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Customer Validation - How well do you know your audience?

In many startup forums, customer validation is believed to be the natural step after customer discovery. At this stage you should hold a clearer idea about who your target audience is as well as your value proposition. Now, you are ready to ask tougher questions and accept that you may be wrong. Better to be wrong now than later, after you have spent money on it, right?

Why you need customer validation

Reduce risk by checking your assumptions that are tied to the target audience whose problem you are solving. Through validation you will get in touch with the real people who will use your product. High tech startups might likely test out a Minimum Viable Product (MVP) at this stage, which we have discussed in an earlier blog post. Startups also prepare sales materials such as brochures, slide decks mockups for product demos.

The end goal of customer validation is to develop a repeatable sales process.[1] A few significant milestones on the way include getting early evangelists/early adopters to buy your product and identifying a profitable and sustainable sales and business model. To achieve these, let’s look at several customer validation tools.

Tools for customer validation

Learn how users interact with your content, brand, and social media and look at it as a dialogue. Users that are willing to be involved will appreciate knowing how they affect the changes you make to your product. This type of transparency goes a long way. Several tools will help you refine the sales and business model:

Surveys, questionnaires and face to face interviews - A good jumping off point is to initially write down what your assumptions are about your target audience and the value you give them. Once you have these in writing, you will soon realize there are is at least one or two assumptions that you need to clarify more accurately or validate. This is where the focus of your questions should be in any form of inquiry.

Make sure you are asking questions that are not just answered with a simple yes or no. Questions such as how might this product/solution fit in with your life and how much you would pay to solve this problem are better than a question such as do you think this is a good solution for you. The secret is to have each question lead to 1 or 2 follow up questions that dig deeper into the subject you are interesting in.

Experimental ads and landing pages: Use this tool to determine whether there is enough demand for what you are selling. With a web page that communicates your message in clear calls to action such as signing up for a newsletter, social media or asking for an email, you can gain measurable insights on demand. Kickofflabs and Unbounce are two popular solutions to to check out.

A/B testing for features: A/B testing is a method in which you show a feature to one audience while another identical audience does not get exposed to the feature. Then, over a long enough period you test the reactions through visits, hits, revenue generated, etc. The key here is to collect results that are measurable Make sure you are comparing apples with apples, and account for seasonality, holidays, or other events in the calendar that may skew your results.

Net Promoter Score (NPS): This index, which ranges from -100 to 100 measures how willing are your customers to recommend your products or services.[2] Customers are segmented into three categories: passives, promoters and detractors. If the scores from the promoters are higher than the detractors you have a positive promoter score. On the other hand, having more detractors should be a sign your product or communications is due for a tune up.

By following up and asking customers why they gave you a negative score, you can determine where you need to refine your proposition. For example, sending a NPS survey after customers had time to experience a free trial is a good time frame capturing insights on what features they did not like.

Validate the market with industry reports: Industry reports show forecasts on a given industry. Although competitors may not have the same offering as you, using tools like comScore to see how much traffic they get can help you size up the market and its potential. By capturing online digital behavior measures, you can assess how much you can gain and use the evaluation when pitching to investors.

Additional methods and tools for customer validation not covered in this post include crowdfunding campaigns, cold emails and cold calls.

Is your product actually solving a real pain or just a cool idea? There’s no better way to find out than getting out of the office and testing it out. At the end of the day, customer validation provides the most cost-effective framework to measure whether customers will buy your product.

[1] Develop your value proposition and business model using customer validation

[2] Net Promoter Score