3 Ways to Validate your Value Offering

The runway tends to be short for startups - low on cash and low on time. Along with this, launching a new product is hard - and we don’t want to make it harder. So we need to make the most of the resources we have by validating each of our assumptions.

Here we will focus on validating ideas, not on already-built solutions. Because it is often better to validate before we spend time and money building a product.

You always need a hypothesis

What idea or assumption are you trying to validate? For example, we might be testing a new product aimed at providing technology professionals a low risk investment strategy for digital assets.

In this case, your assumption (or null hypothesis) is “Technology professionals want low risk investment strategies in digital assets.” On the other side of the coin, it might be that these professionals prefer high risk, high reward investment strategies. Validation is important so that we know which one of these options provide our customers with the right solution.

The key is to start at the most critical assumption - the assumption that is most likely to fail. This first assumption is often called the Leap of Faith assumption - basically saying that if this assumption is wrong, your entire idea needs to be reconsidered. In the case described above, the Leap of Faith hypothesis is not whether they want a high or low risk investment strategy, but whether they want an investment product at all. So, you start with this assumption and then work your way down the list of assumptions in order of importance, validating/invalidating each one.

Validating through marketing campaigns

A great way to determine if you’re on the right path is through two content marketing campaigns that run simultaneously. This option is great because content is free to create.

You use your hypothesis to create two marketing campaigns, one focused on your assumption, and the other focused on the idea that would invalidate the assumption. First, this will help you to develop a solid understanding of what type of content speaks to your customers, and secondly it will validate your potential customer’s problems and the value offering they find most appealing.

You need to measure metrics like engagement (likes, comments and shares), page visits and click through rate (CTR). You’ll want to take all the metrics into account so that you get a full picture of the campaign’s performance.

A prelaunch landing page with signup

While you are building your product, it is a good idea to launch a simple website with signup, and then drive traffic to it. You can then use this to validate your value offering while you are building the product.

Average sign up rates on web pages range from 1-2%, which is not very high. Therefore, you will likely need thousands of visitors to get accurate results. This means you will need a solid distribution strategy if you’re going to get enough traffic.

Once again, you need to do focus one version of your website on the high return hypothesis and the other on the low risk version. You measure each page’s conversion to determine which one resonates more with your customer. There are two metrics that I consider the most important: average time on page and signup conversion. One tells you how well your content speaks to the prospect and the other dictates how well your offering gets people to take the next step.

One thing I must reiterate here is that you must keep it simple - forget about visual effects and other nonsense that doesn’t play to your value offering. Focus solely on communicating the value you want to provide to your customers. Talk about their problems, pains and give them your solution. And then test which value offer appeals to them.

Discussing your proposed solution with the customer

This is a really good option when you already have some people who are interested in what you are doing. It is also useful if you know a group of people who experience the same problem.

We must always focus on the customer’s problems and pain points. You want to discuss with them how your solution solves their problem, and also how it fits into their life or their company. Do you need a wallet connection? Does it plug directly into their website? Sometimes the client will point out these needs when they object to your solution, and then it gives you some information as to what needs to be built into the solution to make it more desirable to the client.

You may even want to ask if the client would be willing to pay upfront for early access to the product. If they say yes, that is a great sign - it means that their problem is so severe and they like the solution to the point of paying before they can even use it. Then when you release your early version, speak to them regularly about what it does well and what needs to be improved - get that feedback and improve.

Conclusion

In today’s issue we’ve discussed three ways in which you can validate your value offering - if you can, use all three options to get an understanding of what your customers need. And always remember: the goal is to learn about your customer, and then to validate that your idea is in fact worthwhile pursuing further.