May 9, 2011
Sure, your brilliant new idea may be the next Google, but what if it’s not? How much money are you willing to spend on your idea? How much time are you willing to invest on your potential success? If you are like most hopeful entrepreneurs, the answers will probably be “a lot.” However, before you spend your life savings — or more — on product development, hiring employees and building infrastructures, consider cheaper and faster ways of testing your ideas.
Knowing whether or not people will use your product can save you money and years of frustrations. Furthermore, understanding the specific features and functions your customers want will increase the likelihood of your success. So how do you do it? Here are some simple steps to validate your million dollar idea without going broke:
1. Develop and Define Your Offering
Create a concise statement that conveys exactly what your product and/or service does. This will allow you to frame your concept in a way that anyone can easily understand. This is also a good time to get started on a basic mini-business plan.
2. Build Buzz around Your Idea
Next, set up a very basic website, which can simply include a landing page with a strong call-to-action, such as “Sign-up Now,” “Create an Account” or something similar. When the button is clicked, it should direct the user to a page that says “We are currently in private beta testing, please leave your email address so we can provide you with access when we launch.” Below this, provide a lead capture form that allows visitors to enter their name and email address. For a quick alternative to this step, build a viral “Launching Soon” page with LaunchRock and leverage its prepackaged social components.
3. Refine your Web Presence
A free website is a feasible alternative for lean pockets. Start with content management platforms including Wordress.com, which provides free theme designs, Plugins and customizations. Take the website live and visible to the public with economical web hosts. Companies like Site5.com and HostGator.com offer hosting plans as low as $5 per month.
Don’t forget to purchase a domain name that reflects your proposed company name or product name. A domain can be purchased for as low as $8 per year. You could go out on a limb and get creative with your company or domain name, like Google, Yahoo, Twitter, and countless companies did with their original names, just note that it may alienate some users.
4. Set-up Tracking and Measurement Tools
Now is the time to set up tracking and measurement. A free Google Analytics account will allow you to monitor website traffic, where visitors are located and the sources they are coming from. Determining site activity such as page views and visits is essential; it will allow you to analyze the effectiveness of your advertising campaigns, content and much more.
5. Test Cost-Effective Advertising Tactics
The fifth step involves creating a free Google AdWords account, which will allow you to create advertisements that are visible on Google when someone searches for particular terms. Revisit the statement that you created in step one to frame the context of your advertisement by using specific keywords. Get started by mind mapping targeted and relevant keywords using keyword research tools. Once you are confident that you’ve outlined all the proper terms, create and launch a basic paid search campaign.
Google’s revenue model is based on either Cost-per-click (CPC) which means that you pay for every click that your advertisement receives, or Cost-per-thousand impressions (CPM) which means that you pay for every thousand impressions that your advertisement receives. Select whichever method is more suitable for you. Countless coupons can be found on the web to save you money on your first AdWords campaign so look for them before you begin.
Your objective is to drive as much qualified traffic to your website as possible and to then gain leads via a strong call-to-action form. The cost per advertisement or click can often be as cheap as a few dollars. For the purposes of this article, we will assume that you will run this advertisement for two or three months.
6. Track Your Success
Once you launch your advertisement, view your Google Analytics data resulting from Step 4. If you get a lot of visitors to your website, this is a good thing. If you begin converting the majority of these visitors into people who provide you with their email addresses, this is a very good thing. Basically, you have now begun validating your idea. You have people that are interested in your idea and your product.
7. Spread the Idea Virus and Integrate Social Media
To further promote your idea, consider adding social media sharing options that will allow interested users to share your website with their contacts and friends within their networks. This will help you get more traffic, without spending more money, and will hopefully result in higher conversion rates.
8. Maximize Engagement and Leverage the Crowd
Now that you’ve launched your idea, set up proper tracking tools and start grassroots promotion via social networks — the validation process doesn’t stop there. If you are ready to provide access, launch an email campaign to communicate with potential customers. Begin the discussion by asking them what they expect to see in a product. Some potential users may be surprised or shocked to hear that you are asking for their opinion, but you can use this as an opportunity to fine tune your idea. Also, this is a great place to interview your potential customer to find out how they will use the product, how much they would pay for such a product and/or service, and if they would encourage their friends to use it.
Test, Refine and Repeat
At this point, you have taken what was just an idea, and have validated it as something that people would want. Furthermore, you have found out what specific features people would look for in that product. This will save you time from creating features that people don’t care about. Continue moving forward with product development.
If this experiment has demonstrated a lack of interest in your concept, you may want to revisit the demand or utility of your idea. Ask people, specifically your target consumer, who can provide you with quality feedback. If the results demonstrate that your idea was a hit, get started on building your business.
As you begin the process of developing your million-dollar idea, use some of the Lean Startup Principles shared by experienced entrepreneurs like Eric Ries and Hiten Shah. For example, build a minimal-viable-product to further test the details of your product. Develop a bare and basic prototype and utilize it as first generation version. Continue to request customer feedback along the way and constantly improve your product based on what customers want. Regardless of what direction you take, you are now better suited to evaluate the potential success of your big idea. I wish you the best of luck.
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