be more professional. ·
Level of evidence: medium. By forcing users to sign up for a trial or to be the first to test the beta, you cause actions and gain useful information about your customers.
Use this test to: verify consumer expectations and target audiences for a new product or business concept and obtain insights for a competitive value proposal. ·
When to use: you've just got an idea, nothing else. ·
Time and money to set up: this could be difficult. Depending on your internal network, stakeholder management expertise, the scale of your business and its structure, it can be extremely simple or massively time-consuming to reach customer service. ·
Level of evidence: medium-weak. The level of proof really depends on the consistency and structure of the insights documented. These observations do not substitute customer interviews but should provide a framework for further forming the conclusions before performing the interviews.
Whatever the interaction, if the interviews do not conclude with definite next steps, that's a bad sign: if the product needs iteration or pivoting, or you ask only for your thoughts on the concept and you don't specifically, ask for a clear commitment and next steps. One last note to ask for commitment: you might be tempted to avoid the terrifying question. But denial is good learning! You won't know if the lead is real until you give them an opportunity to deny you. And when refusal comes, it's time to return to the whiteboard. Good news is that almost nothing would have been spent at this point. ·
Use this test to: verify a value proposition for a new product or business model and take the following steps. ·
When to use: A competitive value proposition based on consumer insights has already been established. ·
Time and money to be set up: from only a couple of days to several weeks, depending on how easy it is to meet target consumers and the size of what you use as a demonstration. A few hundred pounds may be expected if the interviewees obtain bonuses and rewards. ·
Level of evidence: medium. It really does rely on your kind of dedication, but if you commit, it's a positive sign that you've got something worthwhile
The landing page is such a strong and a multipurpose tool that it can be used not only to confirm value proposition at a very early stage, but also to attract customers to perform customer discovery interviews in case you are struggling to secure meetings with them. There is one important thing that we feel we need to recommend: before you start designing the landing page, you can spend 10 minutes of your time compiling a lean canvas of the business concept. We've put together a couple of tips on how to compile a lean canvas and an illustration.
The compilation of the Lean Canvas would help immensely to explain the value proposition message, the platforms and the clients to be targeted. You're going to need these things anyway, so it's best to start on the right foot.
Use this test to: verify a value proposition for a new product or business concept, or employ customers for customer exploration interviews. ·
When to use: either you have only an idea, or you have identified a competitive value proposition based on consumer intuition, and you want to calculate customer response. ·
Time and money needed to set up: from a few hours to a week, depending on the tool you're using, and how polished you want the landing page to be. A few hundred pounds would be needed to run the AD campaigns – traffic doesn't come for free, to purchase a domain and pay for the website, either because you hired a developer and a designer, or you bought a premium subscription to a service. ·
Level of evidence: medium. These are no longer terms, but real customer behaviour. Customers who have pre-ordered or left their email have clicked on an advertisement, gone through the website and found it compelling enough to leave their email address. Ok, a pretty good confirmation.
The notion that you're going to launch a campaign, share it with your buddies, and the money that comes with a snowball effect is similar to being told that you're going to go off-license and that you're going to buy a winning lottery ticket. In reality, success in a crowdfunding campaign is damn hard, because you're not going to get the money pledged unless you at least meet the funding target. You can need help from video producers, PR agencies and possibly specialist agencies that establish and enforce the strategy (this one is very interesting, for example). All of this will distract your resources from the exercise of identifying the needs of target customers and identifying a successful value proposition in order to gain their commitment. So it's very useless to launch a crowdfunding campaign before you've finished those tasks. Considering the effort, this is definitely not the first thing you have to do when you have a business idea in mind. Instead, there are much easier and more efficient ways to collect consumer information and de-risk the concept (see above). ·
Use this test to: validate a value proposition for a new product or business concept, and get the funding needed to launch or expand a Minimum Viable Product(MVP). ·
When to use: you have a compelling value proposition that has already been tested by consumers. ·
Time and money needed to set up: it will take at least two / three months and a few thousand pounds. There's a lot of competition out there, and if you want to win, you need to invest. ·
Level of evidence: very solid. Customers are opening their wallets and giving their money to your team and your concept. Ok, a pretty good confirmation.
Use this test to: validate a value proposition for a new product or business concept, and get the funding needed to launch a Minimum Viable Product(MVP). ·
When to use: you have a compelling value proposition that has already been tested by consumers. ·
Time and money needed to set up: depending on the size and technological context of the founders, this could take from half a day to a few weeks. You would need to spend cash to push traffic to the landing page, to buy a domain, and to pay for the website, either because you hired a developer and a designer, or you bought a premium subscription to the service. ·
Level of evidence: very solid. Customers are paying for something that doesn't really exist. They certainly fit the definition of the early adopters: they're so mad about what you're doing that they're ready to commit before it makes reasonable sense to do it.
When to be used: you have a working prototype ready for whatever purpose, a product needs several real iterations, or you have a competitive value proposition already validated with consumers. ·
Time and money needed to set up: this could take from a few days in the case of a 3D printed object to several years. ·
Level of evidence: medium. It really depends on the kind of commitment you're trying to make, but if they commit, it's a positive indication that you've got something important.
When to be used: you have a working prototype ready for whatever purpose, a product needs several real iterations, or you have a competitive value proposition already validated with consumers. ·
Time and money needed to set up: this could take from a few days in the case of a 3D printed object to several years. ·
Level of evidence: It really depends on the kind of commitment you're trying to make, but if they commit, it's a positive indication that you've got something important.
Use this test to: confirm a value proposition for a new product or business concept, get insights into a financial strategy, get momentum to either persuade investors or decide to take the plunge. ·
When to use: you have a compelling value proposition that has already been tested by customers in cheaper ways, and you want to try the real thing. ·
Time and money needed to set up: this depends on the actual cost of renting or re-labelling the service/product. One thing is certain here: expect money to be invested, possibly in the thousands. ·
Level of evidence: very high. Customers are purchasing, leaving suggestions to you. It's like you're dealing with your business idea.
For example, Twitter began as a way to send SMS to a group of people, and there were no @replies, # hashtags, or retweets. Fin-tech startups like Monzo or Tide have launched early iterations of their app-only banks using prepaid cards or not enabling customers to set up standing orders. Minimum Viable Product(MVP)is a minimalist exercise designed to provide target consumers with the right collection of features that will make the product trustworthy, competitive, enjoyed and purchased. In order to reduce the risk, this test involves the launch of the actual product in a selected market where the concentration of early adopters is greatest. For example, the Deliveroo food delivery service began first in Chelsea, where the concentration of early adopters was higher. Having validated the idea and value chain and gained tremendous momentum, they have raised so much credibility to raise funds and extend the reach of investors.
Use this test to: launch the actual product on the market with the highest concentration of early adopters, learn and fine-tune operations and value proposition, and develop a reputation to grow in adjacent markets later.
When to use: you have a competitive value proposition that has already been tested with consumers in cheaper forms, and you have the funds to develop and deliver the real thing.
Time and money needed to set up: this depends on the actual costs of the design and start-up of the operation. One thing is certain: plan to spend thousands of pounds and start working on this full time.
Level of evidence: very strong. Customers are purchasing, leaving suggestions to you. It's like you're living with your business idea but in a kind of "secure" sector.
Use this test to expand your company. ·
What to use: you have successfully opened a test market and you have funds to grow. ·
Time and money needed to set up: it really depends on the actual cost of growing the company. I'd bet you're already working full time on a company, and I'd probably hire someone to help you out.
How To Select A Test To Get Market Validation For A Business Idea
One of the pillars of Lean Startup technique is to test
hypotheses about a new company or product concept.
By choosing the riskiest assumption, identifying a
hypothesis, checking it with customers and then evaluating results,
entrepreneurs may systematically minimize the risk of implementing a new
product.
This is particularly necessary because 72 per cent of all new
products do not achieve the anticipated benefit outcomes.
For this reason, we suggest that you not make a mistake
without proof in implementing a new product or business concept
and to always test your ideas, no matter how brilliant in theory they might
sound.
But how do you pick the right test to confirm the riskiest
assumption?
Because of your current weaknesses (e.g. time and money), we
often try to select studies which will provide the highest level of proof.
Because any 3 out of 4 pounds spent at the start of a new company or product
design is likely to be wasted, it is best to minimize:
- using cheap and quick tests for high uncertainty
- more costly and longer assessments if the
riskiest conclusions have already been checked and validated
- To promote the challenging task of selecting the right test at the right time, we have compiled a test library to obtain market
validation.
- The cheapest and easiest to the longest and most
costly tests are ordered below.
One notice, however: this is only an outline, intended to be
a catalogue for easy choice rather than execution.
Search Trends on Google, Socials And Forums
This is by far the quickest thing to do when a new product or business concept is validated. Look at Google for the problems you want to solve? Do people complain about the issues you want to address on forums or on social events? Has the number of discussions on the subject raised or not? Here are some tools that you can use: Trends in Google Here you can see how many times people have searched for particular topics on Google (for example, the problem you want to solve). Don't forget to identify the geographical position of the country you want to travel to, otherwise, you'll check research patterns for the US by default. You will look for more and more patterns to support your theory.Google planner with keywords This is a platform that advertisers often use to buy keywords on Google and plan promotions. But it's also a gold mine of wisdom for businessmen! Only type the keywords to solve the problem and check the competition and the search volume for the area of interest. The higher the values, the more validation you have for your idea.
Amazon If you think of a physical product, it is your place to evaluate quickly. We also met several entrepreneurs who have made a fortune just by looking at Amazon's unfulfilled customers' feedback and using their knowledge to create a better product to sell it. Whatever the issues the product solution can fix, see if consumers are actually disappointed with this issue by using rivals or similar products.
Tumblr, Quora or other vertical platforms are an incredibly helpful place to discuss the consumers' complaints with a product or service. These sites gather an incredible wealth of insights, often quite experts and early adopters spend time helping the group or reporting on issues. Validate your assumption with fast browsing using these methods. Social networks It is futile to list all social networks that offer insights into your consumer segments and the issues you would like to address. Hashtags will help to narrow your research tremendously. You will pursue high volumes and/or rising trends as usual. ·
Use this test: verify easily if your idea solves a problem with your customers. It's a perfect point of departure. ·
When to use: you've just got an idea, nothing else. ·
Time and money needed to set up: no excuses, because no planning is necessary and probably only one night's surfing is necessary. ·
Level of evidence: You may not generally depend on data from third parties relevant to your customers.
Customer Discovery Interviews Based on a Script
This is by far the cheapest and quickest the thing to do to verify consumer requirements and target segment assumptions behind a new product or business concept. In the wake of Steve Blank's mantra of "moving out of the house," this test allows entrepreneurs to hire, meet and tell you about their experience when they finish the jobs the new product is addressing. It is important not to jump into "pitch mode" and not to sell the concept in these interviews. Instead, these interviews are a valuable learning activity that helps businesspeople to think more about the frustrations, pains, alternative resources and networks to which they are exposed. In addition, the interviews help to classify the early adopters. We have written several resources on how consumer exploration interviews are conducted. Learn all about recruitment, performing interviews and asking consumers to say the truth and not what you expect to hear. We typically develop a script before the interview to help us remain centred and execute the discussion rather than getting carried away. This does not mean that you have to hold an interview when reading the script. Finally, interviews will still perform better if they are done on the spot, which ensures that consumers sense their discomfort and find a solution. This will help A LOT to contextualize consumers and gain valuable perspective. ·Use this test to: verify consumer expectations and target audiences for a new product or business concept and obtain insights for a competitive value proposal. ·
When to use: you've just got an idea, nothing else. ·
Time and resources to set up: from only a few days to a few weeks, depending on how well, the initial assumptions are established and how easy access is given. If you offer bonuses and rewards to interviewees, a few hundred pounds might be needed. ·
Level of evidence: small. After all, it's a chat, customers don't buy something-particularly because you won't sell. Customer Exploration interviews are the simplest and best way to find out if we're incorrect or incorrect about our proposal and the needs behind it, if well performed and based on past experiences instead of hypothetical acts in the future.
Explainer Video And Landing Page
This is one of the most common cheap and fastest tests alongside the landing page to validate a corporate concept on the market. If a business idea needs a combination of technology, infrastructure and physical aspects, a video might help. A popular example of an explanation video is that used in 2011 by Eric Ries, founder of Lean Startup to illustrate his the idea of a Minimum Viable Product(MVP)(the quickest way to start learning how to create a sustainable company with a minimum of effort). He used the example of Drew Houston, Dropbox's creator. Drew decided to gain money for evidence that the innovative and transparent file-sharing system can be demonstrated across the cloud he had in mind. He needed approximately $ 1 M to build the complex proof-of-concept that investors would not want to offer without proof of market demand. Instead of falling into the building pit, he produced a trivial three-minute demonstration of the technology. Drew personally narrated the video, explaining the use cases and the sort of files you could synchronise. The spectator was able to see his mouse control his screen. Drew combined the video with a landing page where users can pre-register to enter Dropbox early. Although he shared the video on a website with his early adopters, he took hundreds of thousands to the landing page. The beta waiting list ranged literally from 5,000 to 75,000, providing him with ample validation on the market to encourage investors to finance their businesses. ·Use this test to: verify a value proposition for a new product or business model and take the following steps. ·
When to use: A competitive value proposition based on consumer insights has already been established. ·
You can easily do this at home with the camera of your cell phone, hardcopy figures and your voice just like Drew. You may ask a designer or an illustrator to do this for you if you wish to be more professional. ·
Level of evidence: medium. By forcing users to sign up for a trial or to be the first to test the beta, you cause actions and gain useful information about your customers.
Customer Support Analysis
You have plenty of insights to use if you are an entrepreneur working with an existing company to validate your proposal. Do consumers still have the problems with a new feature that you want to solve? The frontline of your business, the departments that deal directly with consumer problems and concerns is one of the first places to find solutions: customer support. If customers have some issue, they're going to hear. We suggest that you contact the customer service manager and ask him if he can share any data with you. You will start by explaining what the problems you are dealing with. Then you ask for qualitative and quantitative perspectives (how many of the issues are affected vs. the actual number of incidents). In general, well-structured companies often record the customer service calls/chats to allow you to spend some time in them. What you are looking for here is a large number of events relevant to the problem that you are investigating. ·Use this test to: verify consumer expectations and target audiences for a new product or business concept and obtain insights for a competitive value proposal. ·
When to use: you've just got an idea, nothing else. ·
Time and money to set up: this could be difficult. Depending on your internal network, stakeholder management expertise, the scale of your business and its structure, it can be extremely simple or massively time-consuming to reach customer service. ·
Level of evidence: medium-weak. The level of proof really depends on the consistency and structure of the insights documented. These observations do not substitute customer interviews but should provide a framework for further forming the conclusions before performing the interviews.
Customer Validation Interviews to Get Commitment
This is the quickest thing for a successful value proposition is based on customer feedback and you want to know if it solves and does better than the competitors' pain points. It will also help in confirming the defined early adopter target segment. These interviews usually begin with customer confusion about the complexity of the job to be done and then prove a swift, rough prototype that reflects the value proposition. Anything works like a demo, from paper drawings to a mockup. Only try to be lean and innovative and invest as little as possible to have the greatest possible impact. The aim of customer validation interviews is to collect input and to make a difference. Commitment is one of these ways will come: Period (e.g. time to achieve specific targets next time a product is being evaluated for a relatively long time) Reputation (e.g. introduction to colleagues and team members, introduction to decision-makers, public testimony, and alpha consumer case study) Money (for example a letter of intent, a pre-order or a deposit) The requested commitment must be associated with the form of the prototype presented. After showing a drawing on a napkin we can't really ask for a deposit (if you succeed, please let us know).Whatever the interaction, if the interviews do not conclude with definite next steps, that's a bad sign: if the product needs iteration or pivoting, or you ask only for your thoughts on the concept and you don't specifically, ask for a clear commitment and next steps. One last note to ask for commitment: you might be tempted to avoid the terrifying question. But denial is good learning! You won't know if the lead is real until you give them an opportunity to deny you. And when refusal comes, it's time to return to the whiteboard. Good news is that almost nothing would have been spent at this point. ·
Use this test to: verify a value proposition for a new product or business model and take the following steps. ·
When to use: A competitive value proposition based on consumer insights has already been established. ·
Time and money to be set up: from only a couple of days to several weeks, depending on how easy it is to meet target consumers and the size of what you use as a demonstration. A few hundred pounds may be expected if the interviewees obtain bonuses and rewards. ·
Level of evidence: medium. It really does rely on your kind of dedication, but if you commit, it's a positive sign that you've got something worthwhile
Landing Page and Advertising Campaign
This is a classic way to test a company or a new product concept easily and reasonably cheaply. You just need to buy a domain, put a live landing page to show off the value proposition, and run marketing campaigns to drive traffic. Then you calculate the conversion rate and change the target customer, the channel/message used for moving traffic or the proposal until you get a reasonable conversion rate. If you want to be super lean and cut costs, you could opt for one of those services that allow non-coders to build a landing pages with a professional look and feel (WordPress.com, Wix or Square space to name a few). Whatever you use to live the website, it is completely mandatory for the landing page to have an active call in it, such as a "leave your email to pre-order" or a "leave your email to get updates" post. Without a call to action, this exercise is wasted time, since you will not be able to calculate the commitment of your customers. In addition, all of these emails received would be useful in one way or another (i.e. you might contact these customers when you have something to sell).The landing page is such a strong and a multipurpose tool that it can be used not only to confirm value proposition at a very early stage, but also to attract customers to perform customer discovery interviews in case you are struggling to secure meetings with them. There is one important thing that we feel we need to recommend: before you start designing the landing page, you can spend 10 minutes of your time compiling a lean canvas of the business concept. We've put together a couple of tips on how to compile a lean canvas and an illustration.
The compilation of the Lean Canvas would help immensely to explain the value proposition message, the platforms and the clients to be targeted. You're going to need these things anyway, so it's best to start on the right foot.
Use this test to: verify a value proposition for a new product or business concept, or employ customers for customer exploration interviews. ·
When to use: either you have only an idea, or you have identified a competitive value proposition based on consumer intuition, and you want to calculate customer response. ·
Time and money needed to set up: from a few hours to a week, depending on the tool you're using, and how polished you want the landing page to be. A few hundred pounds would be needed to run the AD campaigns – traffic doesn't come for free, to purchase a domain and pay for the website, either because you hired a developer and a designer, or you bought a premium subscription to a service. ·
Level of evidence: medium. These are no longer terms, but real customer behaviour. Customers who have pre-ordered or left their email have clicked on an advertisement, gone through the website and found it compelling enough to leave their email address. Ok, a pretty good confirmation.
Crowdfunding Campaign
This is a very common way to validate a value proposition and get funding for the next steps. Successful businesses such as the publishers of the best-selling book "Bedtime Stories for Rebel Children" use crowdfunding much of the time they want to market a new product and need validation until investing. If you've done the research correctly, i.e. you've been through the process from the original concept to the value proposition verified by the customer's commitment, there's a fair chance that the campaign would be effective and will help you raise money to launch a Minimum Viable Product or to improve/grow the current one. However, a crowdfunding campaign is not an easy feat, and the commitment required should not be underestimated.The notion that you're going to launch a campaign, share it with your buddies, and the money that comes with a snowball effect is similar to being told that you're going to go off-license and that you're going to buy a winning lottery ticket. In reality, success in a crowdfunding campaign is damn hard, because you're not going to get the money pledged unless you at least meet the funding target. You can need help from video producers, PR agencies and possibly specialist agencies that establish and enforce the strategy (this one is very interesting, for example). All of this will distract your resources from the exercise of identifying the needs of target customers and identifying a successful value proposition in order to gain their commitment. So it's very useless to launch a crowdfunding campaign before you've finished those tasks. Considering the effort, this is definitely not the first thing you have to do when you have a business idea in mind. Instead, there are much easier and more efficient ways to collect consumer information and de-risk the concept (see above). ·
Use this test to: validate a value proposition for a new product or business concept, and get the funding needed to launch or expand a Minimum Viable Product(MVP). ·
When to use: you have a compelling value proposition that has already been tested by consumers. ·
Time and money needed to set up: it will take at least two / three months and a few thousand pounds. There's a lot of competition out there, and if you want to win, you need to invest. ·
Level of evidence: very solid. Customers are opening their wallets and giving their money to your team and your concept. Ok, a pretty good confirmation.
Pre-Sales and A/B Test on Pricing
This is a more sophisticated variant of the landing page test. The difference is that in this case you're not only receiving emails from consumers, but you're also actually asking them to pay for your product before it's available. A giant leap of faith for your target buyers, and a massive affirmation of your value proposition. You might also be able to introduce an A / B test infrastructure so that you can see which price customers react better and change the pricing strategy accordingly. This is very helpful, particularly if you don't have any references on the market. However, this test is very advanced and does not come free of charge. Payment and A / B testing require more complex technological skills than a basic landing page, and you are supposed to do all your homework (see here the 7 steps to verify your business idea) in order to convince consumers to give you their precious money for something that doesn't even exist. In addition, you need to be aware of legal and regulatory conditions before selling anything that does not currently exist. So then it's not for beginners. ·Use this test to: validate a value proposition for a new product or business concept, and get the funding needed to launch a Minimum Viable Product(MVP). ·
When to use: you have a compelling value proposition that has already been tested by consumers. ·
Time and money needed to set up: depending on the size and technological context of the founders, this could take from half a day to a few weeks. You would need to spend cash to push traffic to the landing page, to buy a domain, and to pay for the website, either because you hired a developer and a designer, or you bought a premium subscription to the service. ·
Level of evidence: very solid. Customers are paying for something that doesn't really exist. They certainly fit the definition of the early adopters: they're so mad about what you're doing that they're ready to commit before it makes reasonable sense to do it.
Customer Validation Interviews with a Working Prototype
From this test, we're beginning to work with real goods. So no more drawings on paper, scrappy ideas or promises, we're checking the real stuff here. And all the cash and time commitment that follows. This test is a pro version of Customer Validation Interviews to gain a pledge (see above). We see that most of the deep-tech start-ups with which we work has been asked by their clients to see a working prototype before they can commit to realistic next steps. It makes sense that if a business idea is largely based on a tech marvel, they want to see if the team can execute it before pushing forward. The method and goals (get commitment) are the same as the Customer Validation Interviews, but instead of presenting drawings on paper or a mock-up, you will be presenting a working prototype of the product. It's easy to see that rejection at this point could cost a lot, and it could hurt a lot, simply because building real stuff doesn't come for free. So this test is useful in case you either have a working prototype ready for some purpose ( e.g. it comes from an R&D or a University Lab), a product needs several real iterations due to its inherent design or you are so advanced in the validation process that you have chosen to invest in making something real. Using this test to verify a value proposition for a new product or business concept. ·When to be used: you have a working prototype ready for whatever purpose, a product needs several real iterations, or you have a competitive value proposition already validated with consumers. ·
Time and money needed to set up: this could take from a few days in the case of a 3D printed object to several years. ·
Level of evidence: medium. It really depends on the kind of commitment you're trying to make, but if they commit, it's a positive indication that you've got something important.
Sell Concierge Service
From this test, we're beginning to work with real goods. So no more drawings on paper, scrappy ideas or promises, we're checking the real stuff here. And all the cash and time commitment that follows. This test is a pro version of Customer Validation Interviews to gain a pledge (see above). We see that most of the deep-tech start-ups with which we work has been asked by their clients to see a working prototype before they can commit to realistic next steps. It makes sense that if a business idea is largely based on a tech marvel, they want to see if the team can execute it before pushing forward. The method and goals (get commitment) are the same as the Customer Validation Interviews, but instead of presenting drawings on paper or a mock-up, you will be presenting a working prototype of the product. It's easy to see that rejection at this point could cost a lot, and it could hurt a lot, simply because building real stuff doesn't come for free. So this test is useful in case you either have a working prototype ready for some purpose ( e.g. it comes from an R&D or a University Lab), a product needs several real iterations due to its inherent design or you are so advanced in the validation process that you have chosen to invest in making something real. Using this test to verify a value proposition for a new product or business concept. ·When to be used: you have a working prototype ready for whatever purpose, a product needs several real iterations, or you have a competitive value proposition already validated with consumers. ·
Time and money needed to set up: this could take from a few days in the case of a 3D printed object to several years. ·
Level of evidence: It really depends on the kind of commitment you're trying to make, but if they commit, it's a positive indication that you've got something important.
Sell by Pretending to Own or Re-labelling
Again, with this test, we're "faking it before we do it," and we're validating consumer demand by selling a the makeshift product that pretends to be the real thing. Just to make it clear again: that doesn't mean we're cheating on customers! They're going to get the same service they're paying for, nothing less. However, we're selling something that we don't even own or create. An example could help: a film sound service checking the value proposition for a brand-new advanced recording technique has two options. Either to get a loan to buy $100k worth of equipment, or to rent it from another supplier, to sell it to their customers who barely cover the cost. The benefit of the second choice is that if their customers did not respond favourably, they would only have lost a few hundred pounds instead of getting a £100k to pay back to the bank. So this test is about borrowing or renting something required for a business idea before spending a lot of money to buy it. Businesses such as HSS hire or Appear Here largely meet these needs: before rushing to purchase a tool or sign a contract to rent a prime commercial space for a store, they encourage entrepreneurs to "pretend to own" or "re-label" something, postponing a major investment until they have enough validation for a value proposition. Again, this is not supposed to be done for scaling, and not even to make a profit. Instead of a learning exercise, it helps to reinforce a value proposition, de-risk the new business concept, and get a lot of knowledge to put together a realistic financial plan. This test also includes a landing page with an order form capable of accepting payments from customers and advertising campaigns to drive traffic. ·Use this test to: confirm a value proposition for a new product or business concept, get insights into a financial strategy, get momentum to either persuade investors or decide to take the plunge. ·
When to use: you have a compelling value proposition that has already been tested by customers in cheaper ways, and you want to try the real thing. ·
Time and money needed to set up: this depends on the actual cost of renting or re-labelling the service/product. One thing is certain here: expect money to be invested, possibly in the thousands. ·
Level of evidence: very high. Customers are purchasing, leaving suggestions to you. It's like you're dealing with your business idea.
Sell Actual MVP in Test Markets
By now, you should have realised that you have a lot of options to test the market before you create the actual product you have in mind. And there's no reason to slip into the construct pit! These last two assessments are the most labour intensive and enable the founders to create and sell the actual product. This means that a potentially significant sum of cash will be spent. The definition of a minimum product or Minimum Viable Product(MVP)is one of the main concepts of the Lean Startup technique. It determines the construction of a product in order to minimise to a minimum the commitment of customers with a number of features. Most popular startups have begun with the Minimum Viable Product(MVP).For example, Twitter began as a way to send SMS to a group of people, and there were no @replies, # hashtags, or retweets. Fin-tech startups like Monzo or Tide have launched early iterations of their app-only banks using prepaid cards or not enabling customers to set up standing orders. Minimum Viable Product(MVP)is a minimalist exercise designed to provide target consumers with the right collection of features that will make the product trustworthy, competitive, enjoyed and purchased. In order to reduce the risk, this test involves the launch of the actual product in a selected market where the concentration of early adopters is greatest. For example, the Deliveroo food delivery service began first in Chelsea, where the concentration of early adopters was higher. Having validated the idea and value chain and gained tremendous momentum, they have raised so much credibility to raise funds and extend the reach of investors.
Use this test to: launch the actual product on the market with the highest concentration of early adopters, learn and fine-tune operations and value proposition, and develop a reputation to grow in adjacent markets later.
When to use: you have a competitive value proposition that has already been tested with consumers in cheaper forms, and you have the funds to develop and deliver the real thing.
Time and money needed to set up: this depends on the actual costs of the design and start-up of the operation. One thing is certain: plan to spend thousands of pounds and start working on this full time.
Level of evidence: very strong. Customers are purchasing, leaving suggestions to you. It's like you're living with your business idea but in a kind of "secure" sector.
Sell Actual MVP Broadly
As mentioned above, the definition of a Minimum Viable Product(MVP), or MVP, involves the creation of an actual product in order to minimise the engagement of consumers with a a number of features to a minimum. Minimum Viable Product(MVP) is a minimalist exercise designed to provide target consumers with the right collection of features that will make the product trustworthy, competitive, enjoyed and purchased. The only difference from the previous test is that you are not only approaching the area with the largest concentration of early adopters but are also spreading to the neighbouring markets. This isn't really a survey anymore, but the actual company is beginning to expand. For example, when Uber began testing the market to offer its the value proposition to simplify cab-hailing, it introduced in 2010 a single venue, San Francisco, targeting the high-end market (professionals using black limo-type cars) that they described as their early adopters (read more about how they did it). This helped them to iterate and validate the proposal and to be credible in front of investors, to show traction and to raise additional funds to grow widely. Up to now, Uber has earned at least $24B of funding. ·Use this test to expand your company. ·
What to use: you have successfully opened a test market and you have funds to grow. ·
Time and money needed to set up: it really depends on the actual cost of growing the company. I'd bet you're already working full time on a company, and I'd probably hire someone to help you out.