Helping startups get further, faster.

Launching a new product or an entire business around a new product or service is a daunting process that’s often tackled through a “suck it and see” approach to product testing.

Are you about to Dive into the Deep End?

In this approach the founder comes up with an idea and moves quickly from development to launch in rapid succession, often without the upfront homework required to understand the needs of their intended buyers.

This is a common scenario and leaves the founder wondering, “who should sell this to now?” or “how do we attract people to our site/store/product/service etc?” once the product is “complete.”

Whilst there’s often no better way to learn than by diving in the deep-end, this is an expensive and time consuming way to launch a new business requiring a real stab in the dark.

Before sinking resources, time and energy into a new project it’s important to assess the potential demand for a new product or service. Upfront homework, at first, seems to slow the wheels of progress but in reality time spent learning about customer needs and gauging the level of demand helps creates more relevant products and more targeted marketing strategies.

Upfront homework also allows an entrepreneur to assess the viability of their new product and avoid certain projects. Often the best strategy is to walk away from low-payoff opportunities.

To help entrepreneurs assess potential demand for their new product prior to launch we’ve compiled the 8 ways below. These all help gain a better understanding of the market you’re about to enter and mitigate risks creating a “fail fast and fail cheap” methodology to test new ideas and new products.

(1) Adwords & Analytics

Google Adwords and analytics offer a treasure trove of information for new entrants into a prospective market. Tim Ferris, author of  The Four Hour Work Week, used adwords to choose the 4HWW title, by running a simple adwords campaign. One click equaled one vote, and after a short period of time Ferris had a clear leader, a catchy title and an eventual NYT best-seller.

Google Analytics also allows you to assess if there is a demand for product too, which we used to assess if there was a demand for Beertopia a small tour company we own and operate in Melbourne. Eric Ree’s Lessons Learned blog, provides a must read overview of this topic, calling online businesses that don’t test with Adwords & Analytics crazy. I’d agree.

(2) Lean, mean, demo site.

If you’re going to run an adwords campaign and monitor your analytics the obvious necessity you’re going to need is a website. Rather than Google “Web Development” or hassle the IT guy at work to build  a complex website, get a hosting account with, JustHost ($3.95 per month) and use their one-touch install to install either Joomla or WordPress. Within minutes you can choose a template and start putting in your content. It’s free and relatively straight forward. If you get stuck then you can hassle the IT guy at work, he should respect the fact you’ve gone to some effort.

(3) Segment and Interrogate!

Customer segmentation is perhaps the most important way to assess the potential demand for your new product or service. If there’s a segment in the market that you can appeal to; the segment is large enough to support your projections; and they like you and your product – you’re in business. The real question, is who are these “segments” more descriptively, who is the ideal customer, that you’re hoping gains value from your new product?

This requires a great deal of thought, questions and upfront homework. Don’t assume that building a business that you would like will translate into commercial success after all, each of us, are only at most a target market of one.

Our preferred tool for identifying and surveying target markets is: AskYourTargetMarket.com Another service for identifying profitable segments within a market is Marketing Samuri.

Note: When designing a survey, gather information not only about customers feelings to your product, but also, information about them, their purchase habits, favourite brands, the media they watch/consume etc.

(4) Secondary research.

For those unfamiliar with research secondary research is data collected indirectly, for another purpose that can be used to make inferences about a related topic. E.g. If you were looking to launch a new game console in Australia, you’d need detailed information about the Australia video game industry from reports, competitor sales figures and industry analysis (you’d also need a lot of start-up capital, but that’s a different topic). Secondary research, such as census data, academic market research, industry reports, annual reports and directories. An often overlooked but powerful source of information are media kits. Newspapers, journals, magazines, and radio and TV stations maintain demographic profiles of their audiences (their income, age, gender, amount of disposable income, and types of products and services purchased, what they read, and so on), and many also have information about economic trends in their local areas that could be significant to your business.

(5) Keep customers close and competitors closer!

Striking early-relationships with key potential customers and asking for their feedback and suggestions allows an entrepreneur to ensure they’re building a product or service that satisfies the customers needs. If it’s hard to find someone to assist in this phase chances are it’ll be equally as difficult to find customers. In addition, during this phase of keeping customers close, it is important to keep competitors closer. Strong competition in a market indicates that there is a healthy demand for the new product or service you intend to launch, our previous post details the importance of competitor research and how it can help assess demand for new products.

(6) “In-field” testing and monitoring.

Whether your new business is online, offline, or both “in-field” testing allows you to gauge whether a mock-up or prototype of your product is appealing enough to gain customers attention. Online “in-field” testing this can be analyzed using adwords and analytics, but with offline products, you’ll need to be more imaginative to test your product “in-field”. E.g. Using the’ example of 4HWW once more, Tim Ferris mocked-up a range of different covers and tested them by placing them on random books in Borders and counting how many times they were picked-up, from his nearby vantage point. Whilst, this could be considered going to long-lengths – you need to be just as imaginative to get a real insight into how customers interact with your product in an unbiased setting.

(7) Trial close with trial prospects.

This is particularly relevant for B2B and professional services start-ups. You must be able to pick-up the phone and “sell” to your intended target market without a finished product. Take notes of any objections they may have; spend time thinking about complex questions, and gather information about the problems they face and how your product may be able to help. If you get a buyer wanting to move forward, buy yourself sometime and then work like hell to ensure you can deliver on fulfilling the sale.

(8) Get social -

Social media provides a great way to see if your brand, idea and demo or prototype can engage and excite an audience. Setting up a Twitter account, Facebook fan page, YouTube, Flickr or Vimeo account can provide invaluable information from the number of views, to the types of followers you’re attracting. If you can engage a large following before you’ve even launched your new product and create dialogue with potential customers chances are there is a market for your new product. If you’re finding the opposite to be true, it may be that the difficulties you’re having attracting people to your prototype will carry over to the finished product.

About the author: Andrew Birt is an Australian marketer that works with startups and upstarts, such as JustRosters.com.au. LinkedIN: www.linkedin.com/in/andrewbirt T: @andrewbirt