In the Lean Startup methodology, one of the most important elements is getting out of the building. You must conduct client interviews, website usage tests, and maybe even set up a small PPC campaign to figure out whether or not the market is interested in you offering.
In this article, I’ll give a quick overview of the best practices for validating your business idea in use today. Ideally, you will be able to use the results for your business plan and your pitch deck to convince investors and other business plan recipients that your idea is worthy of investment.
The importance of speaking with potential customers
When you validate your idea in a way that allows for a dialogue with your potential clients, you get the chance to pivot your offering and revise the market launch strategy before investing and (perhaps sinking) too many resources in the wrong place.
Idea validation and Lean Planning
Idea validation is a practice which has been gaining more and more popularity as Lean Startup and Lean Planning methodologies have changed the way new business concepts are conceived.
However, it goes beyond the Lean Planning process: The lessons learned from validating your idea can also be applied for investor pitching and market entry strategy. Idea validation should not just aid you in conceptualizing, but actually yield a hard return in other aspects of the startup process.
Therefore, always try to embed lead-capture opportunities in your surveys, interviews, and test sale posts where possible or else create the chance for some kind of follow-up.
After all, you should be talking to a portion of your target audience when validating—why not attempt compiling a batch of test users or test buyers while you’re already at it?
Startup validation tactic 1: Interviews and getting out of the building
This is an old one—we’ve mentioned it on Bplans before—and so I will focus on giving a few recommendations about the actual process to complement the knowledge already amassed.
Ask open-ended questions
Interviewing as a Lean Planning validation tactic is commonly practiced to yield quality feedback (versus quantity feedback).
One very important rule when compiling your interview script is to, therefore, have very few yes/no questions and many open-ended questions. These ideally do not give anything away about the solution you had in mind, but should rather give you more insight into your prospective client’s take on the problem your solution should solve, as well as consumption habits.
Avoid collecting biased responses
Interviewee bias is real, and so ideally the person you’re interviewing shouldn’t necessarily know that you’re considering starting a business.
If they’re aware of your plans, will give you all kinds of positive indicators that will lead to you falsely validating the idea for yourself. Then, when the day comes, you’ll be entering the race on a dead horse—because perhaps no one was ever really going to spend money on your solution.
Everyone just wanted you to feel good and confident about your business endeavor because you’re such a likable person, and in consequence, you now have a big problem. Not a good place to begin from!
Startup validation tactic 2: Social media surveys
The beauty of social media surveys (for all of the founders who either have their own following, or are somehow able to garner enough support to hijack other channels or groups for a serious social gauging) is that they’re quick and easy to execute.
Collect qualitative data wherever possible
Social media surveys easily give fairly reliable quantitative data from actual people. That being said, some survey situations even allow for a little bit of qualitative data.
Popular, for example, is the small text field for comments, suggestions, or even audio memos which usually concludes the survey. Facebook surveys can, by the way, be set to allow for participants to add answer fields by themselves, a feature that can sometimes also deliver valuable insight.
Focus on asking the right thing the right way
When designing social surveys, make sure you’re asking the right thing of the right people in the right way. Social channels are as agile as they are flaky—one wrong word can make all the difference between massive participation rates (which can also lead to comments and shares), and being ignored.
An example of a good approach would be to ask a specific group for people with lower back pain about the worst aspects of being a chronic back pain patient, perhaps using common keywords used by the group along with empathetic language.
An example of a bad approach would be asking in a general group of digital nomads whether people prefer Apple or Microsoft, while also mentioning that you’re developing a hardware product. You’ve not only exposed your commercial interest, but you’ve also asked a question that is asked every other week for a variety of reasons, and so people will likely not be very engaged.
Startup validation tactic 3: PPC (pay-per-click) test campaigns
This is a big one and should be a top priority, because in many cases you will be using PPC campaigns for the actual thing.
Pay attention to your copy and image elements
If you cannot get any traction with a $100 test campaign, either your ad is flawed, or your idea is.
The former should be avoided by basic competitor and target group research, and testing different copy and images in the same campaign (two to three test ads).
The latter is more serious—if $100 in a PPC campaign cannot give you one lead, you’d better pivot hard.
This validation tactic helps you shed a glaringly honest light on your client acquisition cost, distilling from CPC (cost-per-click), to CPA (cost-per-action), and the various other conversion steps. The nature of the conversion and therefore the interpretation of a cost figure can vary a lot depending on whether you’re looking for signups, purchases, downloads, or what have you.
Make sure you have a following and website to support your tests
As Facebook and Google try to deliver higher quality ads to their users, it has become more difficult to stage test campaigns with strapped resources. During a seminar I attended, it was suggested that businesses need Facebook fan page with at least 1500 likes to get any decent displaying reach. For Google Adwords, you need a fully functional and content-equipped website.
While the more targeting-friendly Facebook will usually not reject ads pointing to your landing pages made with tools such as Unbounce or Launchrock, Adwords will usually not accept these. It’s a good idea to learn more about the basics of PPC marketing, as it will likely come in handy further down the road.
Startup validation tactic 4: Email test campaigns
If you’re lucky enough to either already have a big list or the ability to access one through an associated list owner, this one could be a great idea for you. Make sure you segment your list smartly, put a lot of effort into crafting a compelling subject line, and polish the email text.
Set up tracking from the start
Make sure you track opens and click-throughs, either using integrated plugins such as Yesware or built-in analytics of your chosen email marketing provider.
If you have made it to here, I’m sure you can use your expertise and imagination to come up with various funnel paths you want the mail recipients to flow through. When emailing, think both quality and quantity validation, and you’re on the right track.
Startup validation tactic 5: Test sales
What keeps you from propping up a stand at your local flea market, supermarket ads board, or other designated communal usage space and putting up a big, attention-grabbing sign outlining your business offer?
Why not use situations such as people waiting in line in front of a club, stadium, or concert to act as an ambulant salesperson and try and push-sell your offer? You might need a permit, but perhaps you can ask the organizer or other person in charge and they will give you permission for a short 30 to 60 minute experiment.
The idea is to experience the exhilarating feeling of watching someone get out his or her wallet and hand you some money. It is the ultimate validation to get someone to put actual hard-earned money into your hand in exchange for maybe even just a promise that you will sign them up for a course (perhaps consider asking for a 20 percent deposit—psychologically this is easier to rationalize for most people and you will encounter less resistance).
Consider trade fairs or cold calling
If you’re good with the phone and your solution is B2B, nothing keeps you from going through some industry association’s directory or trade fair floor plan and look for ideal clients. Ring them up, rehearsed sales script in hand, and try and get some purchase orders. It’s a thrill, it can be fun after a few times, and you’re doing the one thing you’re absolutely going to need for your business to thrive—you’re selling!
Startup validation tactic 6: The Mechanical Turk or Concierge Method to test your MVP
This one tactic is for those who are putting together a technology product, usually software, but could have use cases also in other industries. I want to specifically go over it in connection with the preceding advice. If you’re struggling with putting together something that you can offer as an MVP (minimum viable product) for validation purposes, consider using manpower to bridge the tech development gap.
For example, say you’re building a fintech app that uses AI to help people find exciting investment opportunities based on their interests. Before paying a developer, you could:
- Come up with a good “signup bribe” (an ebook, for instance).
- Put it up on a squeeze page using for example free trial versions of Unbounce/Mailchimp.
- Post the link guerrilla marketing style (think Bit.ly so you can later easily redirect all the links you built to your future homepage for SEO) up and down in financial forums and social groups.
- As you keep an eye on user engagement analytics, perhaps testing two to three different headlines, eventually leads should start dribbling in.
- Now you have to sit down in front of your computer and manually piece together what your software would otherwise compile automatically.
Et voila, you have some solid validation. If you’re pitching, make sure you dedicate a portion of your business plan or pitch deck to expose these findings to your potential stakeholder. Personally, I find such data considerably more exciting than any market volume and growth statistics scraped off the internet.
Mechanical Turk MVP or Concierge Testing as opposed to the more minimalistic, superficial test pages with no actual benefit to the user has a lot of advantages. Not only do you maintain your credibility in the forums and social channels, but you also learn much more about your clients’ patterns of thought and action. Lots of insight and much stronger validation for your idea!
Create validation you can depend on
Do not chase vanity metrics and warm fuzzy feelings when setting out on your quest for ultimate validation. Gauge the real interest and be extra-prepared to abandon your idea if you can neither get validation nor pivot smartly. There are millions of opportunities out there, and you deserve to have your time and effort pay off. As fashionable as failing seemingly has become in the startup world, the validation process should not be your first blunder to begin with.
More than in any other moment in the history of business, you are able to cheaply and quickly get any message in front of custom-tailored audiences in an easily scalable way. This is a power not to be handled lightly. Always keep in mind that well-executed validation is also your strategic foundation for successful market entry in so many other ways.
It’s smart to test the ice by tipsy-toeing; big leaps will come soon enough to the entrepreneur who understands this concept.
I invite you to be that entrepreneur: Validate like your life depended on it. Because in 21st-century business, it does.