I would love to gain further knowledge of different strategies used to create initial demand or to even validate that the business model will work. Would a leap of faith and passion get you far?
An easy way is to run some smoke tests to tackle the demand.
A smoke test is basically pretending that a certain product or service exists to see whether potential customers are willing to buy.
Also, it is a great way to gauge the interest of potential customers regarding certain aspects of your business model.
The steps I would make:
When you’re an early stage startup you need to validate that you are addressing a real problem your potential customers are facing.
Remove the over-used words, initial demand, validate, business model, leap of faith and passion. Find a human being in sales or marketingr or biz dev person in the area you're going after. That person can take you to potential users or customers - Listen... AND make your case. You will get feedback - to "validate" or to "pivot" - Pivot really means try again. You may make a sale. Hope this helps.
You typically do not create demand, you uncover it.... or you don'T. Customers choose you, not the other way around. Your job is to find out what causes them to buy. Combine that with what you love to do and you have a winner. If you can help them make progress in their jobs/lives then they will buy your product/servicE. The best way I know I to do this consistently is Jobs to be Done. Please feel free to reach out is if you want to talk more.
Like in Mario Bros, what "strategy" you employ depends on what level you're at.
Level 1: Value Prop fit
Level 2: Product-Market fit
Level 3: Business Model fit
You're at Level 1 if you have an idea and no customers.
Viability before scalability.
Here are a few examples from a few startup entrepreneuers sharing about their businesses:
Alex Brola - co-founder and president of , which runs an online on-demand cleaning service.“We actually validated [the idea] without having any cleaners to do the cleanings. We threw up a site, a booking form, a phone number, and ran some [pay-per-click] ads through Google and Bing, and saw what the conversion rate would be had we actually had cleaners.”
Danny Maloney, CEO and co-founder of , which offersaPinterest analytics tool." We 'validated' our first (failed) product by having friends and family tell us how wonderful it was. [It] felt great, but they didn’t use it. When we started , we took a different approach -- asking complete strangers who didn’t care about us at all to [sign up] and pay before our product was even built. We stood up a signup page, bought some AdWords traffic and people actually started offering to pay us! We didn’t actually charge them, but we learned we were onto something."
Rick Martinez, the owner of , a manufacturer of ready-to-serve, bottled sangria."To validate, I made some of my homemade sangria and I took it to a few retailers and asked them if they would buy a sangria in a bottle that tasted like this. Each of them said if I could bottle my homemade stuff they’d buy it. They all seemed to really enjoy my sangria but didn’t think I’d be able to do it on a commercial scale.The second level of validation was running the numbers. I created a fairly complex spreadsheet which I still use today. This spreadsheet allowed me to understand how much money I would need to commit to this business and how much product I’d have to sell. It forced me to ask a TON of questions to people about the alcohol industry. These [two] steps were all the validation I needed to have me move onto the next step."
Rob Infantino, the CEO of , which helps users discover local car-repair services."I owe much of the validation process to ," who was an advocate of leaving the office. "After formulating the idea for this online marketplace, I got out of the building and spoke to potential users of the service. The idea needed validation by real users. Since I was planning to build a two-sided marketplace, I had to speak to vehicle owners and automotive service providers, both of whom consistently offered valuable feedback about their challenges, their needs and what they’d want to see. I built a working prototype and shared it with the same groups with updates along the way. This took months of work. Before I knew it, I had validated my idea and development on a real product was to commence."
Hope, that helps.
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Give it for limited time free and see the demand.. This also helps you to see the gaps in your product with these free customers
This was covered somewhat here. Create a basic WordPress or Squarespace site with describing your idea. Put an email capture in it where people can sign up for updates. Get business cards made. Now go find your target market & talk to them in person.
Also, just follow the steps in the Startups Owner's Manual.
Start with a list of questions you need answered:
- how much can I charge
- what will it cost to make
- how much will it cost to sell
- will people be able to use it
Then you create a strategy for each question.
The strategy will be different depending on your company, the market and the question.
The best way to validate your idea is to do a feasibility study. This however is a lot of work. It is a worthwhile process if you are about to throw yourself wholeheartedly into a new venture, but the underlying premise is you already feel pretty strongly about the idea. If you are not there yet, you can start simply be sharing your idea with everyone you can (friends, family, smart business people) and see what their response is. You will get a fairly quick read on weather the idea is grounded in reality or somewhere out on cloud 9. It should also be noted that you don't have to give away the "secret sauce" for your idea when having these discussions - you're looking for feedback on the concept not the details behind it.
Creating initial demand is a different thing. I wouldn't even begin thinking about this until after you have validated your idea, but the premise is the same as above - i.e., you'll need to talk to everyone you can - only this time you'll be looking to drive mass awareness via marketing tactics like advertising, public relations and direct mail / email to name a few.
My project is a web/app based marketplace that provides a niche service in a large industry already well supplied by an entrenched industry structure.
For validation, I have created AdWords ads that are displayed based on searches for terms used by both providers of and consumers of my service. My search terms are based on available third party tools that indicate terms used by these companies' own campaigns.. These ads link to my domain, where I have a simple set of splash pages that describe features of the service. There is a single Call to Action, a "Let Me Know When You Launch" button, followed by a Thank You page. Three pages for each ad.
My first market is my local market. High demand AdWords cost up to $10 per click in my industry. However, ads display with bids as low as $0.78. Some of these terms show only a few hits per month. I have blanket bids of $0.80 for all my terms and a daily budget of $3.20. Presuming I spend up the budget on any given day, I can get as many as 120 hits for about $100 a month.
It is very early in this project, too early to know whether it is successful. My intent is to gather indications of interest from both potential consumers and providers of the service, based on the service promises named in the web pages. They are intentionally minimalist, not consumer sites. My intent is that the only reason anyone would provide their information is because of the offers.
Presuming successful, I can shift the campaign from market to market as a way to indicate broad supply and demand.
There is also the possibility that I can communicate with and hand pick the initial providers and consumers, actually providing my service and fulfilling payment without fully developing the app and web based marketplace. This would provide a pretty solid basis for asking for development money.