Whether you're launching a small business from scratch or developing a new product within your existing company, validating your idea can prevent you from squandering finances on a product or service your customers won't support. Best of all, you don't need a dedicated budget to perform baseline market testing.
Large companies can spend years testing variations of product designs, marketing campaigns and other aspects of a customer's experience. For instance, Wendy's once spent nearly three years testing a new recipe for a hamburger before rolling it out to the public.
Most small businesses and entrepreneurs don't have that kind of time or money. Fortunately, you can adopt a few lean methodologies that offer many of the benefits of a testing program without the cost.
Write the Marketing Page First
Although established companies can benefit by staging a dramatic campaign launch, small businesses don't get the same results from building buzz. When you want to determine the potential success of a new product, start with a simple sales letter or landing page that describes its features and benefits. A service like LaunchRock can help you publish a quick website that can validate whether there's sufficient demand for your product through pre-orders or requests for notifications.
Develop Your Minimum Viable Product for Testing
Your minimum viable product (MVP) may feel rough around the edges, but it's the fastest way to determine whether you're on the right track. Focus your efforts on eliminating pain points and solving problems for your target market, instead of worrying about whether your product's perfect.
Measure Results Against Your Expectations
Instead of relying just on "buzz," set clear metrics that can illustrate whether you're heading for a profit or merely burning cash. Comparing active users to overall signups can show you whether your early adopters have jumped ship, or if you're gaining real traction among your target market. Some application developers even turn accountability into a form of promotion by revealing their customer numbers or queue times during the early phases of a launch.
Iterate or Pivot
Based on customer feedback and measurable results, prepare to modify or abandon your idea every few weeks until its formal launch. The right iteration signals that you're listening to customer feedback. Pivoting out of your original idea may feel like a failure, but it shows that you're focused on the long-term growth of your company.
Detractors of market testing often point out that Steve Jobs delivered products based on a vision instead of extensive market research. Yet, even Apple's founder relied on the customer feedback he received via his company email address.
Jobs once told a Time reporter that it acted like "a thermometer on practically any issue." Bringing customers and prospects into your product development cycle early can give you the same kind of benefits, without the expense of formal focus groups and product testing cycles.
Joe Taylor Jr. has covered personal finance and business for more than two decades. His work has been featured on NPR, CNBC, Financial Times Television, Fox Business, and ABC News. He recently completed a personal finance book entitled "The Rogue Guide to Credit Cards" (Rogue Guide Books, 2012).