You miss a lot of the shots you take if you’re aiming at the wrong target.
When I’m working with startups on when to launch, I always stress the importance of careful aim. Launching without doing thorough market research is like taking a shot in the dark.
Many startups ultimately fail because they don’t know their customers, competition, and revenue model inside and out. Founders run into roadblocks they didn’t anticipate and don’t have the resources to fix, or they spend their precious time and capital chasing a dead-end idea.
The tried-and-true methods of interviewing and surveying can help you uncover your customers’ needs and desires, their pain points, and, perhaps most importantly, what they’re willing to pay. Taking the time to ask the right questions is your way of carefully aiming before you take your big shot: the launch of your startup.
Here are some key questions to answer before you launch:
1. Would customers wait in line for the product, or would they walk away? In other words, is your product or service a nice-to-have or a need-to-have? Market research can help uncover the most needed — and most appealing — aspects of your idea.
2. How easy was the product to use? Try to notice customers’ behavior, as well as their verbal feedback. Are they using your prototype the way you imagined, or do they seem frustrated, creating workarounds to find what they want? If you see the latter, there’s an opportunity to enhance your product and add value.
3. Do your target customers use any similar products, and how do they compare? Ask about any products and services your target customers currently use, along with those they’ve tried in the past. Remember: your competition is not only products that are similar to yours, but also products that meet similar needs or fill similar gaps in the marketplace.
4. How much would they actually pay for the product? You might have the latest and greatest product, but it won’t get you very far if your pricing isn’t competitive. As the new kid on the block, make it easy for potential customers to try your product or service. Give them an easy in with an affordable price, and then let your product win them over with its efficiency, ease of use, and value.
Pivots Are Possible but Costly
When a startup launches too soon, it’s sometimes possible to make adjustments on the fly and find a working model in the end. However, this backtracking can be painful if you’ve already used precious resources on an untested idea.
Veteran Central is a great example. The company launched as an online resource for the veteran community. It planned to generate revenue through site sponsorship and advertising.
Eventually, market research showed that both the veterans and the big companies who would advertise on the site had very specific needs. Veteran Central became a job site to match companies with qualified veterans. The founders struggled to execute this new idea because they’d already spent so much time and capital building a general information site. In this pivot, the entrepreneurs transitioned from a for-profit to a nonprofit to better serve the community.
Although Veteran Central found a working model in the end, surveys of its target markets and analysis of the competition could have helped it find a successful path much sooner.
If your market research shows customers like some parts of your product and business model, but not others, it might be time for you to make a similar pivot. Ultimately, it comes down to adding value. If your aim is right on target and customers see the value of your product, they’ll work with you — and ensure you make a lot more of your shots.