You’ve just come up with a brilliant business idea. But, how can you know whether it is worth investing both your time and money? Before you start building your business plan and developing a product, you need to make sure that it is something relevant to your target market and customers.
Here are a few steps you need to take to test your business idea effectively.
#1 Who are your Customers?
To develop a product that will be valuable to your potential customers, you need to get to know them first. This is exactly where target audience segmentation shines. When doing your research, you need to take a plethora of factors into consideration, including demographics (age, gender, income, marital status, education, occupation), physiographic data (attitudes, lifestyle, hobbies, risk aversion, personality traits), geography (country, region, area), and so on.
Only by developing your buyer personas will you be able to understand your target audiences’ preferences, keep pace with the changes in their buying patterns, and deliver a highly personalized approach. When it comes to validating your ideas and conducting a customer research, Facebook Ads are a tool you shouldn’t ignore. Here is why:
- It shows your customers’ feelings about your product (even before you create it).
- They are affordable (under $100).
- They can cover a wide audience.
- It provides you with multiple engagement metrics. You will see not only the number of people clicking through your ads, but also keep track of their likes, comments, and shares.
#2 Is there a Need for your Product
Having a million-dollar product idea is great. However, it’s not enough for you to succeed. Before you start working on your product any further, you need to see whether there is a market demand for it, and Amazon can help you do so. For starters, you need to pay attention to the Amazon’s “best sellers” section and look for the products similar to yours. If your product category already exists, this simply means that there are people interested in buying it. This also means that the industry is big enough to support the expansion of multiple companies simultaneously. You can also observe reviews of related products on Amazon to see what existing buyers like, dislike, and complain about most commonly.
#3 Know your Competition
One of the most important steps you need to take is your competitor analysis. You could start by looking for them on Google or finding them on social networks. Pay attention to the people interacting with those companies or talking about them online- they may become your customers one day. By researching your major competitors, you can see what has worked in the past and gain invaluable insights, without suffering any losses. Most importantly, you will understand how people feel about business ideas similar to yours, create a product tailored to the needs of your potential customers, and gain a competitive advantage.
#4 Ask for Feedback
Does your target audience buy products related to yours? If they do, why? What is the most obvious benefit they could get from your product? Is there anything disturbing about the existing products in your category? What do your potential customers value?
These are just some questions you should answer during your market research. And, the best way to do so is to ask for your customers’ feedback. Now, this kind of research is usually synonymous with endless questionnaires or people trying to get rid of annoying researchers pestering them on the street. However, this doesn’t have to be so. With the rise of technology, businesses are given the opportunity to collect their customers’ feedback in a more subtle way.
For example, you could use brief email surveys, keep track of people’s discussions on social networks, or create polls. To make sure that the participants will take your questions seriously and answer them honestly, you could even use paid surveys to reward them for taking their time to help you. On the other hand, developing focus groups, doing real-life interviews, and offering product testing opportunities may also help you collect people’s feedback instantly.
#5 Create a Test Landing Page
Once the word is out about your new business idea, your target audience will want to get more information about it. Of course, the first thing they will do is google you up. This is exactly why you should create a simple test landing page and link to it from all your social media profiles. Prelaunch landing pages play an immensely important role in your business validation, given the fact that they will help you calculate your conversion rates and see how this all will work out once your real site is up.
Most commonly, a landing page will consist of a brief insight into the product and tell your visitors what problems it solves. It will also have a section where users can subscribe to stay updated. You should keep in mind that you don’t need to have a fully developed product to display on your pre-launch landing page. These pages are here to give you an idea of how much customers are interested in your product and build buzz among your potential customers.
To Wrap it Up
Finally, there is no definitive guide that will tell you immediately whether your business idea is profitable or not. However, the tips listed above will help you get an insight into your market, see whether your idea is valuable to your target audience, collect the right figures, and make your future decisions based on them.