I’ve just finished reading Rob Adam’s latest book ‘ If you build it will they come? – three steps to test and validate any market opportunity’. His previous book was titled ‘ A good hard kick in the ass – basic training for entrepreneurs’ – also a good read.
As the title states it outlines the process of market validation (MV). I have yet to come across a book that does this as good as Rob does. Despite knowing (and doing) a bit about MV (compared to most scientists 🙂 ) I have always wanted to know the nuts and bolts, I wanted someone who has gone through it multiple times ( experiencing both sides : canning and further developing ideas) and can lay it out in a systematic manner.
This book points out the obvious. And that’s exactly what a lot of budding entrepreneurs need as the process of market validation is something that is frequently done half arse. People just don’t do it/ properly despite the concepts being simple and common.
Rob outlines the reasons behind this:
– People believe the ‘don’t have time’ as the market opportunity is moving fast. Reality is that there isn’t probably a market opportunity worth running after.
– People have an output mentality. Fixated around doing other things for the business that aren’t really aligned to establishing your market assessment which is ultimately what matters at this point.
– The process of market validation pushes people outside their comfort zone – the fear of rejection and undertaking processes which are not as measurable, tangible or are made up of smaller digestible steps as say.. product development.
– Its just not sexy as it requires hard work, perseverance and discipline.
The most value I gained from the book was in the ‘Aim’ section about knuckling down to talk to your market and a logical process to adhere to when doing this. From the various sources you can gain access to people/ information to how your questionnaire/s should be structured and evolved over the course of your validation.
Some key takeaways:
- MV takes 60 days and 10 % of your development budget.
- You should look to directly interview 100 people – at least 20 % should be face to face, the rest by phone.
- Internet surveys are a good way to get a whole lot of data with associated demographics. This is good for helping you find your segment and the 100 people who you need to interview.
- Target a market segment which is large, growing and in the early majority phase of its lifecycle. Dominate the segment with the biggest ‘pain’ then look to move to others. This also allows you to get a simple product out the door ASAP which has only the ESSENTIAL features for solving the specific market pain associated to that segment.
- Broad market targeting = appeals to no one.
- Market validation vs. market research = shaping an offering vs. confirming an offering. i.e. validation helps to decide what your product will look like and do.
- MV will enable you to gain a level of insight into a market that no one else has.
- Acquiring customers from a competing product costs 3 – 10 x more than getting customers new to the market.
- Use experts/ influences/ analysts to bounce your hypotheses off
- The ‘I want to keep my money’ customer mentality is a competitor and substitute to your offering.
- 1st year marketing budget? = 1st year amount spent on product development
The Three Steps of Market Validation
Ready – quick assessment of the market opportunity using secondary market research [ market size, growth, life cycle phase, trends, competitor analysis, substitute analysis, economic analysis]
Aim – in depth exploration of your market segments – getting your hands dirty by collecting data via primary research tools/ methods –> talking to people! 1: Explore the pain 2: Test your offerings with different segments 3: Refine your final offering and segment.
Fire – Taking your insight and making sure it makes its way into your final product/service offering
Graeme @ graemefielder.com