How To Find Out If Your New Idea Will Sell And For How Much
Most entrepreneurs are confident their new product or service idea will be a big winner. But you would like to find out if your new idea will sell and for how much before you invest lots of time and money. So, to be safe, you tell your Mom or wife about the idea and ask what she thinks. Guess what? She says it could be a great idea. She may not be sure, but she doesn’t want to hurt your feelings or dampen your enthusiasm.
Still not sure, you decide to ask more people and get additional “facts.” Again you tell them your idea and ask if they think it’s a good idea? Do they think people will buy this product or service? Not surprisingly, almost everyone agrees with your Mom. Great. Now you have the facts to validate your hypothesis.
Not All “Facts” Are True
But, there is a big problem, you don’t have real facts. The “facts” you have are only “opinions” from people who don’t want to hurt your feelings or dampen your enthusiasm. Just like your Mom, people want to be nice. Besides, they are not committed to buying it, so there is no downside for them.
If you start your business using these false facts, your chances of succeeding are slim. But, there is an answer. Rob Fitzpatrick, author, and entrepreneur, started several companies that failed using this traditional customer research. He finally realized what the problem was, and here is what he found.
Talking to potential prospects is critical, but you have to speak to them in a way that they will give you real facts, not just opinions. So the first step to getting real facts is not to tell them what your product idea is.
Don’t Talk, Listen
Set up a casual meeting or coffee, so they are comfortable. And remember, you are there to listen, not talk.
Ask them about themselves and their job. People love to talk about themselves.
During that conversation, find a way to bring up a question related to the problem you want to solve.
For example, here are some opening questions, “that part of your job sounds difficult.
Is that a big problem?” or “I’ve been told that X is a problem. Do you have that problem?”
Then based on their answer, keep probing about the problem and how they dealt with it.
This explanation is experience talking about their problem and how they handled it — this is how you get factual information rather than just opinions.
They verify if the problem exists, how painful it is, and how they dealt with the problem.
Maybe it’s a minor problem, and they have a way to deal with it now. Perhaps it’s a significant problem that is costing the company time and money.
This approach will verify if there’s a problem and if the pain is severe.
You get facts, not opinions, which will give you actionable insights.
Here are some of the problems with the traditional approach:
1. We spend too much time collecting data that’s too unreliable for important decisions.
2. Sometimes we don’t realize the data we are collecting is worthless (even misleading)
3. Asking customers what they think of your idea almost always leads to bad data.
4. We assume customer feedback is scientific, and whatever they tell us is scientific and counts as learning.
5. But, it’s easy to bias the people we are talking to. Once you tell them you have an idea, they are already biased beyond repair because they don’t want to crush your dreams,
6. If people tell you your idea is terrible, that may not be useful data either. Why? People are bad at predicting both: which ideas are good and what they,
as customers are going to do, buy, use in the future,
7. Even Venture Capital firms credited with being the best predictors are wrong more often than right.
And If their judgment is worse than a coin toss, how seriously can you take anyone’s opinion?
8. If you are going to get your “facts” faster (e.g., focus groups, surveys, etc.), it could be a big mistake.
The problem is this information is not robust enough to bet your company on it.
Get them to talk about costs
During your questioning, you will ask how they solved the problem and how expensive it is to solve the problem.
Now, you have an idea of the cost parameters to determine if the product will be profitable.
This approach does take some time as you will want to interview people until you begin to get repeated information.
However, it is less expensive than starting development and having to end the project later.
Get facts, not opinions
You can get broad industry views and some facts and figures from Google information,
but the insights you need only come from face-to-face conversations with prospects.
It’s the insights into your customers’ worldview and decision-making that tell you to build it or not.
You need real insight into what customers want.
There is also a problem if you put together a small group of people to do these interviews.
You will end up with several opinions as to what they heard and what is essential.
These variations in view make defining the most critical problems difficult.
You do need to keep everyone informed of the information.
Conclusion
You can get the real facts you need if you don’t bias the potential customer by telling them your idea.
Ask questions about a problem they might have and what they did to solve the problem.
Get them to say to you, based on their experience, the problem, and how they solve it or don’t solve it.
Also, what they currently pay to get it solved now.
At this point, you are only trying to verify that the problem you want to solve is a real problem, and the customer would be willing to pay to get it solved.
Once you have your product concept designed, the second step is to follow up with customer interviews
with your product or service design to determine your solution’s validity.
You will also ask for some commitment, not necessarily money, maybe a referral to another user in the company
to determine if the person’s positive response is factual or just being friendly.
We would love to hear your thoughts on this blog or this topic. Or a topic you would like us to discuss. You can reach us HERE.
Jim Zitek
P.S. If you know someone else that would like this information, pass it on.
