Market Validation Tips
Market validation is critical to business success.
Scaling a business is all about profitability. There can no profits without revenue. There can be no revenue without customers. There can be no customers if you don’t solve problems that customers care about.
Ten tips for market validation are listed below.
- First become the world’s expert on a customer problem, and then apply technology to solve that problem. How do you go about becoming a world’s expert on a customer problem? There is no magic here, just hard work. Simply, get in front of 50 to 100 potential customers and understand their problems. With that number of interviews you should gained a nuanced understanding of the problem, and understand that problem better than anyone else.
- Who is a customer? Someone with both a big problem and a budget they have the authority to apply to solving the problem.
- What is a big problem? A problem that keeps a person awake at night with worry, or a problem when solved will get the person promoted. If your company can uniquely address those kinds of pains or gains, the person should be willing to write you a check (again, if they have the authority to allocate funds).
Nice-to-have or incrementally-better rarely motivates a customer to make a commitment to you. Especially since changing vendors can be risky or a big hassle.
- And the customer is an individual. Your customer is not a group, like an engineering department, or a company, or an agency. These types of entities don’t decide to spend money with you. An individual with a name and a desk and a picture of their family on their desk can decide to spend money with you. When you find enough of these individuals willing to write you a check, then you have validated the market need and size.
In complex B2B sales environments there may be a variety of people influencing the purchase decision. But ultimately one individual makes the final decision. You need to interview that person.
- When you interview the person, it is not productive to start off by talking about your cool product or technology and then asking the customer if your baby is pretty or ugly. No one wants to tell you that your baby is ugly.
- And don’t ask about their opinions. You don’t care about their opinion. Opinions don’t buy products or services. Solving pain sells products and services
- And don’t talk about the features of your product or service. No one buys features. They pay when your offering beneficially takes away their pain.
- The more productive way to approach the customers is to start off by mentioning the general problems area that you are interested in, and then get the interviewee to talk about the pains they have in that general area.
- Spend 80% of your time listening and only 20% of the time talking.
- At the end of the conversation, if you have successfully identified a pain that you can solve, you can summarize your product or service offering, and ask how much they are willing and able to pay for a solution.