They have an idea for a business: a bookbinding service that binds contemporary paperbacks in vintage leather bindings. However, they are not sure if there are enough interested bibliophiles who could become potential paying customers. One way to test this is by conducting customer validation interviews with real people from your target market.
This is the customer validation process – the point where business concepts meet market reality. With the help of customer validation, you can not only test business ideas, but also theories about a target market or specific product concepts. Here is an overview of customer validation with tips on how and when to implement it.
What is customer validation?
Customer validation tests a business assumption about what will and will not please potential customers, including product concepts and business concepts. The customer validation process takes place at the beginning of the product development process and often involves collecting feedback via surveys and customer validation interviews with real customers. The idea is that respondents will confirm – or not – assumptions you made earlier in the development process.
For example, your product team could conduct customer validation research to determine if a potential product will resonate with the broader market. Customer feedback can confirm that you have a promising product and inspire you to start production. Or you might learn that your internal product managers like a concept more than the general public.
When do you do customer validation?
Customer validation is one of the earliest steps in launching a new product or brand, preceded only by the customer discovery phase of the customer development model. American entrepreneur Steve Blank initially described the customer development model as a four-step process for adapting concepts and products to actual paying customers. When finding a customer, a company suggests products and imagines a potential customer for its offers. Customer validation is the second step, where the company connects with real people and learns if their assumptions were correct.
By conducting customer validation early in the product development process, you can determine if the product fits the market before committing serious resources to manufacturing and distributing a product. If you want to validate an entire business concept, early client validation will help you assess whether there even is a viable market for your business. If you want to validate an entire business concept, you should do it before a public launch.
How to perform customer validation
- Complete the customer discovery process
- Propose a product concept or a business concept
- Survey customers from your target market
- Follow up as needed
A successful customer validation process starts with thorough preparation. Then it requires interacting with real members of your target audience, whose opinions will guide your next steps. You can do this in four steps:
1. Complete the customer recognition process
Acquiring customers is all about articulating who you think might be interested in buying your product. To do this, you can write a positioning statement that explains the value proposition that your company or product offers to potential customers. For example, an e-commerce stationery company might envision a target customer who typically buys high-quality stationery from brick-and-mortar stores, but is happy to shop online when they are offered a wider range of options and lightning-fast shipping.
2. Propose a product concept or business concept
When your customer acquisition efforts are complete, use your positioning statement to formulate a business concept or a single product concept. Refine your concept to meet a market need and address customer pain points. You need to present your concept to potential customers. Therefore, this step may involve creating sales materials such as a product prototype or a slide presentation that describes your proposed business.
3. Interview customers in your target market
You now collect customers from your target market, present your concept to them and get their feedback. If you already have a business and are launching a new product, you can interview a sample of your existing customers. If you are proposing a new company, you can announce that you are looking for study participants and host a focus group. Use these interviews to collect qualitative data—non-numerical information that companies use to learn more about customer attitudes, needs, and values. Questions you can ask topics include:
- What do you find particularly valuable about this product, service or business concept?
- What about this product, service or concept does not seem valuable to you?
- What reasons would you pay for it?
- What are the reasons you wouldn’t pay for it?
- What would be the right price for this product or service?
- How could this product, service or overall concept be improved?
4. Follow up as needed
Your customer validation interviews will give you a sense of whether there is a viable market for your company or product. You may be satisfied with the results and ready to proceed with the launch. Or you may find that your concept needs to be refined to appeal to your potential customers. If you end up changing your product or business concept, you can choose to double check with your interviewees to test your refined ideas, or you can conduct a whole new round of customer validation. You can then use the information gathered from your target market to guide your sales strategy.
Mistakes to avoid in the customer validation process
The customer validation process can give you a valuable preview of the public reaction to your product or business concept. It can also help you create a sales roadmap and marketing plan by helping you better understand your target market. However, this can be undone by the following common mistakes in the process:
- Identify the wrong target market. Validating your target market is only helpful if you choose the right target. For example, you might think your target customers are single people in their 20s and overlook a viable market of parents in their 40s and 50s. Consider all potential customer bases during the customer discovery process.
- Detection of an insufficient sample size. If you don’t survey enough people, the responses you get won’t be representative of your entire audience. A few individual opinions will then take on overriding importance in your market forecasts. Interview as many people in your target market as you can reasonably afford. Large companies might have hundreds of potential customers, while a small startup might only be able to interview a dozen.
- Ignore the collected data. Some entrepreneurs follow the right steps in the customer validation process, only to find their business failing because they didn’t respect the data appropriately. Your prospects may be telling you things you don’t want to hear, such as: B. that they do not see the value of your product idea or think it is too expensive. You’ve got their opinion, but only you can decide whether to take action to incorporate their feedback and change your business strategy.
Frequently asked questions about customer validation
What is the difference between customer recognition and customer validation?
The customer discovery process involves observing the market and making an educated guess about who your target customers will be. The customer validation process is about testing this assumption by presenting a business concept or product to some of these target customers and finding out if they would actually pay for it.
How do you identify your target customers for customer validation?
If you’re new to the market, you could target the customers of similar companies or those who fit your demographic criteria. For example, a company that sells diapers would likely target new parents. If you already run a business, you can target your existing customers who have bought from you in the past.
Do companies create customer personas as part of the customer validation process?
Yes, companies create customer personas, also known as buyer personas, as part of the customer validation process. This gives you a clear view of who is actually going to pay for your product or service. You can create a buyer persona by describing exactly the type of person you expect to want to buy your product.