As a key driver of determining what to build or develop when it comes to launching a new product or feature, market validation helps you understand your users, target market and whether the solution you are developing solves a particular pain point. It also helps you understand what the market is willing to pay for your product / service.
Creating a new feature / product
The most expensive way to perform market validation is to build and deploy a feature or product into the market without any validation. Especially if you are a startup or small to medium sized company building products with no market validation can cost you a lot of time and resources.
What problem are you trying to solve?
Some of the key questions to ask when you are considering a new feature or product is understanding what problem you are trying to solve. Is there a market demand for the product or are you trying to create a whole new market segment? Is the problem you are solving a true pain point for potential users that they are willing to pay for your solution? Without the answers to these questions you may be building a cool new product that no one may be willing to actually pay for. Take for example Google Glasses. Google developed glasses to enable users to look for directions or search online, but they did not take into consideration the social aspect that could be a huge put off if you have several folks walking around saying “ok google” and potentially recording every conversation at all times.
What products exist in the market today that solve the same problem?
When entering an existing market, you should understand shortcomings of existing products and identify work arounds that users use today. Sometimes the workarounds that exist may be enough and isn’t painful enough to warrant a new solution that users are willing to pay for. Take for example the Amazon fire phone launched in 2014 that was developed with the intent to avoid the 30% cut apple takes from in-app sales which prevented Amazon from selling e-books through the kindle iOS app. What Amazon did not account for was that the success of a smartphone depended on the apps available and the developer ecosystem that contributes to building new apps. Due to a highly customized version of android that was used, many apps that came out of the box with regular android phones were not available and contributed to the downfall of the phone.
Who is your buyer and user?
More often than not in B2B your buyer and users are not the same person in an organization. In B2C products they are usually the same person except in the 0 – 18 age group where parents are usually the decision makers / buyers. Addressing the needs of your users without keeping in mind the buyer and purchase constraints can be costly. Your product may be exactly what the target user needs and wants but you may have very high COGS (cost of goods sold) that make it too expensive for the market or you may not have thought of security and compliance constraints that are needed for organizations in certain industries to use 3rd party products.
Identify your target market
In order to understand your user and buyer and build user personas that you can then use to influence your decisions when designing features within your product, you need to identify the type of companies or industry verticals you are selling into. Based on the market you are targeting, there may be compliance or regulatory rules or other needs (security, deployment options, etc) that you need to design for which may not be part of your core offering.
Build user and buyer personas
In order to build products and services that are truly useful, you need to understand the persona of the users who will be operating and or consuming your product / service. Building user personas helps you understand their motivations, responsibilities, pain points and frustrations as well as their skill level and expectations from your product. In addition to user personas you also need to understand personas of key influencers and decision makers that may not be the same person using your product day to day.
Asking the right questions
When interviewing potential users of your product, it is important to ask more open-ended questions.
Examples of What not to ask
- Is this product / feature useful to you?
- Does this concept seem like something people would buy?
Examples of What to ask
- Tell me about a typical day for you
- What frustrates you or prevents you from performing a particular activity
- If you had this product, how would it help you?
Pricing Validation and Hypothesis
Pricing is a key part of market validation, especially when you are bringing a new product to market. It validates the value proposition of your product and helps you understand how and why the product drives value for your customer. Omitting the pricing validation and hypothesis during market validation can sometimes prove to be a costly mistake.
Now you may find examples of products that were released with little to no market validation like the examples of the Google Glass and Amazon Fire phone. However, large enterprises that have the cash reserves, are willing to pay the cost to shorten the time to market by circumventing the market validation and research phase. But for majority of startups and medium sized organizations Market Validation is key to a successful product or feature launch.