Your business idea action plan: How to validate your idea (Part 2)
So, you decided to create your product and gain market share. You have received a feedback from your users and don’t know what to do next? If you don’t know what we are about, probably you have missed the first part of our story here.
After the preliminary feedback, you will have a clear vision of how to re-adjust your product, if necessary. It’s only now when your startup idea is getting that final shape.
The next step is preliminary product’s S.W.O.T. analysis
This can easily be bootstrapped, if you have any knowledge about market analyses. If not, it’s best to outsource this important step of the entire process because it could easily prove that your idea simply doesn’t stand any chance against the well-established brands. If nothing else, you will see where to improve and what traps to avoid.
Important thing here is to be perfectly honest and that might be a good reason to outsource because you really want an unbiased observation. The inevitable fact is that every startup founder is subjective and too optimistic regarding the future of his idea. An independent view may easily prove itself vital for the future of the product.
What you basically want to do here is to compare your product against the competition while carefully analyzing their moves. In Wallor’s case, for example, the huge opportunity was identified in two predominant weaknesses of their competitors. Late shipments and poor customer service made supporters furious. Cretu quickly figured out how to exploit each of these two weaknesses.
So before he engaged the Innovators, he made sure to set up a premium support service and several logistic centers on three different continents.
Without efficient support service (logistics), everything is in vain because without an effective CRM there is no business.
By doing that, he could compensate for two of his greatest weaknesses:
1. A non-established brand
2. Entering in an already crowded niche
His biggest strength, in this startup phase, was a personal connection with several tech companies in China, specialized in development of innovative modules and applications. He was able to negotiate a cut in production cost which gave him an edge. However, that was his biggest threat in the same time because you simply can’t rule out the foul play. But, sometimes, in some areas, you simply must take the risk. It’s the inevitable part of the entire process.
When everything was set, Wallor was ready for the next stage of the validation process — Innovators.
Product’s Initial Landing Page
It seems rather simple to build a landing page. Yet, only a fraction of all landing pages sees even a simple visit, let alone a real action such as signup or pre-order.
The purpose of this initial landing page is research before everything else. You are still seeking for the absolute signal from the market.
Therefore, the landing page must connect several important segments:
• Visual and mental neuro-hooks (images, videos, text) that attract immediate attention (make no mistake; there 35 critical on-page criteria that your page must meet if you want conversions)
• Appropriate technical and creative design because human decision-making process relies predominantly on the optimal visual stimulus and usability
• Fast loading speeds (less than 2 seconds)
• Has to be carefully adjusted to a specific demographic
• Extensive analytics software (not just Google Analytics!)
• Finally, you need someone who is experienced in interpreting the data.
That’s exactly what you want from your product’s initial landing page(s). The extensive and accurate interpretation of all the received data.
Those data will arrive from Innovators, if your marketing team manages to target them!
After careful analyses, you will have three significant, and possibly game-changing intels:
1. Most optimal demographics to focus your marketing efforts on
2. Most optimal advertising approach given the nature of your demographics
3. Potential need for the last-minute changes and/or upgrades of your product to really “seal the deal” with your crowd.
But what about the product itself? Should you invest time and money into building a fully featured one like those dinosaur brands or is there another, cheaper and faster way to receive that final validation of your startup idea?
Fundamental Efficiency of a Minimum Viable Product (MVP) Strategy
In November 2016, Wallor Wearables LLC finally launched their Kickstarter campaign. They designed the next generation fashion wallet for men with an independent GPS tracking system and an advanced app that connects the accessory with the user’s smartphone. Before Wallor, RFID wallets were equipped only with the low-range Bluetooth modules connected with the user’s smartphone through far simpler applications. GPS allowed global-range tracking and that was the remaining part of the problem.
In the time of the official launch, there were 12 similar smart wallet campaigns.
However, only Wallor managed to reach the funding goal and successfully launch the Stage 1 of the production. But even them missed to reach their first stretch goal.
From 13 campaigners, 12 experienced a total failure, while only one managed to pass the funding goal and acquire at least some money. In comparison, only 6 months before, one of the Wallor’s top two competitors, Walli, launched a closely similar campaign and managed to collect $217,363, while blasting through all of their stretch goals. A year before, the other competitor, Woolet, acquired $332,694 through crowdfunding, also reaching every stretch goal. None of these two smart wallets were equipped with GPS tracking!
So what went wrong?
The 13 newbies made the same tragic mistake.
All 13 miss-timed the market!
For 12 of them, that was a rather expensive fail because they bought into a paradigm that a startup must first develop a fully featured product and only then seek for funding. Consequently, they had to:
A. Invest large capital in prototyping
B. Increase their funding goal
C. Invest far more time in pre-launch phase than they essentially needed.
The only reason why Wallor has succeeded was their relatively low financial goal and lower total costs in pre-launch stage because they decided to go with MVP or a minimum viable product strategy.
Instead of needing tens of thousands of dollars to develop two high-tech modules and robust app that allows user to even store fidelity and membership cards, Wallor scaled down in every segment.
First, they chose in favor of an easily available, custom-made Bluetooth alarm module. The GPS tracking module, also available on the market for mass production, was using GSM data storage cloud service in this initial phase. And the Wallor app contained only the most basic features.
But, their supporters are well-aware of what is coming soon for only a fraction of the future retail price and while they are waiting, they can experience the functionalities and get used to a product.
In other words, unlike the twelve complete failures, Wallor has successfully validated their startup idea for a quantum of potential cost, thanks to MVP strategy.
When you think about the obstacle all 13 campaigners ran into (wrong timing of the market, common for inexperienced startups), would you rather test your idea with 5-figure cost or the 6-figure one?
But that’s just one part of the solution.
Within the framework of the concept, the idea of your startup is a hypothesis. To test it, you need to do the following:
- Clearly formulate a hypothesis.
- Define the criteria by which its viability will be determined.
- Make a minimally viable product to confirm the hypothesis and run it.
- Measure performance indicators.
- Draw conclusions and test the following hypothesis, if necessary.