How to Test a Market for New Product Entry

Discussions Include:

• Common mistakes in new business ventures
• Knowing how your product will be received within the market
• Minimally Viable Products
• How to test your product
• Rules for testing your product
• Budget concerns for testing your product
• Advice for how to achieve success

The Hangout:

The Conversation:

ZEF: We all start with an idea or a product, then you create the product and the business plan to go with it, then what?

SUPER JULIE: Pray!

BILL: An idea is really a hypothesis. Before making a product or plan, it is best to test your hypothesis.

ZEF: I agree! From my personal experience, an idea is just "wishful thinking" unless you take action. You're absolutely right about testing the idea. Since we are talking about action, why do you think that people get stuck in their business idea and don't get launched?

SUPER JULIE: Perfectionism paralysis. It happens to the best of us and if we are always in the mode of "let's add one more thing or change this or that" and we don't get to launch, then we won't ever know what people like, hate, are interested in, etc. The days of Martha Steward perfectionism are over. There are so many people launching - and getting feedback - it's those companies who launch quickly that have a greater ability to learn, change, and succeed.

ZEF: How do you know that your product will be received well in the market?

BILL: There are no guarantees. In his book, The Lean Startup, Eric Ries suggests that to have the highest probability of success, entrepreneurs need to create minimally viable products (MVP's) to test their assumption.

SUPER JULIE: You won't know until you test it or roll it out. This is where I suggest to go to the market and let consumers tell you what you need. Don't wait for perfection.

ZEF: Bill, you mentioned MVP's (minimally viable products) earlier - do you know of any big name companies that have used this MVP process to successfully launch products?

BILL: You bet. Here are a few - Zappos, Dropbox, Google, Twitter, Facebook, Intuit, and Groupon. Zappo's founder, Nick Swinmurn, didn't start by stocking up big amounts of shoes and investing in an e-commerce backend. Instead, he went to local shoe shops. He would ask the owner's permission to take photos of shoes and put them online. Once the orders started flowing in, he went to the shop, bought the pair that was ordered, shipped it, handled payments, returns, all of it by himself and by hand. Drew Houston, Dropbox founder, used an ultra-low fidelity explainer video to test interest in file sharing and the Dropbox solution. The screencast was enough to give early adopters a hint of the product experience. It was enough to get many smart people to give them the same feedback as if putting the product in their hands. The new version of the video had the waiting list of emails jump from 5,000 to 75,000 in one single day. The explainer video served them so well that it is almost the only thing still featured on their landing page.

SUPER JULIE: Part of launching a product is testing. When I was at Bath and Bodyworks, many years ago, we had 3 test stores. In those 3 stores, we tried everything for 1-2 weeks before we looked at the results. Based upon those 3 stores, we built the first 30, and then 100, then 2,400 before I left the company. It's all about defining a group or location and try, try, try. Bill, how do you test your products?

BILL: Create the lowest fidelity representation of your product possible and test it with potential customers. Do you remember Franklin Mint Coins? They'd do full page ads selling their commemorative coins. The ads looked great and the coins looked real. The ads asked people submitting orders to allow for 6-8 weeks before delivery. The ad was Franklin Mint's MVP to test the market and they built only enough coins to satisfy demand. Overtime they learned the interests of the market. Dropbox was drawn out, and re-drawn several times, and fully tested with customers before any code was written.

ZEF: How much money are you spending on the testing?

BILL: Zero. Use sites like KickOffLabs to create free landing pages and push traffic using social media and email.

SUPER JULIE: Our entire business is about testing and trying and we are still continuing to improve and learn everyday. I can't put a hard number on it because it's ingrained in our entire business.

Your Hosts:

Meet Zef Here!

SUPER JULIE BRAUN
www.SuperInterns.com


"Super Julie Braun is the Co-founder of SuperInterns.com and she has worked with hundreds of employers and schools, and thousands of virtual interns all across the country.  As a thought leader in working virtually, Super Julie has helped companies and organization transform their “brick and mortar” thinking to “online” thinking and having the opportunity to work any time and from any place in the world with interns."

BILL KENNEY
www.TestMyPitch.com

"Bill Kenney is the founder of Test My Pitch, an online platform that helps business accelerators and incubators harness and exploit the potential energy in their community."

Join us for more post-show conversations and interactions in our Google + community!

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Tips & Solutions:

ZEF'S TIPS:

• Do your research!
• Get help - especially hands-on guidance from people who have done what you are looking to do, which can save time and sleepless nights!
• Cater an event for a local organization to test market
• Give away prototypes of your product in exchange for people answering a questionnaire
• Use social media to solicit ideas from your friends online
• Set up a website with the product or service described and have a survey at the end asking for feedback

SUPER JULIE'S TIPS:

• Get your ideas out there! Testing is a great idea, get feedback, learn, change, and then launch!
• Don't be afraid to fail! If something doesn't work, tweak it, change it, or throw it away and start over.
• Ask for the truth. If all you want to hear is how awesome you are, then your company won't really be able to grow. You should encourage people to tell you what needs to change or to be honest in the problems they experience so that you can fix it and come up with alternative plans.
• Limit your tests to a few so you can actually see a difference, like a "control group"

BILL'S TIPS:

• The best rule is to keep it simple. Steering potential customers to a nice looking landing page with your offering is a great way to start. Simply ask visitors to leave their email address if they're interested in more information or if they'd like to be beta customers. This is also a great way to find your early adopters.
• Don't fall in love with your idea! Use your testing to inform you about the marketability of your idea. Evolve your idea as customers share their feedback.
• Make your testing as independent as possible. Be aware that your personal biases will affect the process. Design a process that minimizes tester bias.
• Be okay with failure. Failure is a critical part of the learning process; take Thomas Edison for example. When asked by a report about his more than 1,000 failed attempts to invent the light bulb, Thomas Edison said that those weren't failures; he proved 1,000 ways not to make a light bulb.

Image obtained from www.TheLeanStartup.com


In his book, Eric Ries provides a scientific approach to new product development. The book teaches entrepreneurs different principles of the "lean startup" theory, such as how to eliminate uncertainty, how to work smarter, not harder, how to develop an MVP, as well as how to validate learning.