Any startup’s first and foremost challenge is to validate its product and business idea. About 50 percent of businesses fail within the first year of operation, endorsing the vitality of idea validation. A lot of people ‘think’ that there is demand for their product or service, but the reality is otherwise –, and as a result, there are deadly consequences.

Entrepreneurs often get excited and ignore the practical approach to their business concept and build a product nobody wants. In order to ensure that there is a sustainable demand for the product, a business has to adopt some basic idea validation tips and get on track.

Get the Fundamentals Right

Your SaaS product idea validation doesn’t have to be a boring and lengthy exercise. There are just three simple questions to ask and answer.

• Can you build it? This would involve discussion around expertise, skills, tools, and capital required to build the product.
• Should the product be built? This is more about market assessment, where you analyze if it has a chance in the market.
• What should be the level of complexity? This question should help you plan your minimum viable product (MVP) and go with the features that people would find more appealing and useful,

You just need to answer these questions in a cost-effective and as simple as possible manner. Here are some idea validation tips that should help you validate your product idea in an affordable and faster way.

Know Your Customer

The first step in validating your product idea is to understand your customer and target audience. Determine customer-product fit by pointing out the problem you intend to solve and then match it with the audiences you aim to target.

A lot of folks think that KYC or knowing your customer is to identify your target audience – it’s much more than that. You have to understand their pain points, priorities, psychographics, purchasing power, and decision-making.

Start with a Narrow Audience

In order to ensure that you are targeting the right audiences, it is a good practice to start with a narrow set – to test the market. If the experiment on a narrow audience goes off successfully.

This is the perfect choice for any startup in terms of resources, time, and monetary investment – as you could test the idea and product without mass advertising. Of course, with the availability of funds and better results, you can expand the customer base and continue to widen the audience.

Now, the question is – how to understand your audiences and get to know their preferences? Here are a few options.

1. Conduct Online Surveys

There are many ways you can do the survey. It could be in the form of video interviews and/or simple survey form submission.

You can use email marketing systems to send out an email questionnaire to determine who is interested and who is not. The biggest catch is your ability to build and manage email lists here.

There are two types of contacts – those who already know your brand and in your email database and then those who are new. You need to build the capacity to create a lookalike audience through various tools like Sales Navigator, Snov.io, and others.

2. Conduct a Field Survey

This might look old-school, but it is actually one of the most effective and affordable ways to discover your audience. You can hire some college interns to help you do this field survey and meet with the people who fit the description of your target market and ideal customer profile. You can locate them in offices, parks, shopping malls, metro stations, and networking events.

Your team just needs to engage them – but not overwhelm them with a bombardment of your product ideas. You may follow a simple ice-breaking process and help them help you.

• Tell them about the problem and learn if they experience it
• If yes, ask how do they currently solve it
• Learn the issues with their current solutions
• Tell them about a potential solution and learn about the potential impact on their lives
• Ask if a solution is provided today, and how likely they are going to avail it

You can simply use a recording device to tape the answers with their consent or just use a questionnaire. This method might not give you unlimited reach, but the quality of feedback and input would be unmatched. Out 15, you might get 10 or fewer people responding to your queries, but that is fine.

At the end of the conversion, make sure you ask for their email addresses and contact information for future updates etc.

3. Research the Market

While this is very obvious, we just want to be sure that you are on it. Here, the sort of information you need is total addressable market size, competitors, consumer behavior, target audiences’ demographics, pricing of different competing products, costs of production, barriers to entry, and potential legal challenges.

This can be done through industry reports and research conducted by authoritative market research firms. Moreover, you can look around on social media and web trends to assess the market conditions and dynamics.

Google Trends and some market intelligence tools can also provide valuable insights. Twitter and LinkedIn trends, hashtags, and leading publications coverage can also assist in understanding the market.

Once you are done with market research and surveys, the next step is to move on to your production and development exercise.

Validate Your Production Needs

Once you are done with the market research and identifying the target audience, the next step is to understand if you can build the product or not.

This exercise primarily deals with finding information about the skills and resources you may need. Generally, you would need to make a call around the following:

• Funds
• Infrastructure (technologies & tools)
• Team
• Timeframe
• Potential suppliers/service providers
• Outsourcing vs. internal development
• Financial modeling
• Break-even assessment
• Future projections

These assessments should help give you an idea of whether it is practical to build the product or hold for now.

Analyze Your Competition

This is one of the most under-rated idea validation tips you’ll ever encounter. Your competitor intelligence can help you understand your market and validate production needs. There are a whole bunch of online tools like Google keyword planner, Ahrefs, SEMRush, Spyfu, etc., that can give you substantial intelligence.

You can track people’s queries, search trends, and keywords that they use to search for a particular problem – to give you an idea of potential gaps and opportunities.

Conduct an Experiment

Once have the intelligence about the competitors, and there is a clear hypothesis in place, now is the time to test your idea. This is a straightforward and efficient way to validate your startup idea.

The idea here is to create a marketing experiment by running mock advertising around the idea, and driving people to your landing page. Advertise your minimum viable product (MVP) idea to your ICPs.

You need to create compelling content that explains your product and push it through different channels like social media and digital ads. Once people click on your content or ad and visit your landing page – it should work as a lead magnet.

The landing page should ask people to provide their email addresses in exchange for some benefit like early access to the product (or anything you could offer). This way, you would be building a smart email list. Your incentive should be captivating enough to convince people to share their details.

Build an MVP and Pitch to Various Stakeholders

While some experts believe a simple prototype is enough – we would recommend opting for MVP. An MVP is a functional and usable version of your product, though it is in a very early stage and offers very selected benefits.

The prototypes or MVP will be a handy tool in the validation process as it can offer a lot of credible intelligence that you could use while pitching the idea to investors.

Once you have the MVP and its credible use cases, you can go and pitch the product to various industry stakeholders. At the same time, this may sound very risky as the idea might be stolen if you get late in materializing it. However, the delay is costlier.

Discussing your product idea at different seminars and networking events and pitching it to the people of interest can help get funding and networking. In addition, with more active word-of-mouth marketing, your product’s likelihood of success grows bigger.

Conclusion

Startup idea validation is a necessary step in building a winning product. Many entrepreneurs appreciate the process but shy away from practicing it due to visible complexities. We hope that the lean process we explained above will help do away with typical complexities.

At Numberly, we are committed to helping founders with their business models and financial projections. Our team can help do the right projections and win funding at better terms if you are working on startup idea validation.

Schedule your free consultancy call and talk to the industry experience with all of your questions and concerns in mind.