As an entrepreneur, it's easy for you to get excited about an business idea that solves a glaring problem in your own little orbit, without fully considering how that solution would fare in the marketplace. Conducting market research can answer many of those questions--but only if you ask the right questions and are prepared to adjust your idea based on the feedback.
It's tough to distinguish a good idea from a great idea that will sell, especially before actually launching your product. But there are some things you can do in your earliest stages of product development to make sure your great idea also has great market fit.
Get the right feedback from the right customers.
Before starting our company, my co-founder Dennis Steele and I had an idea for a note-taking device that worked offline so students could take notes without getting distracted on the web. We went around the campus asking hundreds of students, who said they would buy the product if it were available.
The positive reaction was really encouraging, so we made a prototype. But none of the students who had so enthusiastically expressed interest in the product actually wanted to buy it. Would it have helped them take notes? Sure. But was it a must-have solution they couldn't get anywhere else? Not really.
These days, there's no shortage of data and feedback--in fact, there can quickly be too much of it to be useful. Rather than taking a shotgun approach and getting lost in a sea of information, isolate the type of feedback you want and need, and use that to make specific changes to your product.
Make sure customers will buy in--literally.
The failed note-taking program helped us take a more scientific approach when we founded our company. Before we built anything, we went door to door and asked locally-owned businesses--our target audience--if they would be interested and what features they would like to see. Then we went a step further and actually pre-sold the product.
At that early stage, taking those payments made a world of difference. The payments were small, so the financial stake was low enough for the companies to take a chance on something that didn't exist yet. But involving prospective customers established three important things:
Our customer base had already bought into the idea.
We could use that base to fine-tune our idea and make the product fit the market as well as possible.
We had proof our idea was something people would pay for.
Vetting our product in this way was similar to launching on Kickstarter: customers are sold enough on your product to invest, which gives you the capital and confidence to fulfill that promise.
By the time we were ready to start the business, we had talked to hundreds of local businesses and understood their pain points, so we could implement solutions into the product.
Focus on fit, not reach.
To make a meaningful splash in the market, it can feel like you need to solve all of a customer's problems at once. But that can diminish your energy and money for development and marketing, which can result in having several shoddy products instead of one rock-solid one.
When Podium got into the Y Combinator in 2016, our little company was in a cohort with rocket scientists, AI-based agriculturalists and others that all seemed to have world-changing ideas. In comparison, our tool to help local businesses get reviews felt small and basic. Dennis and I were suddenly insecure and came up with an entirely new strategy to weave in some "sexy" ideas.
When we presented it to our Y Combinator mentor, he asked if we were joking. He said we should focus on our so-called "small" idea because it was already one of the highest revenue-producing companies to enter the program. He suggested we pay more attention to the obvious market fit we had achieved before we worried about how broadly we were addressing problems. That advice helped us focus on our core idea and then gradually expand as the market demanded.
Revisit market needs often.
It can be tempting to take a bunch of great data or a successful product launch and get comfortable. After all, you nailed the market fit and proved your product is as great as you thought. But products and services can almost always get better. Even with a perfect product, customer needs change and the market shifts. As your company grows, it's important to create a positive feedback loop to capture those shifts and adjust.
Refine your ideas by thinking critically, talking to your customers and adjusting accordingly. In entrepreneurship, there is no guarantee of success, but every refinement can get you closer to it.