Testing the waters: How to validate a business idea

At Purrweb, we say: Validate first. It means that prior to any big actions you need to check the demand —  if the issue, you wanna solve, really exists, how critical it is and how people handle it these days. 

Rather than taking a bank loan to build a complete app, check the ways how you can validate a business idea without spending a fortune. Pick one to gain initial learning and get the product off the ground as fast as possible. 

1. Customer surveys

It might be a newsletter survey or a 15-minute phone call. You can even do this manually in a shopping mall or any other crowded place in exchange for free pizzas/ coffee/ discount coupons. The goal is to find potential customers and talk to them. 

When it comes to questioning, brevity is ingredient #1.

Here’s why:

Say, you’re in a hurry. A random stranger approaches you with something like “Could you spare me 15 minutes? Just 50 questions to ask.” 

What will you do? 

Randomly tick on the boxes? Or say “Nah, man. I gotta go”? Simply ignore without even saying a word?  

The third is likely to happen, right? So, the same thing happens when it comes to user surveys. 

To get more responses (and not irritate :D), keep surveys simple and short. Asking 1-2 open-ended questions will be more than enough. Your respondents will thank you for that!

The given information helps you figure out the best way to move forward. You might find out that:

  1. The core value proposition isn’t engaging.
  2. There’s a better alternative your targets are happy with.
  3. The problem you’re trying to solve isn’t a problem at all. 
  4. 30 out of 50 respondents are ready to buy your product. 

Whatever the results are, you’ve validated most of your assumptions without building a complete product.

2. Landing page

This is exactly what you can use to gauge customer interest and measure purchase intent.  Set up a very simple page that looks sexy and conveys the core value of your future product. The goal is to describe an upcoming solution from a customer’s perspective (without ad puffery).

To create a convincing landing page, be succinct and to the point. Make it easy to understand within 15 seconds for everyone who quickly scrolls the landing page through. Imagine making a song or a movie teaser, so the same should work for your landing page.

Ask readers to subscribe with email addresses. This way, you can build the initial customer base when the product is live.

Make sure that you give expectations when the app will be ready. It can be a page that says something like:

Sorry, we are not ready yet, but thanks for showing your interest! Please, share your email, so we can notify you about the release date. 

Receive some traffic from online advertising channels. Try using a combination of Facebook ads and Google AdWords for that.

Reward early visitors with discounts or any other product-related stuff. People, who share emails are gems. Attracting and retaining them works great for up-selling later on or for a future referral program.

Rather than building a huge thing right away, Buffer crafted a simple landing page to see if anyone would like the idea. Check the way it looked back then:

As soon as visitors shared their emails, Buffer could ask them for feedback about the idea 

Right after building a landing page they haven’t switched to dev work. Next, they added plans & pricing info.

To signup, users had to view pricing plans, then picked one of them. These users could potentially turn into paying customers 

So, a landing page helped them track purchase intent and gain initial user base as well. Once the initial product version was ready, they got about 500 users and started generating revenue from the paying ones.

3. Wizard of Oz

This is when customers think they use a complete product, but behind a curtain, the entire work is done manually. This way you see how people interact with the product and optimize this “realistic model” while a product, device or service doesn’t yet exist.

Say you wanna build a car recommender. In this case, becoming the “wizard” means personally finding cars for a user by going through online catalogs and recommend those ones that match said users tastes, then sharing the results via email. To end-users, there’s no difference between an automated search algorithm and its simulation.

ZeroCater, a food service company, is a well-known manual-first startup.

They initially used a simple spreadsheet to keep track of office teams and manually ordered food from local restaurants

Now ZeroCater is all-inclusive service with personalized menus and hand-crafted meals.

4. Piecemeal MVPs

Actually, you do the same as with the “Wizard of Oz” approach, but here all missing features are delivered with existing services and tools. A kind of “Frankenstein monster” that is made of various stuff.

Groupon would be the most popular example.

At the very beginning, Groupon delivered services using WordPress Blog and made coupons through FileMaker (which were afterwards sent with Apple Mail)

 5. Single-feature MVP

A scalable product happens at later stages, i.e when you have enough money to hire tech wizards. Now, rather than building a giant ‘packed-with-tens-of-features’ solution, it’s wise to focus entirely on just one painkiller feature. To narrow down the market and release faster. Plus, it’s way easier to explain just one feature, rather than 10 or 20 (you can keep the rest for 2.0., though).

Take a look at Spotify:

The streaming platform initially rolled out as a single-feature MVP

Rather than jamming as many features as possible, they decided to start out with just one key feature music streaming.

So, what’s the verdict?

To find the best way to validate the idea, think about what you can deliver in up to 3 months. Test things out quickly  there’s really no sense in spending years on that.

A few cases to ease your decision-making:

  • Say, you’re a developer yourself (or you’ve got a techie-friend) + you’ve found out what is likely to bring the maximum value → to measure customer demand, you can either try a single-feature MVP or build a landing page;
  • In case you have enough time/energy to micromanage things (like, features that require manual work) → Wizard of Oz MVP might be the way out.
  • If you’re tight on your schedule → validate the idea using a piecemeal MVP (tools will do the job for you).