Idea Validation: How To Test Your Business and Product Ideas
Not all great business and product ideas perform well after actually being executed. Revolutionary ideas such as Google Glass or Pets.com had a lot of potential but failed dramatically in just a few months.
On the other hand, many business ideas that drive true innovation and lead to the creation of revolutionary products or services are often met with skepticism at the beginning. Airbnb - a company that is now worth $75 billion - was initially rejected by many investors who didn’t think it was an idea worth investing in.
So how do you know if your business idea is worth the effort and investment of execution and whether it will be ultimately successful?
By validating it first.
The more complex and out-of-the-box your idea, the greater the need for idea validation to make sure your innovation risk is worth it.
In this article, we’ll talk about idea validation and the steps to manage your ideas.
What is Idea Validation
In the ideation process, idea validation comes right after idea evaluation and before idea implementation. After you’ve evaluated your idea and decided it was worth pursuing, you now need to validate it.
Simply put, idea validation is the process of testing your idea against the reality of the market. This must be done before you start throwing in the money to execute it. This way, you’ll avoid investing in building a product or launching a service no one will want to buy.
Idea validation allows you to verify whether there’s an actual demand for your product or service idea by asking yourself these questions:
Is there a need for my product or service idea?
Does this idea solve an existing problem in a revolutionary way?
Is there a way to enter the market with this new idea?
Will people want to pay for it?
If the answer to these three questions is a “yes,” then you’ve got an idea with potential. But this doesn’t mean your idea validation is over. Far from it! Now, the actual process begins.
This level focuses on understanding the market and finding a way to enter it.
Take the time to thoroughly research your target market to spot existing competitors and understand their strengths, weaknesses, and market share.
This way, you’ll be able to identify market gaps and find an effective way to enter the market.
💡 Here, you’ll also need to find the product-market fit, so this stage will involve a lot of customer feedback, market research, and iterative testing to make sure your product idea will have actual demand.
Business model level
This level is all about figuring out how you'll make money from your product and finding the best revenue generation strategy.
At this stage, you'll explore different ways to make a sustainable profit from your product, test different pricing models, and consider potential partnerships and marketing strategies that can contribute to the financial stability of your idea.
The next step in the idea validation process - and possibly the most important one - is to determine whether your idea aligns with the needs and desires of your target market.
Does it solve an existing problem in an approachable way? Does it address your target market’s struggles, and does it align with their expectations?
To know the answer to these crucial questions, you’ll need to perform user research.
💡 Depending on your idea, the research may go from being really basic, like performing keyword and social media research to see how often the topic is mentioned online, to something more complex, like conducting online surveys.
At a deeper level, you should validate your hypothesis by actually talking to your target audience. You can do so by interviewing people who fit your ICA (ideal customer avatar). Prepare the questions to ask, make a list of interviewees, and allocate resources for this process.
After you perform the interviews, analyze the data to figure out whether your initial hypothesis was accurate. If so, pass to the next validation stage. If not, adjust your idea to match what you learned from your interviewees or respondents.
Start your market research by analyzing your competitors. Find out who they are through customer research data, reviews, or online research.
Once you know who they are, you’ll want to dive as deeply as possible into their branding and marketing strategy. Figure out what their unique value proposition is, what features they’re offering, and how they market the products or services.
Remember that your target audience can be found where your competitors are present.
If you find that they focus most of their marketing efforts on SEO, it means that your potential customers are mostly looking for products or services similar to yours on Google.
This will allow you to test your assumptions about your business model and adjust it based on the insights you gather from your market research validation phase.
To fully validate your idea, you need to measure your audience’s interest. A great way to do that is by pre-prototyping - gathering market data before fully developing the product. In other words, creating the “coming soon” marketing strategy.
This “coming soon” strategy should be implemented after conducting market research and before actually building the product. The goal is to see how your audience would react to the finished product by staging a coming soon landing page and running ads.
Coming Soon Landing Pages
These landing pages are also called pre-launch landing pages or waitlist landing pages, and their purpose is to build anticipation for the upcoming product launch while collecting contact information.
They include a contact form where the customer can sign up for the waitlist to receive a reminder once the product is ready for purchase.
Another way to do this is by allowing the customers to pre-order the product and having them go through the checkout process to identify potential areas for improvement. It can also be a great way to validate the product's price before its launch.
The last step of idea validation before implementation is the testing phase. After all the validation you’ve conducted so far, you’ve arrived at the prototyping stage. It’s time to create the first version of your product.
By building a prototype, you can start testing your assumptions about the product. This will involve conducting a lot of A/B testing, technical testing, and user testing.
Doing this will allow you to pinpoint any issues with your product early and rectify them before the implementation. It will ultimately help you create the Minimum Viable Product (MVP) you can continue refining.
Accepting that not all ideas you come up with will be loved by others can be unsettling. After all, when we love our idea, we become attached to it and cherish it too deeply to accept its failure without picking a fight.
But it’s impossible to execute every idea. If you try, it will end with a lot of money and time wasted on implementing something that was destined to fail from the start.
That’s why validating your ideas before you eagerly rush into executing them is so important. It will save you the resources that would go down the drain had you not validated your idea first.
While idea validation doesn’t guarantee the success of your idea (there are just too many factors involved), it certainly does minimize the risk of failure.
And sure, they say there’s no gain without risk.
But when it comes to growing a sustainable business and investing hundreds of thousands of dollars into developing innovative ideas, the lesser the risk, the bigger the gain.