Startup Series Validating The Market & Product

In part one we walked through a practical method for clearly and concisely defining your idea using the Lean Canvas approach. In case you missed it, read part one here. Now that your idea is clearly defined, the next step is to validate that the assumptions we made in our Lean Canvas, are in fact correct. This is a very important step and may end up saving you a lot of time and money when done correctly. So, it's best to be thorough and careful in your implementation of this process and in your analysis of the outcomes.


So how do we validate the assumptions that we made when defining our idea? Well, to do this we want to first break up the concepts behind our idea into the two spheres of our Lean Canvas – Market and Product. We will test both of these individually and then later, we'll test the two collectively using something called a Minimum Viable Product (MVP). But first off is the market validation.

Validating the Market

Without a market, there is no one to buy your product. So, validating this correctly is crucial to the success of the project. There are many ways to identify the size and composition of the market. I will explain the ones I find to be most practical and effective.

Keyword Planner Tool

Google provides the Keyword Planner tool which is designed to help users developer Google AdWords campaigns. This tool is provided to help users drill down into the frequency statistics of Google keyword searches performed globally. Which ultimately also makes a perfect tool in validating the sort of interest that the market might show in a potential product which you bring to the market.

For example, say I was looking to launch a app-based fast food delivery service in my country (Australia). Using the Keyword Planner, I could quickly validate that each month "fast food delivery" is searched an average of 880 times. Not only that, Google suggests that competition for AdWords ad placement is at a "medium" level. This provides me with some confidence that the public are looking for such a service.

Surveys

Surveys are still a great way to gauge public interest. They can be executed in many ways, on the street, online, user testing sessions, over the phone etc. The key here is to ensure questions are worded well enough to both validate or invalid your assumptions, and more specifically, that there is no underlying bias which might cause the user to answer in a certain way which might skews the results.

There are many online survey providers out there, such as Survey Monkey, Typeform, Zoho Survey and Survey Gizmo. These tools make it easy to get your survey out there, and some of them offer free packages. A good sample size to go with is 1000. And what you'll end up with is a fairly telling result set including a useful breakdown of demographics, which will further help you define your target market.

Existing Products

Searching far and wide for products which are similar or the same as your solution is a quick way to determine if there is a market out there. By finding several actively supported products already on the market, we can deduce that there will indeed be potential customers out there for your product. This process can however be daunting, as finding competitors can give you a feeling of being late to the race. In my experience, however, competition is a good sign, and as long as you're not up against the likes of Google, Microsoft or Facebook, the competition will simply bring extra visibility to the type of product you offer.

Validating the Product

By this stage, we've validated that the assumptions you made about the market for your solution are correct, or perhaps we've refined that target market as a result of our research. Either way, that's great! now we can move onto validating that our proposed solution is something that our market will be willing to pay money for.

We are purely attempting to validate that the assumptions we've written in the Product sphere of our Lean Canvas are correct. And therefore, some of the tests we can use for the market validation are also applicable to the product validation. That said, we definitely don't want to leave it at that. So, here are some tried and tested ways of validating your proposed product.

Ask People

Yes, this is an obvious one. Go to networking events and ask people, explain your idea and how it solves the problem for your given market. Not only will you get feedback about your solution, you will also potentially hear about how people may have overcome the problem already. Also, others might suggest things to improve your solution which you may not have thought of yet. At this stage, also be sure to have an elevator pitch for your product ready and memorized.

Explainer Video

The explainer video is a great way to showcase your solution, without having actually built it yet. This is where you put together a neatly edited 90 second (give or take) video which explains or even shows the use of your future product. This video will show viewers exactly what your product does, and can be easily shared across social media. A platform like YouTube conveniently provides free hosting for your video and with the ability for viewers to perform a "like" or "dislike" action, as well as provide comments. This will all help tremendously in gauging the markets response to your solution. A great and well known example of this is the Dropbox video.

Landing Page

Probably my favourite method of validating a product is the use of a landing page. A landing page is a simple web page typically used for advertising a product or service. Using a platform such as Unbounce or Leadpages, we have the ability to set up a simple, single purpose web page which explains our product to the user. This page needs to look attractive but as the intention is simply to validate the desire for your product, we a really just looking for them to perform an action that signals their interest. The most common practice is the use of a web form when the user can provide their name and email address.

The process of setting up a landing page might be as follows. First, using one of the providers mentioned earlier, we set up our landing page and configure it appropriately to properly explain our product, this will include a message saying that our product is not ready just yet, but will be soon. It will also include a fairly detailed product description, and an explanation of the benefits a user can expect the product will provide them. Accompanying this is a form allowing users to subscribe to updates on the progress of the product release. For us to get web traffic to page, we can make use of AdWords paid ads, as it will be a fairly short-lived campaign. The final and most important step is ensuring that some form of browser tracking is set up on the page, for this the most common used service is Google Analytics.

Once you've put the page together and have initiated to AdWords campaign, you can sit back and what the web traffic roll in. What you will want to look for to validate the web users interest in the product is the ratio between unique page views to the number of form registrations. This will give us a great idea of how interested the market is in our product. I've found that a ratio which is indicative of a successful campaign is anywhere over 35% conversions.

Intrested in the next steps? Check out the next article in our Startup Series - Designing Your Minimum Viable Product