What Is Your Market Validation Plan?
Author: Peter Hanschke
Here’s the situation: Your development team is busy creating a Minimum Viable Product (MVP). You have people off in all directions trying to secure some funding. But do you have a Market Validation Plan? Furthermore, are you executing this plan along with all the other activities? In other words, is this an activity that you are currently performing?
As the name suggests, a Market Validation Plan (another MVP for those who like TLAs) is about reaching out to your target market to determine whether:
The market likes your product or product concept
The market is willing to buy your product when you have it ready
“Like” is a bit of a weak word. But at this stage of development, the product may simply be an idea or a very early prototype. So “like” in this context is appropriate. As the development process advances and the product and concept solidify, you will require stronger validation. A vital aspect to validating the market is to determine if the market that you are targeting is willing to pay for your product. Are prospective customers willing to part with their cash either up-front or through a subscription model?
The three steps of an MVP
Step One: First, and probably most obvious, is to talk to people or companies directly in your target market. These, in fact, are your target customers. Many companies are reluctant to do this. They feel that they may lose a sale if they don’t have the product just right. It becomes a Catch-22 between sales and development. Sales says, “The product is not ready to sell,” while Development says, “We need to validate with potential customers to make sure the product is ready.” My philosophy is that it’s better to lose some of these early sales and learn what the product needs to be than to develop the product with no validation and lose every sale!
