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Why Validating New Business Concepts is a Bad Idea

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In this article, I am going to tell you why that is a bad idea, how it could waste a valuable opportunity and ultimately cost you a lot of money.

If you look up validate in a dictionary it says things like “prove the accuracy of…” or “demonstrate something is correct”.

That is what most of us accept the meaning to be.

And, in truth, that is what a lot of early stage entrepreneurs and innovators do.

They are seeking affirmation that their particular idea will fly.

For an investor, such affirmation or “proof of traction” goes part way to showing that there is demand for the concept.

But does it?

Well that depends on how you elicit the feedback.

The temptation is to sell.

Online surveys can quickly confirm your natural bias for your idea .

It is easy to answer yes to a question asking if you would buy a particular product with attractive sounding features, but if asked for your credit card, would you actually part with money?

A buying decision is a far more involved evaluation process than selecting yes in a survey.

Do you believe the claims made by the seller?

Is there a better alternative?

What other influences are out there? Is it even worth the effort let alone the cost?

When 70% say yes in a survey, it is very tempting to declare victory prematurely, only to be disappointed by the very low conversion rate from sales and marketing efforts.

I have seen lots of promising businesses discover this the hard way, often as they fritter away their meagre customer acquisition budget hoping for revenue that never materialises

I have long argued that insight empowers innovation, but insight exists on many levels.

A survey is the most superficial.

Quantitative yes, but lacking detail behind the choices made and potentially misleading due to confirmation bias.

It is far too easy to be suckered by the term validation into assuming that success is people saying yes because it vindicates our idea.

In reality we don’t want that at all - at least not yet.

What we really want is for some people with definable characteristics to say “yes”, and others with different characteristics to say “yes if” and a third group distinct from both the others to say no.

Even better, we want the “yes ifs” to say what would turn their support from conditional to unconditional.

Then we need to find other groups, again and again until we can predict with reasonable accuracy what each person will say. At that point we know enough to stop.

With each successive round of insight gathering, we want to be eliminating people from our target segment(s) and discovering the benefits that are most attractive to those that remain.

But hang on a minute - surely a bigger addressable market is more attractive than a smaller one?

Actually no, because there is an inverse relationship between conversion rate and segment size.

The better defined your niche, the more directly relevant your sales copy and the more likely your prospects are to see your product as the obvious choice.

And online, where it is possible to hyper target your advertising, why waste money on those less likely to buy?

Before you can make those decisions you need insight into you customers’ hopes, fears and aspirations.

You need to know who will most benefit from which aspect of what your product has to offer and why.

You need to know the words they use and the people they believe.

The acid test is whether your sales copy and marketing strategy writes itself.

Does yours?

To paraphrase George Orwell:
Insight Good, Validation Bad.

Mark Neild

Mark Neild

Founder & Chief Learning Officer Grow Inspires

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