Accelerate Your Startup 2: How To Demonstrate Customer Demand for Your Business Concept
In the first article of this series, we talked about how to turn your idea into a successful business, whether it’s selling products or web designing.
We have discussed that even the best ideas don’t mean anything if you, the aspiring entrepreneur, don’t take the necessary steps to turn those ideas into viable business ventures.
Some of these steps including identifying a problem that your business can solve, identifying your market, and eventually, learning how to sell your idea.
The next stage of the process will be discussed in this article; that is, how to demonstrate customer demand and test the existing business concepts against different environments to hone the most effective model for success.
1. Find the ideal customer
If you’re planning to develop a new product or service, you should be able to identify a customer that fits your plan and then focus development around this person.
It may be possible to target several customer segments in your industry but remember, a product or solution that tries to be many things at once and sell to all people is more likely to fail.
Identify the total number of “ideal” customers and then add 10-20% of what you may call non-ideal customers, and present your product or service. Keep in mind that these non-ideal customers will find your product less appealing, regardless of the level of quality or your sales efforts.
2. Does your product already exist?
There’s an assumption that creating new products automatically sets you up for higher sales as opposed to improving upon an existing offering. If you find that an offering already exists, it only shows that there’s a current market need and therefore a better source of customer information.
Indeed, most investors prefer to improve on an existing solution rather than creating a new one without a proven market need.
If a need exists, there’s a high chance that somebody else has already introduced a solution that is most likely very similar to your own. If that is so, you have to prove and demonstrate value improvement to your customers, or your offering won’t be accepted.
3. Present a new and dynamic concept or capability
Successful business models usually focus on presenting a unique strategic capability that the business or brand can bring to the marketplace.
The good thing about presenting a unique strategy is that it improves the customer offering and increases the cost of entry for your competitors.
The best way to enhance the value of your business concept is to focus your efforts on one part of your business model that stands out as unique, and to partner or outsource other elements of the business.
4. Plan for a successful launch
If your business idea is successful, you will definitely have competitors. Imitation, after all, is the sincerest form of flattery. If you don’t have competitors, it probably means you’re doing something wrong!
Don’t focus too much on first mover advantage; instead, focus on how your concept enhances customer value and how you can meet customer demand. If a second mover emerges and takes away a significant portion of your market, strive to make your process and product better.
5. Define your business model
Can you comfortably define your business model?
Ideally, a good business model takes into account key factors like customer segments, value propositions, customer relationships, resources, partners, cost structure, and revenue stream.
Create a parallel strategy that allows you to build the business using other means, say by partnering with someone as opposed to working alone, and find out which method enables you to build your strengths.
6. Test and review your data before building the full structure
By all means, avoid the mindset of “I will build a product and the customers will come.” Instead, come up with clever ways to attract a group of beta customers and build your business around their needs.
You can gain tremendous insights simply by implementing a strategy of test-and-learn especially in the initial stages. A responsive website is a great tool for gathering data and analyzing customer trends.
Creating a website nowadays no longer have to break the bank. Use the Bookmark website builder to make a professional looking website at a fraction of the cost that a web developer would charge.
Bookmark also has analytic tools that can gauge preferences and interaction in your target group. Evaluate every factor that affects the customer’s ability to access your solution, and seek to minimize these hindrances.
7. Build on your list of contacts
At this stage, you probably have a list of contacts including suppliers, vendors, and perhaps a few customers. If so, great.
Continue building your list and create a communication strategy that helps you stay in contact with the most important people on that list.
Remember that some of your contacts have access to wide networks of people who may need your products or service.
8. Create a marketing plan
All preparatory work means very little if you don’t have a plan to generate customer response and to show customer demand for your products or services. Once you establish that you have a viable product, make a list of 100 things you can do to market your product, and act on it.
Also in the process, speak with as many people as you can about your solution and record the feedback. This way, you will have first-hand knowledge about your customers and what marketing strategies are more likely to be successful.
9. Ensure you have recurring revenue
Customer acquisition is not cheap. One-time sales tend to be unreliable and they don’t bring in good rewards. Recurring sales, on the other hand, stabilize your business.
If possible, focus on recurring revenue from your main product and if that doesn’t work, consider incorporating add-ons that can boost your income. Add-ons come in different forms including memberships, tune-ups, and information.
Concept testing matters. A lot. Think of it as a way of placing those abstract ideas you’ve been toying with in front of a real audience to see whether those ideas resonate with them and if there is an actual customer demand.
The concept you choose will be one of the most crucial decisions you make in your business, and most entrepreneurs don’t get 10 or 20 chances to get it right, so take time to understand the concept and how it relates to your customer solution.
As you continue to expand your business model, make sure to stick with the large markets. Investors like to see you operating in a billion-dollar market, as it will give you a healthy supply of clients and customer demand and leave you with more space to grow. It’s better to have just 1% of a large market than 20% of a tiny market.
Go through these factors first before developing or expanding your business and maintain some level of flexibility.
So whether you’re selling goods or performing some services like web designing, it’s very important in the process of accelerating your startup to test customer demand for your business.