Step 2: How To Validate Your Idea Without Going Broke
"Your time is limited. So don't waste it living someone else's life." ~ Steve Jobs
At this stage you have a list of ideas and you have a good idea who will pay for your idea. If you are still stuggling with finding that idea, then here are a few other methods you can use.
Research Your Idea
Amazon: Review the best sellers section on Amazon. When looking at this page you will see products that already have guaranteed customers, so maybe you can build something complimentry around that market. An example of this is the Angry Birds, Knock On Wood Game.
Look around: Right now look around where you are at and what do you see. Do you see things that you use or things that can be improved upon or you can add value to? What do you frequently complain about? Maybe you can find the solution or provide information on how to make it work better.
Linkedin: Linkedin has a Answers/Q&A section where people can ask questions around certain subjects. Search for your expertise and see what people are having issues with. You can access this under the More menu item in Linkedin. You can also do the same thing while searching Twitter. The big reason I recommend Linkedin is because the users on their most likely have more disposable income.
Using Google & Facebook To See How Big Your Market Is
Now we have nailed down your idea or at least down to 2 or 3 options. Now we need to find out how many potential buyers are in your market.
Using our "siamese cats" example, now you will want to use Google Trends, Google Insights and Facebook Ads to make sure your market shows a steady growth and is not getting smaller.
Here is how you do this:
1. Facebook Ads - Go to Facebook Ads and pretend you are going to create an ad for your market on Facebook. So for our example you will want to search for people available on Facebook with "cats" as an interest. You can search anywhere, but for this example I just searched the United States and Canada.
Now you can see what siamese cats comes out as when you drill down in your search.
2. Google Trends - Go to Google Trends and search for similar words related to your industry. For our example I searched cats, siamese and burmese.
You will see siamese has a decent search trend and is more popular then burmese.
3. Google Insights - When the three features are entered into Insights, we can see that there's a considerable amount of interest in cats. This is a great way to doublecheck and it breaks down the search data by location (i.e. what regions the searches are coming from), by date, and what they’re searching for (news, images, products).
People Say They Will Buy Your Product, But Will They Really?
Excellent, we are making some great headway. I just might create a product around siamese cats. :-)
So we have done the searches, checked out the the interest on Facebook, now we need to find out if people will really buy this if we ask for the SALE.
This is critical. We need to know this. How can we find out, before we spend all this time in building our idea and concept?
Well first, lets see what your market already spends in your industry. For our example, lets see what Siamese cats cost to buy and what siamese cat owners spend during the lifetime of their pet.
It's been awhile since we purchased a siamese cat, however by searching on Google, the current price seems to be anwhere from $200 to $800, so lets take an estimate of $400.
Once again, I did a quick search and it looks like the average cost for a cat each year is roughly $527 and the average age a cat lives is 14.
Total lifetime cost: $400 + ($527 x 14) = $7,778
Please note these projections are on the low end.
Using our numbers from Facebook, we now know that there are 18,520 people on Facebook interested in Siamese Cats. If you create an information product for $100, that means we can figure out would the total amount of revenue we can generate for our product from the Facebook market.
Total Available Market: $100 X 18,520 ='s $1,852,000
But Chris, this seems a little far fetched. Well aren't all projections??? :-) The goal here is to find out whether or not we should move forward with an idea before we spend tons of time and money on it. This is how we find out.
The Total Available Market only takes Facebook number into consideration. You can see here that there are over a million monthly global searches for Siamese cats on Google and over 450,000 local searches. These numbers we produced using Google's Keyword tool.
What is Total Available Market? It is the revenue forecast accounts for all the product that can be sold in that market segment.
Time To Test Like Tim Ferris Says
If you've read my blog before, you know I am a huge fan of Tim Ferris's book the 4 Hour Workweek (affiliate link). In his book, Tim covers a ton of great things, but one area I am going to focus on is testing your market with your idea. If you haven't read the book, I highly recommend you get it.
Create A Sales/Landing Page
Next you want to create a very basic sales page outlining what your product is and what the benefits are for your product. So, what will the outcomes be if someone buys your product.
For this example, we might create a product around the best products for you to use if your siamese cat has diabetes. Our little guy does.
No website? Guess what, you don't need one. You can go to Formstack (affiliate link) and create an account and start building landing pages right now. Remember, this is just to create a presence to see if there is interest in your idea. You aren't selling anything yet.
Other tools you can use for landing pages are Unbounce, Premise (Wordpress Plugin) and if you already have a website, you might want to check out Optimizely.
Yes, You Have To Spend Some Money (100 bucks)
Now I want you to create and run some Google Ads and Facebook ads that send people to your landing page. You will do this for one month.
What do you want on your landing page?
- Name of your product
- 3 bullet points outlinging the benefits
- Email sign up box for people to sign up so they can be notified of when your product is ready
After the month is over, you can then gauge the following data:
- Traffic to your landing page from the ad
- Clicks on the ad/impressions
- Sign ups to your form
Non-Tech Validation (Find 3 Paying Customers)
To take another page out of Ramit Sethi's book, find three paying customers. You can do this by going through your list of contacts and finding out who might be interested in the product you are selling. Email them, call them or ask them the next time you are hanging out if they will buy your product. Yes, buy! You want the money right now.
If three people do, then you should be quite confident that you can move forward with your idea.
You did it!!!
As you can see this can be all done for $100 (depending on which landing page product you use) and some time. Sure is a heck of a lot better then spending countless hours and money on your next big, great idea.
Ready to see how we productized what we were doing 2 years ago and we didn't even know we were doing it?
