Validation is the first step in your SaaS startup journey. It is the exercise of gauging customer interest in your product before a full-fledged launch. The goal is to spend as little resources as possible before determining whether the concept will be a good market fit.
Generally, startups undertake two types of validation, i.e., market and product validation. In this article, we will be discussing:
- What is market validation?
- How is it different from product validation?
- And how can you conduct market validation?
What is Market Validation?
Market validation is a research process that helps determine the size of the market willing to purchase your product. It gauges the extent of demand in your target market before you move towards product development.
If your target market is too small, you should reconsider and invest resources into an idea more likely to bring revenue and evolve into a successful startup. But if market validation deals with the size of the market, what does product validation deal with?
Difference between Market Validation and Product Validation
Product validation helps you determine whether people need your product. It aims to find out the ideal customer who is still looking for a product similar to yours. On the other hand, market validation aims to determine the size of your target market.
A few people may need an innovative ride-hailing service, but the number of those perfect users may not be enough to make you profitable in the long run.
Below, you will find a table with the detailed characteristics of both the market and product validation:
| Comparison Attributes | Market Validation | Product Validation |
|---|---|---|
| Focus | To determine the size of the market that needs the product. | To test the product idea and see if people need it. |
| Key Questions | Are there enough customers to buy this product? | Does this product address people’s challenges? Does this product satisfy people’s needs? |
| Goals | To ensure that the product will bring enough revenue to keep the business running. | To ensure that the product satisfies the needs of the customers in the best way possible. |
| Tools and Techniques | MVP development Market research Competitor research Customer interviews |
MVP development Competitor research Market research Customer interviews Lean development |
How to Conduct Market Validation?
Market validation is a detail-oriented technique that can quickly become complicated in the absence of an organized system.
At VeryCreatives, we break down this process into different steps to make it easier to document and interpret. They are:
Interview the Target Market
Market validation begins with “talking” to the market. The idea is to determine the platforms where your ideal customers hang out the most. For instance, if Gen-Z makes up most of your target audience, Instagram might be a reliable space to engage with them.
Once you determine those platforms, you can engage your to-be customers in conversations around topics such as:
- Pain points: Things they struggle with daily vis-à-vis your product category.
- Expectations: The results they hope for when using products similar to yours.
- Satisfaction with current competitors: What are their feelings about the big names in your product/idea category?
- Potential customers: How many of those interviewed will spend money on your future product (or similar products)?
- Potential revenue: How much money are they willing to spend?
The outcome will be a combination of qualitative and quantitative data. Documenting these insights will help you make the right decisions about feature selection, pricing models, and marketing strategies.
Below, you will find some recommended techniques to engage with your target audience:
Surveys and Questionnaires
Use tools like Google Forms, SurveyMonkey, and social media to conduct surveys with targeted questions (examples discussed above). 85% of market researchers conduct online surveys, as they provide reliable and actionable insights about market size and interest.
Social Media and Community Engagement
Social media pages, groups, and community forums are a goldmine of opinions and conversations. You can join specific forums of your competitors or your product category to have authentic conversations with your target market and gauge their interest.
Email Campaigns
A simple user-friendly landing page around your product idea can help you build an email list of potential users. You can then launch email campaigns around research questions, such as common challenges, satisfaction with current products, product gaps, etc., and learn how your ideal customers feel.
Digital Advertising
Utilizing digital advertising platforms like Google Ads and Meta Ads can quickly put your idea in front of people. You can integrate surveys and questionnaires in those ads to collect opinions about your idea. Running ads might cost you more than other methods, but they’ll also produce rapid results if you’re pressed for time.
Analyze your Competitors
Understand the competition thoroughly to learn about the size and scope of the market you wish to sell to. You’re unlikely to come up with a product that has zero competitors. However, if a segment has fewer similar products, a lack of market need may be one reason (but not always).
Conversely, there may be many similar products out there, but most of them may lack a key feature that people need. Communication tools like Skype have always existed, but Slack took over with great strides by bringing together communication, third-party app syncing, and project management all in one place.
Study the following aspects when conducting competitor analysis:
- Competitor products: To get a complete picture of the range of products a contender is offering. It will help you consider other product ideas you might not have thought of yet.
- Pricing models: To identify the most preferred pricing models in the industry you’re operating in.
- Target market: To determine the audience segments your competitors are targeting. It doesn’t make sense to market an HR SaaS product to aspiring visual artists.
- Social media engagement: The social media presence and engagement of other market players. It will be useful when developing a social media marketing strategy.
- Features: To compile a list of the features most commonly offered by similar products. Ultimately, this list will be useful during feature prioritization.
- Customer reviews: To get a pulse on how the audience generally feels about similar solutions already in the market. These insights will help you come up with unique and innovative features.
Estimate the Market Size
Building a product solely based on the existence of customers is not enough. Therefore, this entire process aims to understand how big (or small) your target market is. This information will help you determine whether your product will become sustainably profitable.
Use industry statistics and reports to determine the scope. The insights from market and competitive research conducted earlier will also help you estimate the size of the industry you’re operating in.
Pre-sell the Product
Create a simple and seamless website and offer an opportunity to pre-order the product before it is developed. The website copywriting should clearly explain what your product does, how it solves customer’s problems, and how it is different. Doing so will help you collect responses that will be a near-accurate representation of your customers’ behavior after the launch. With enough pre-orders, you can move on to MVP development. Utilize SEO, paid advertising, social media, and email lists to market and generate traffic for your website.
Test with a Minimum Viable Product
MVP development aims to launch the product with the most essential functionalities and test the market’s response. It is an iterative process that releases features in short cycles and deploys them quickly. Most startups prefer to build MVPs because they help them go to market quickly without incurring huge development costs.
Whether your MVP fails or succeeds, launching it will give you plenty of data about what to do next. Depending on the feedback, you can either refine the product or work on a different idea altogether.
Early User Testing and Feedback
Instead of releasing MVP to the entire market, a good idea would be to launch it to a selected group of users, also known as early or beta testers. These people represent the average user and inform you about the changes you should or need to make before releasing it on a large scale.
You must also introduce a system that consistently collects user feedback and helps you keep up with user complaints, recommendations, and feature requests so that your product can satisfy their needs all the time.
FAQs
Do I have to build a complete product before market validation?
It is neither practical nor recommended to develop the complete product before market validation. The goal of the market validation is to determine the market size and demand. Therefore, we recommend conducting thorough market validation before spending huge costs on development.
How can I determine if my product idea needs market validation?
Regardless of how innovative the idea seems, we always recommend conducting market validation before developing the MVP. It is never a good approach to base your product idea on assumptions regarding customer needs, market size, and demand scope.
Summing it Up
Market validation is but one step in a long list of processes an entrepreneur must undertake to develop a profitable product.
Whether it is market research, technical development, idea validation, or cost estimation, it does not make financial sense to do it all on your own. Instead, partnering up with MVP development experts like VeryCreatives can protect you from unknown pitfalls that can derail your business before it takes off.
Our team awaits to hear about your startup ideas and explore opportunities together!
