Many have heard of the MVP (minimum viable product) concept, but it’s one thing to have heard about it and another is to put it into practice effectively. The acronym itself is probably wrong, as it implies that a product must be built to validate an idea, which is not always the case. Demand and distribution must first be validated, then product development becomes more relevant to understanding whether the product is really useful.
Validation of a B2B product idea
If you plan on selling something to other companies, talking to other companies should be critical to your process, not product development. The simple development of a website, a presentation and some additional marketing materials is all it takes to validate that there is demand for your product, as this is how any sales process begins.
When it comes to reaching out to other businesses, there are a few key channels to test first: cold calling, email, and LinkedIn. Regardless of the channel you choose, your first step should be to establish a list of contact details. I recommend that you find at least 50 contacts to start with and then contact them one by one.
If you can generate a qualified engagement in the first 50-contact approach, your efforts are at least average, as a 2% success rate for an initial campaign is an average starting point. The most successful campaigns will have a success rate of 10% or higher, meaning you will schedule at least five meetings in the batch of 50 contacts.
Being able to generate meetings effectively enough validates that your message resonates with your target audience. If you can’t, you should try new messages and new contacts. Can you improve your success rate with the next 50 selected contacts? It is generally recommended to change only one variable at a time so that you can validate whether it was the message or audience that led to bad results, although the same can be said for validating good results.
You’ll need to be ready for your meeting and have a good strategy around your message – after all, you don’t have a product built! You can let the prospect know that your product is still in beta and that you are accepting waitlist applications, or you can be sincere by saying that you are validating customer demand before creating the product. Either way, you’ll have to be genuine and say the product isn’t ready yet.
For sales calls, a 10-30% success rate should be your goal, as this is a common success rate range for many B2B companies. Fortunately, if you’re not successful, you’ve wasted no time creating a product, and it will be much faster to pivot your business when pivoting involves tweaking your message text, your contact list, and your sales pitch.
Validation of a B2C business idea
When selling to consumers, there are more testing options: organic social media marketing, social media advertising, paid search marketing, organic SEO, direct mail, etc.
Some of these options, like digital advertising and direct mail, require a financial investment to get started, so they might not be the best starting points for most people. That said, they can provide faster results, so if you have the budget, they’re definitely worth a try. Additionally, you’ll find that Google Ads offers promotional credit for new ad accounts, which might be the best starting point if you’re interested in taking this route.
As with B2B, your first goal should be to establish an online presence. It can be as simple as a landing page with a waiting list to sign up. You need to have a conversion goal in some form so you can gauge if there’s demand, even if your product or service isn’t ready.
Then you can test promoting your concept wherever you find your audience online. Are there Facebook communities with your target audience? Quora questions? Hashtags on social media? You need to reach your audience instead of waiting for them to find you if you want to validate your idea as quickly as possible.
SEO is one area where you can get audiences to come to you if you develop a business concept that is non-competitive and has relevant search volume. By setting up your website and using relevant keywords in your titles and your website title, you will be able to rank in search engines like Google and start getting traffic for free for having the most relevant content for users of a certain search.
No matter which of these approaches you test, the point remains the same: try to validate the business idea before building the product. If you can’t get people to visit your website, your marketing message or the audience you’re trying to reach is probably not good.
Translated article from Forbes US – Author: Matt Pru (co-founder and managing partner of Stackmatix, the first growth partner for start-ups)
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