How would you like to use what some call “market fishing” to find the best market fit for your business?
A big mistake lots of novice entrepreneurs make is choosing the wrong target market.
You can spend a ton of time and energy creating a great product. You have developed an invention or service that you are really proud of.
And you think you’re customers are going to love it, too.
But then you spend loads of time and money trying to sell it...
And it falls flat. No sales. Not even a dime. *Cue the violin music*
What the heck happened?
The number one reason for startup failure is due to a lack of product-market fit.
How to Avoid Failure
What I’m about to share with you is a simple way to discover the best possible customer for your business. Plus, if you follow these steps, you’ll end up with a solid set of validation data that you can share with investors, and maybe convince them why they should bet on your company, too.
The key is to listen to your potential customers from the start, even before you spend time, money, and effort on product development, or sales and marketing. You’ll want to test key assumptions you are making about your business by talking to people you think would buy what you will (one day)be selling.
First, you need to list your key assumptions(or hypotheses) about why your business might work. But also you should list the riskiest assumptions about what might cause the business to fail.
A hypothesis, just like from 5th-grade science class, is a statement that predicts a possible outcome. A hypothesis isn’t a question. Phrase your hypotheses as statements, focusing in on WHO your customer is and WHY would they spend money on your product or service. Saying “People will buy this because they will think it’s cool” isn’t really answering who or why. Be specific!
Remember, a hypothesis is just a guess, so don’t stress on getting it right the first try. You’ll come back and make many more specific hypotheses throughout your business’s life.
Second, you need to get out of the building to actually talk to your customers. Your goal is to talk to a potential customer and either validate(prove true) or invalidate(prove false) your statement hypothesis. This can be TRICKY! Try planning out your questions ahead of time so you are prepared to narrow in on an answer.
Getting honest feedback and interpreting it correctly is a challenge. You have to try your best to be neutral in receiving both criticism and praise, and then using the interview data to adjust your hypotheses. Often, you’ll have to hear the same response from several people before you start to identify a trend that either validates or invalidates just one of your hypotheses.
Here are some tips for getting out of the building and getting some of that vital customer interview data:
Once you have all that data, look for trends to see who is the most likely to need your solution. When you track all your data, including the responses to your questions and specifics about the types of people you interview, you should be able to categorize the ones who are most eager to be your customer.
Easy peasy right?
How to Reel In On Who Your Customer Is
Well, here’s an example to make it more relatable for you. Let’s imagine you have a new headband you want to sell that helps to keep your customer’s head cool while doing strenuous activities.
You could assume you know who the best target market is going to be… spend months preparing your product, marketing it, and trying to sell the new headband…
… but after all that time you’ve found out it’s not the best fit and you not only haven’t made money, but you lost money on developing and marketing a product to the wrong audience. How frustrating would that be?
Instead, here’s what you do. We’re going to pick a few customer segments to test. Your target customers could be…
Which customer segment will actually lead to the success of your business? That’s right… you don’t know, yet.
And that’s why we’re doing customer discovery; so that you don’t waste time, money, and effort trying to sell the wrong product to the wrong customer.
From the free downloadable PDF book, Talking To Humans, they recommend that you learn about your customer segment’s current processes, problems, current solutions, and measurable levels of desired performance from your customers.
And here’s a list of questions they give to help you spot the top (2-5) highly important and fairly uncertain assumptions that you need to validate or invalidate.
From there, construct and ask open ended questions of your customer interviewees. Track the data. Look for repeated trends. Pick the winner. Go fish.
You can then use your findings to run A/B marketing tests and assess the performance of ad copy, landing-page messaging and price points, escpecially when you incorporate the words your customers used in their interviews. Study your metrics. Follow up with your paying customers and interview them on their buying process and decision. Then improve and repeat...you know, the usual stuff you do as an entrepreneur.
Sound like a plan?
Here's a Program to Help with Next Steps
Whether a beginner entrepreneur or seasoned expert, there’s always more customer discovery to be done. If you feel like you’ve caught the customer interview bug and are eager to test out more hypotheses, consider applying for UARF’s I-Corps Sites program where you’ll perform 21 customer interviews and solve some more business guesses. We are always looking for mentors to guide entrepreneurs through this process as well. I know it’s a lot to take in, so let me know if you have any questions- I would be happy to help you out.
Program Coordinator, The University of Akron Research Foundation
The University of Akron M.B.A.
P.S. If you'd like to have a meeting or a phone call to discuss your idea or the program before applying, you can leave your info *here* and someone will get back with you!