Do you know that Airbnb's founder had to rent their own houses and go home to home to get feedback from people over hosting foreigners, reason being market validation, test business idea and product validation? This world-known hospitality service now provides millions of tourists with apartments and rooms, and has over 5,00,000 listings in almost 65000 cities. A classic example of a successful startup idea that people were skeptical about at first.
You may not believe it, but most successful founders, top app developer companies are doing months of market research before launching their product. Market validation requires extensive research in the target market before investing in the product. Many reasons for startups failures are stated as a lack of funds and the inability to execute the idea. The main reason is a lack of research in business idea validation, concept validation, its potential, and the lack of proper strategy for idea validation. So, let's understand in details:
- Why should you validate an idea, or validate assumptions?
- Step by step process for idea validation.
- Market validation success factors.
Why Test Business Idea?
Idea validation to explain is the process of trying the product concept in the real world, gathering evidence, information, data around the concept through experiments to make clear decisions about the potential of the business idea. It's an integral part of new company startup, custom mobile app development company, and It helps you:
- Minimize the risk of launching and investing in the wrong idea.
- Idea validation leads to the generation of prominent service in the market in a paced way.
- Reduces cost.
- Shows the real demand for the product.
- Get your information about the right timing to launch.
- Proves that the product can be monetized effectively.
How To Validate Your Business Idea?
However, an idea can be validated by various methods and tools, but we understand that a real-time case study is always a useful learning pattern. We share with you one of the most simple yet effective methodologies we used to validate assumption, and the idea for our product "eProcessify " developed by Code To Art Technologies. The step-by-step idea validation process.
1. Define Goal
Decide clearly what exactly you want to test. These are your assumptions that are the most prominent to test before the launch of the actual product or even MVP development, and MVP validation.
In this stage, you create a set of questions that help have clarity over the objective.
- What is the problem the product will solve?
- Should we validate product
- Who is our target audience
- What will be the core features of your product?
- Is there enough demand to make your product work?
- Is your business model scalable?
- Collect all your ideas regarding your product and prioritize the most critical for your business to succeed.
The goals for eProcessify was providing Single work platform to the professional service industry like chartered accountant firm, accounting & bookkeeping service industry.
Problem and solution - Currently, the industry struggles following Standard Operating Procedures (SOP). eProcessify helps them to manage SOP and make sure everyone in the team is following SOP. Moreover, it can help track the progress, filter the checklist, manage the client's document, and have a clear picture of the work status.
Target audience for concept validation- Chartered Accountant Firms, Accounting & Bookkeeping service industry, and Valuers.
Goal - Test the idea of a single platform for managing SOP is acceptable in the industry, what features they are looking for, what product apprehension they may have, pricing sentiments.
2. Develop A Hypothesis
After you've defined your goal for idea validation, develop hypothesis based on that goal, which can be a testable statement, prediction, and minimum success criteria. For example, if 7 out of 10 say in our product eProcessify that they would use their internal tools rather than investing in new financial software, does that make the idea invalid?
3. Reach Out To Your Target Customer & Experiment The Product
Use the experience of trusted entrepreneurs, customers, experts in the trade for market validation. Figure out and talk to people you want to be your customers, and learn from their experience and feedback.
- In the case of eProcessify, we visited more than 100 customers, industry experts, Chartered Accountant firms, Accounting & Bookkeeping industry, Valuers, and DSA for Loans as these were our right audience.
- We had created a prototype or wireframes of the product to be presented to the clients. One of the easiest ways to understand how customers will respond to your product is to show how the software will look. By creating a wireframe or prototype, you can put your idea in front of customers and gather their reaction, and further flesh out your concept based on insights gleaned from these interactions.
- Take feedback through an interview, ask questions, find out what types of products they are presently using, what products they like buying, and what is the biggest pain point?
- We made our audience use the product and asked them a set of questions to gather relevant feedback.
- Is your target audience convinced about the way you are trying to solve a problem?
- What are the internal tools they are using now to solve this problem, and its shortcomings?
- Are they interested in your product/service as you envision it?
We asked for feedback, ideas, responses, comments. More the information, the better it is. Many iOS app development companies, mobile app development company, conduct these surveys in-person, gather feedback, and implement changes accordingly. Nowadays, entrepreneurs can test their ideas with a crowdfunding page, gauge interest, and encourage people to fund their projects or buy their product before it's even built.
4. Build MVP
We then build an MVP as per the feedback for the market and make the idea into a workable model with the most basic features. MVP allows you to test how your product works as quickly and cheaply as possible. Product validation even helps in MVP validation.
- Post collecting market feedback we developed an MVP (Minimum Viable Product)
- Put down all the feedback and ideas derived at one place
- The design process and user flow
- List the project features
- Build your MVP
- Take again to your target audience
- Measure and learn
5. Validate and develop
In this step, you will get to know if the assumption made earlier stands valid or not. If your idea has been accepted by the audience, and has potential, and the most critical assumption holds valid, start refining and developing your idea.
Idea Validation Success Factors
Although each idea is different, and most often cannot be validated by using the same methods, some concept validation tips can help succeed with the process.
1. Keep the validation process simple - What is product validation? It is actually validation of ideas by keeping the process simple and effective is the key to a fast, appropriate validation process. Assumptions will vary from the real challenges you face. So, instead of listing and spending time on every assumption, make the process simple and backed up a proper framework.
2. Reach to the right audience - Involve the right target audience, when validating a new idea and gathering feedback. Your idea validation process depends largely on the ability to gather accurate information regarding your idea from the people who have expertise in the subject. Taking your product wireframe to the right people who know enough about the business is of key importance.
3. Right metrics - Look for the right idea validation tool, selection criteria, and metrics and focus on the essential aspects, features of your business first. Before working on the best solution, ensure to check the potential of your idea.
4. Be systematic - Business idea validation should be done in a systematic manner to keep track of the assumptions you have regarding your idea and the measurable results you've received by testing it. Look for the right app development company to develop MVP and tools for gathering, developing, evaluating, and validating data.
5. Look into your competition - Being aware of what your competitions hold an advantage on is a great way to understand market sentiments. Also, it will help avoid mistakes already made. So, look at the players in the market and how they do things. What can you learn from them? What is the relative advantage you hold, which means is the idea perceived to outperform the competition? If better than the competition, then how?
Having an idea for your startup is fantastic, but before putting things in action, ensure market validation of your idea to save yourself from empty bank accounts, low morale, stress, and lousy market sentiments. Being smart about your business idea and its validation is of critical importance.
- Define the concept.
- Have a framework ready.
- Research as much as possible.
- Develop an MVP with the best app development company.
- Validate and launch.
Our app development company will be more than happy to share a framework for your startup idea. Read our other small business startup blog. Reach out to us.