One of the core principles of the Lean methodology is to validate “product/market fit” as early in the process as possible. Historically, a business would define a budget, create a product, and put it on the market and hope for the best. Typically this worked fine since we were living in a supply-driven economy wherein there were more consumers (demand) than providers (supply). Today however, the cost of competing to supply a product has fallen dramatically, and suppliers are increasing by the day. And so too, the risk of failure has risen. So it is more important than ever to make sure you are building a product people truly want, with better product/market fit than your competitors.
If you are a startup, you likely have limited time and money, and thus a limited runway with which to work, to make sure your product “hits”. If it doesn’t, it is often game over. So what can you do to make sure you don’t waste your entire budget or timeline creating something that no one wants? Here are a few ideas:
1. Smoke Test – Create a website that promotes your product, market it as if the product exists, and then track your results. Another term for this might be “vaporware”. You can see hypothetically how sales conversions would be, if you were to build the product, before you invest a dime! I’ve used PPC ads for limited amounts of time, and when a user submits their data, I simply display a thank you page and say someone will contact you shortly. This works best for consumer products and software products.
2. Affiliate Marketing – With affiliate marketing hubs such as CJ.com and Linkshare, its extremely easy to become an independent marketer for thousands of brands. By doing so, you can make a little money to cover your marketing costs but more importantly, you’ll have visibility deeper into the sales funnel than you would with simple smoke testing. Many times your affiliate program will share details such as how long the customers stick around (lifetime customer value) and what has worked well for them in the past. A word of caution however, if you’re entreating a market with plenty of affiliate programs, (a) the market is probably already a bit too saturated and (b) those affiliate marketers have already probably driven up and artificially inflated marketing costs in that vertical.
3. eBay – If you have a physical product you’d like to build an commerce store around, consider first trying to sell it on eBay. By a few test pieces, and run a campaign on CraigsList. If you’re able to generate demand volume and reasonable profit margins, then you could justifiably move forward and build the store.
4. Prospect Interview – If you’re considering the development of a B2B product, the best thing would be to talk with the people for whom you might develop your solution. Let’s say you’ve decided you will build a software solution for accountants. You need to speak with a few accountants to understand their “pain points”, and figure out how you could solve them. Once you’ve found something, ask other accountants if they would realistically buy the product and how high of a value it is to them (1-10).
If you find a niche that seems compelling and you have validated a reasonable probability that you can hit product-market fit if you proceed, congratulations! The next step is to build enlogica, meaning build in small installments, beginning with the smallest, most minimally viable version of the product you think someone would actually use. Then, socialize it! Begin to share it with a small group of prospects who can give you feedback and help you refine your vision. Because they are your end-consumer, they should be your partner in the design process. The will be able to tell you better than anyone, if this is exactly what they need and want, and help you to avoid making some pretty fundamentally bone-headed mistakes!