Too many entrepreneurs think the best way to determine the quality of an idea — be it a company, a product, a feature, whatever — is by asking people their opinions. WRONG! Asking people their opinions is the worst way to validate (or invalidate) an idea for three important reasons.
Reason #1: People usually don’t know what they want, particularly in an entrepreneurial context.
Reason #2: People Lie.
Reason #3: Entrepreneurs can’t avoid asking leading questions.
Method #1: Ask people to buy
The most accurate way of collecting data is to skip the hypotheticals entirely. Even your best friends will hesitate to give you money for an idea they don’t think is good, so if you truly want to know whether or not you’re working on something valuable, ask people to buy it.
As Tim Ferris writes in his book The 4 Hour Work Week: “To get an accurate indicator of commercial viability, don’t ask people if they would buy — ask them to buy.”
Strategy #8: Pre-Populated Search Queries
– Google auto-fills search queries using browsing history and consumer data
– Use to advantage by seeing what other people are interested in
– Open private browser and type search terms to see what Google suggests
Method #2: Smoke tests
– Used when no product to sell yet
– Create appearance of purchasable product
– Include infrastructure for purchase (website, product mockups, checkout process)
– Goal: get people to end of checkout process
– Notify product is “out of stock” or unavailable
– Determine demand without spending on product
– Build list of potential customers for future marketing
Strategy #6: Consumer Reviews
The millions of restaurant reviews populating sites like Yelp aren’t just good for figuring out where to get the best slice of pizza. If you read them from an entrepreneurial perspective, consumer reviews are a wealth of high quality data that reveal insights into market demand.
And the same is true for any kind of industry with online reviews, from doctor reviews to Amazon product reviews.
Method #3: Crowdfunding
If “asking people to buy” and “smoke tests” could have a baby, it would be crowdfunding. The concept behind crowdfunding is simple enough. You tell the story of what you want to build, and, if enough people are interested, they’ll pay to help you build it. Not a bad deal, right?
It certainly helps validate your idea. Just remember that successful crowdfunding pitches , so you shouldn’t look at this as an easy option. But, depending on your idea, it might be a good fit.
Strategy #7: Google Trends
Rising trends usually point toward entrepreneurial opportunity. That makes — a platform that visualizes search volume for keywords and phrases — an entrepreneur’s not-so-secret weapon.
Next time you have a brilliant idea, search relevant keywords and phrases on Google trends to see if terms are increasing in popularity. If they are, you might have found yourself a great opportunity. If not, that’s a good indicator your idea isn’t as brilliant as you might have thought.
Strategy #4: Google Ads
Google Ads is one of the most powerful sources of market data in the world. It used to be called AdWords and completely free just by . These days you have to provide a credit card and pre-pay $50 that Google returns after a few days. So it’s still free, but you have to be willing to go through the (slight) hassle of providing a credit card. It’s 100% worth it.
Once you have a Google Ads account, you insert search phrases related to your idea into the keyword planning tool, and it’ll reveal powerful data. For example, in the chart below, I’ve entered a small constellation of search terms related to rock climbing.
The keyword planning tool shows me the number of impressions (i.e., searches) on those terms each day and the estimated number of paid clicks I could get with a given budget.
Strategy #5: Facebook Ads
Almost as powerful as Google Ads, the Facebook Ads platform is also free to use if you have a Facebook account and amazing for estimating market size and demand. The service lets you build what’s called an “audience” around demographics data.
So if, for example, you’re considering expanding your store that sells rock climbing gear to other cities, you could figure out which other cities have large populations of people who like rock climbing and open your new stores according to data rather than hunches or hearsay.
