Lean Market Validation
Lean market validation refers to deciding on what product or service you want to create and how to create it using as few resources as possible. It involves finding out if the product you intend to build is suited to the target market and if there will be a demand for it. The validation stage should be conducted fairly early in the product development cycle, before significant investment of time, effort and money is put into the product.
Lean market validation also provides assurance to potential investors, crowdfunders and banks whom you may be counting on for funding. Insights gained from the validation process include a deeper understanding of how the product meets the needs of customers and may help to establish an initial customer pool for the eventual launch of the product.
Here are five steps to validating your business proposition:
1. Write down your product concept
Highlight the unique features of your product and clarify your goals and assumptions by asking these questions:
Who is your customer?
Be specific and focus on a particular customer segment or industry.
What problem does your product solve?
Write down the existing problem that customers want to address.
How does your product solve these problems?
Find the value proposition for your customers. Think about how they can benefit from using your product, for instance, saving time or money.
What are the key features of the product?
Think about a minimum viable product (MVP) which offers just sufficient features necessary to attract customers.
2. Estimate the market size and share
Research products that are similar to yours to find out about their sales data, customer base and percentage of the market they occupy to determine if you can find a niche for your product and capture a similar slice of the market.
As people usually search online to find a product or service they require, you can run an Internet search for terms related to your product or business idea to gauge the volume of hits returned. The query terms used and number of results generated could be used to indicate if there is a demand for your product.
4. Gather feedback
Start by reaching out to your network of friends, business contacts and industry experts by pitching your business idea to them. Invite them to fill out an online survey or conduct an interview with them to gather opinions about the product. You can also utilise online communities on social media platforms such as Facebook.
5. Test your product or service
Plan for a two-stage testing process for your product. The first round should be conducted among internal employees to fix bugs before the product is released to external users. The second round should be tested among a controlled group of external users to identify specific issues. Testing is vital to ensure that a faulty product is not launched, which could doom the entrepreneurial endeavour from the start.
Entrepreneurs are often advised to start small and continually seek feedback to validate and fine-tune their product or business idea. By making the effort to perform these steps, entrepreneurs will be arming themselves with the information they need to create the optimum version of their product.
Cote, Catherine. “5 Steps to Validate Your Business Idea.” Harvard Business School Online. Published 18 August 2020, https://online.hbs.edu/blog/post/market-validation
EB Pearls. “Idea Validation.” Accessed 22 March 2022, https://ebpearls.com.au/learn/do-i-have-good-idea-a-complete-guide-to-idea-validation/
Jon Lay and Zsolt Kocsmarszky. “A Lean Approach to Product Validation.” Accessed 13 October 2022, https://www.smashingmagazine.com/2016/07/a-lean-approach-to-product-validation/
Product Plan. “Minimum Viable Product (MVP).” Accessed 22 March 2022, https://www.productplan.com/glossary/minimum-viable-product/
Reynolds, Stuart. “Lean Market Validation.” Full Stack. Published 16 May 2019, https://www.fullstack.com.au/lean-market-validation/
Semick, Jim. “Lean Market Validation: 10 Ways to Rapidly Test Your Startup Idea.” Accessed 22 March 2022, https://www.productplan.com/blog/lean-market-validation-10-ways-rapidly-test-startup-idea/