“Jumping into a startup without market testing can be like skydiving without a parachute”
"Will it work?" After brainstorming an idea for a new product or service, this is the first question an entrepreneur should ask themselves. Referred to as market testing, obtaining proof of concept or de-risking an idea, this step is imperative in formulating a business and should be considered early in the first stages of a startup. Below, I list five important benefits of market testing.
1. Save time and money
Many entrepreneurs spend thousands of dollars and endless hours working on their product or service. When they launch, they may find a market doesn’t exist or launch to less than stellar results. Obtaining proof of concept – whether it’s with an online survey, an online focus panel or a Google Adwords test – can help entrepreneurs save time and capital. These online formats can be affordable alternatives to traditional concept testing tools like focus groups, which can cost $5,000 or more.
2. Identify focus and differentiate from the competition
Some forms of market testing also allow entrepreneurs to determine Long Tail opportunities for their product or service. For example, a client of ours was looking into providing offerings to the general health and wellness space. However, a couple of weeks with some niche market strategies and a Google Adwords campaign specially designed to seek out new opportunities led to a focus on specific medical conditions. The company is currently one of the most promising startups in Philadelphia.
3. Obtain feedback from your target market
You have an idea and you think it’s going to work. Why not hear it straight from your target market? Validation from your target market is instrumental and an important but often overlooked step by entrepreneurs. Let’s say you’re looking to launch a clothes swapping social network for example (one of my past ideas), wouldn’t you want to hear from potential customers what they think of the service or whether or not they would use it? You can even test out different price-points they’re willing to pay for your service. If you’re looking for investors down the road, this step is especially critical as you will need to explain how you arrived at your conclusions.
4. Ensure there is a need for your service
Related to the previous step, market testing also allows entrepreneurs to de-risk their idea. Hearing feedback from your target market is a great way to gain insight on how likely they would be to use your product or service. If performed correctly, you may also sign up beta users and attain specific areas of interest from your potential consumer. Sometimes entrepreneurs fall in love with their idea only to realize they are not filling a specific or large enough market need – make sure you don’t fall into that trap.
5. Test out different messages
Finally, another great advantage of market testing is finding out which messages are resonating with your market better. We’re currently conducting A/B testing on a service for a client of ours in the Green/environmental space. We formed two messages – one geared towards a specific psychographic highlighting the measurable benefits of the offering and another focused on a psychographic that highlights the impact on the planet and community. Depending on the results from this kind of test, you can determine which message will convert more users and use it as part of your web copy. This can turn out to be a great way to ratchet up sales.
So now that you know the benefits of market testing, where do you start? Stay tuned for future posts where we’ll explore that topic. In the meantime, check out Steve Barsh’s blog, a guru at one of the DreamIT companies (For more on DreamIT, see our previous blog post “Announcing the DreamIT Series). He recently gave a great presentation titled, “De-Risking your Business Model: A Brief “How-to” Guide with some ideas and helpful insight.
By: Yasmine Mustafa