Product market fit is when an entrepreneur has established the optimum product for their target…
Lean Market Validation
Learn how to determine whether there is a willing market for your product cost-effectively.
What is market validation?
Market validation is the process of establishing whether a product will be interesting to a given market. This in turn informs customer development and is vital to any emerging startup.
The process focuses on establishing time effective interviews with target consumers and should always take place before an entrepreneur invests significantly into their concept or product.
So how can an entrepreneur ensure they have market validation?
Firstly, write down your product concept in two sentences. Force yourself to be concise and clear. What does your idea do and who does it help? If you find yourself struggling to be clear or write down the sentences, chances are your consumer isn’t going to understand.
Secondly, set out basic product and concept questions. For instance, who are your consumers? Why will they specifically buy into your product? What features will your product have that will benefit your consumer? Try to focus on benefits that are quantitative. Quantitative benefits could include a product that saves time, saves money, or provides a social benefit.
Most importantly, be sure to answer the question ‘what problem are you solving?’ Lean market validation requires that you always start with the problem first. Once you identify the problem, you can create a product with features that addresses the problem. It is essential you are explicit in determining what problems you are trying to solve and how your product solves them.
Once you have established these questions, go out and ask people and test the validity of your concept. In order to get the ball rolling and save time, ask people in your network, friends, investors.
A landing page coupled with targeted Facebook spend is a typical low cost way for seeing whether your idea has any traction.
Test Assumptions & Use Your Data
When you have the insights from your questions, be sure that you are decisive. Lean market validation requires you gain enough data about a product that you can make decisions quickly. As a founder of a startup, you can’t agonise over small details that in the end may not even matter. When it comes to your data, use the 80% rule. Get just enough data from customers and interviews to make a decision.
With these results, you will be making assumptions. When you draw conclusions, be sure to test them with a scientific method. You can establish truth by testing assumptions. As soon as you make basic assumptions about your product, be sure to test, then test again and again. Testing three times is important as it means you are not taking your insights at ‘face value’.
Whilst it is important to not agonise over the finer details of a product in the early stages of lean market validation, be sure to not just take your consumers response in interviews at face value. Ask why? Why did they give you that response? Focus less on the specific details of a product in the early stages, but rather the value it is bringing to a consumer. Benefits could include a social benefit, or saving time or money.
Establishing a Value Proposition
Then establish your value proposition. What value will your product or concept give your consumer or target market? If you can answer this, the chances are this brings you full circle to the original point of this post, explaining your product and idea in two concise sentences.
By the end of this process, lean market validation will give you clarity about your product, its value proposition and how it may suit your target audience.
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Stuart Reynolds is the founder of Fullstack Advisory, an award-winning accounting firm for businesses leading the future. He is a 3rd generation accountant who specialises in tech companies, crypto and entrepreneurs.