I was reminded recently of a piece of advice offered by Tim Ferriss in his book “The 4-Hour Work Week”. While Tim presents some game-changing strategies for being more productive and re-evaluating your career priorities, some point out that a few of his suggestions are less than ethical. One such case study within the book offers advice on how to test your market before you build your product, but the method he describes is questionable. I’m not one to throw the baby out with the bathwater, so I think there is a way to learn from the idea without necessarily replicating the practice itself.
Tim describes two of his business mentees who want to know whether their proposed product lines have a market within their niche. Tim’s solution is creative, while questionably ethical: he suggests that each entrepreneur create a preliminary web page for their product with a functioning shopping cart before the product is actually created. If pre-sales are sufficient to indicate a market interest, an email would then be sent out to the buyers indicating a six-week shipping time, enough to greenlight production and ship it out. If the potential product performs poorly, the customers would be notified that the product run is cancelled, and no money would be collected.
For this particular case study, Tim noted that one of his students did just that and had great success, while the other felt uncomfortable with the apparent deceit of offering a product for sale that did not yet exist without explicitly informing the customers. I also cannot condone any market research activity that does not involve full transparency, but the idea got me thinking. Is there any other way to test your market before you build your product and commit time and money to an idea that may flop?
Of course, there is an entire market research industry committed to answering just that question. You can pay thousands of dollars for surveys and focus groups to collect data on anything you can imagine before you ever manufacture a single unit or train any staff in a new service. But what if you’re an entrepreneur or small business owner without those kinds of funds? There are two simpler ways to perform a basic litmus test on a new market.
- The E-Book Test
One solution is to offer an e-book to your own audience on the topic you have in mind. For example, let’s say you are a financial advisor and you want to offer a course on long-term saving strategies for working families. You can write an e-book on the topic of “How to Save for Retirement with a Growing Family” and offer it as a free download to your existing bank of email contacts and newsletter subscribers. The download numbers will tell you whether or not there is an interest before you invest time in writing course materials and designing branding strategies. If your audience is unwilling to download even a free resource on this topic, however, this tells you that you do not currently have access to the right market segment.
- The Crowdfunding Solution
While there are so, so many ways to do crowdfunding poorly, I think the basic concept is brilliant. If you have a great idea for a new product, you essentially offer pre-sales to help fund its development. I like this model because it allows the market to tell you exactly what they want, and how much it is worth to them to have it. The audience also understands from the outset that the product hasn’t actually been developed yet when you accept money for it. This is far better than using your potential customers as an unwitting focus group, and avoids any possibility for mishap with your reputation (as long as you actually fulfill your backers’ expectations with a final product after it is funded, of course.) The real beauty of crowdfunding is that if a minimum funding goal that you set isn’t reached, nobody gets charged. If the interest simply isn’t there and only a few folks sign up, they won’t be out any money, and neither will you.
Just a little bit of creativity and research should give you a good idea of whether or not your brilliant new idea will have any buyers once it actually hits the shelves.