Prior to moving forward with building your new product, you must answer a few very important questions related to the market and the ideal customer you’re targeting. The problem you’re aiming to solve needs to be big enough to warrant your solution and you must do your best to make sure you’re in a good market.
Before kicking off any product-development efforts, I recommend going through the following steps to assess the market fit, validate your idea, and reduce your chance of failure (keep in mind that some of these steps can be performed in parallel):
Assess the Market
You must do your best to make sure that you’re going after a good market, and one of the biggest mistakes you can make is to begin developing a product for a very mature, bad, or shrinking market with loads of formidable competitors.
- If you’re already in the market, assess what has made you successful thus far and why. Take a look at where the market is headed and figure out if what has made you successful today will still allow you to be successful in the future. One of the biggest mistakes founders make is assuming that today’s strategy will work in the future, especially after a successful year, without analyzing the direction of the market.
- What is the current market size? What is the projected growth of the market over the next several years? Where is the market headed? In some cases, especially if it’s new, the market could currently be small but projected for massive growth in the coming years, so you will have to take an educated guess and trust your instincts.
- Segment the market. You want to tailor your products to a specific group of users and become obsessed with solving their problems. This will allow your products to have a much stronger value proposition and really allow you to focus your limited resources. Solving too many problems for too many users, especially in the early stages, is a recipe for failure.
- Assess the competitive landscape. Who are the biggest competitors and what has made them successful? I suggest reviewing everything from competitors’ funding history, employee growth trends, existing customers and case studies, products being offered, what is being said about their products on review sites such as G2Crowd and TrustRadius, and their pricing and packaging strategies.
Look at their existing demand-generation strategy, assess the capabilities of their sales team, and think about what it would take to outcompete them. If possible, try to engage each key competitor as a “secret shopper” who fits their ideal customer profile and have them take you through the entire sales cycle (qualification, demo, proposal, and legal).
Lastly, take a guess on what types of margins the competitors are making (although this is extremely difficult as you probably won’t have a clear idea of their internal costs).
- What percentage of the market can you realistically win and what does this translate into in terms of projected sales? For a pre-revenue company, this will be an educated guess, but you still want to have a rough idea to be able to communicate this to your team and potential investors. Although it will be a guess, it will demonstrate that you have done your research and have some future revenue targets you’d like to reach.
Create a Buyer Persona of Your Ideal Customer
The primary purpose of a buyer’s persona is to give you a clear idea of what your prospective customer profile looks like. If you have only spoken to a few people about your product who fit your ideal customer profile and aren’t sure if the assumptions you’re making are correct, I would still suggest creating your buyer persona and adding to it over time as you have more conversations and learn more about the buyer.
Be sure to include:
- Average company vertical, company size, and/or average revenue
- Age, job title(s), and seniority
- Types of decisions and business functions this person is involved in, or has heavy influence over, and what their average day looks like
- Goals, challenges, and pain points
- Marketing message that speaks directly to the buyer persona
- Common objection you could receive from this person
- Experience the buyer is looking for
- Key sources where the buyer gets their information
Recruit People Who Match Your Buyer Persona for Interviews
You may have already spoken to many prospective customers who match your buyer persona, but I suggest speaking to a sample size of at least 10 before jumping to any conclusions about their needs and pain points and whether or not your product idea will solve specific problems they’re facing. Recruit people who match the buyer persona and target-market segment so the research data is not corrupted; if your target customer is a senior marketer (director level or higher) at a financial institution with between 100–500 employees, then focus on recruiting only users who match this profile.
Prior to the interview, put together a short deck about your product and which problems it aims to solve, as well as a set of questions to ask during the call. After you complete this research stage, take a look at all of the data you’ve compiled and try to identify specific trends around problems faced by your prospective customers and the overall feedback and level of interest for the product idea you’ve presented. You may learn new problems you weren’t aware of before that are compelling enough for you to address in the early stages of product development.
Build an Interactive Prototype and Present It to Your Prospective Customer
At this stage, recruit a good UX designer (or use someone you already have on staff) to map out the application’s overall structure and user journey. Create your wireframes and a (low-fidelity) interactive prototype as well. This step will not require any programming, and once you have your wireframes ready you can use a tool like Invision to make it interactive.
Once the interactive prototype is ready, schedule a call with your prospective customers (use the same people from the previous step, and I encourage you to recruit additional ones), take them through the prototype, and collect their feedback. Many of these users will become your first paying customers once your minimum viable product (MVP) is ready for rollout. Given the fact that you’ve included them in the design process, they will have stronger emotional ties to the product and will feel like it’s (partly) their creation.
After making additional tweaks to your application’s workflow and interactive prototype, it is now a good time to recruit additional users and collect more feedback, as well as improve the usability of your product before proceeding with MVP development.
In the previous step, you’re the one leading the call and the presentation with prospective customers, which doesn’t give you a clear idea of how an actual user would interact with your product. Use a service like User Testing, which allows you to recruit a highly targeted group of users from its large tester database who (most likely) fit your buyer persona. This platform presents them with a set of tasks to complete (created by you) and they record their screen and provide feedback via voice as they perform the tasks you’ve outlined.
I suggest recruiting at least 5 testers per test, then analyzing their feedback and the way they interact with your application, afterward making improvements where you see necessary and running another test. After a couple rounds of testing, you should be able to polish your UX significantly and be ready to develop your MVP.
Create a Marketing Proof of Concept
One last step I recommend is putting together a landing page or a simple website with calls to action (CTAs) and pushing traffic to it through owned and paid channels to see how it converts. Make sure the contents of your offer are properly aligned with your buyer persona and their goals, and is solving problems they’re facing through your solution.
Your CTA could be joining the mailing list to receive product announcements and be the first to know when it’s live in order to get early access, or signing up for a free demo. Testing your offer has several major benefits—primarily, it will allow you gauge the level of interest in your product, begin building an early pipeline of prospective customers, and get your product in front of additional eyes to collect additional feedback.
If the market truly needs your products, you might be overwhelmed by the initial level of interest you generate, and you might hear crickets if the contrary is true.
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Once you’ve done all of this research you will be in a much better position to determine if your product has a real chance of thriving. Just keep in mind that you are not guaranteed to succeed even if the research findings look favorable, but your risk of failure will be significantly lower.
Don’t obsess with this validation phase as you don’t want to become stuck in paralysis-via-analysis. I recommend that you spend no more than two or three months to complete this entire process, and of course, if the findings are negative and you learn that your initial assumptions were wrong, there is no shame in killing your product idea to avoid wasting additional time and financial resources into the next steps. True validation will come later once you launch your MVP and have your first set of paying customers.