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You’ve got your Lambo Goal. You wrote out the 20 steps we talked about in the last episode.
One of the things you wrote was that you wanted to start a new business. You have an idea for a business but you’re not sure how to validate your business idea.
We give you some guidance on how to know whether people will even buy your product or whether you’re building the right thing.
You might have a product that sounds cool to you, but if no one actually wants it, that does you absolutely no good!
How do you know if people will actually pay for something? No, it’s not as simple as asking them. You can get 10 people to say they’d buy your product out of politeness and still have zero sales.
We’ll show you how to observe your potential customers and find out exactly what they’re looking for. In this episode, we’ll help you make sure the next thing you build is something people actually want.
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- 00:37 Sean: Matt, envision this: it’s 2018. We have our Lambos. We’re in an empty parking lot, we don’t care about the lines, we’re facing each other with the driver’s side window rolled down and we’re talking. You’ve got a blue Lambo and I’ve got a red Lambo. Someone’s jogging by and they look over and see these two Lambos talking to each other. The guy walks up and says “What’s going on here?” We share a knowing look. It’s been so long and there’s been so much leading up to this. How do we tell this fine gentleman how we got here? We look at each other, we look back, and in unison we say “LamboGoal.com.”
- 02:12 When the guy goes to LamboGoal.com, he realizes that the show has been going on for some time now. There are so many episodes and he’s really excited. He decides to go back to the beginning and listen from the very first episode. Now, he wants to know how to validate his business and that’s what we’re going to be talking about today. What’s the first thing someone needs to do to validate their business idea?
- 03:22 Matt: I get this question a lot. Does this person just have one idea? Have they already figured out what their Lambo Goal is and they’re trying to work up to that?
- 04:05 Sean: Let’s say they listened to the first episode already, took our advice, and wrote down 20 things that will get them to their Lambo Goal—20 things that will make them money. Maybe one of those things was: I want to start a business that solves a problem for somebody, but they want to make sure that this business is viable before they invest a lot into it.
Peek Into Industry-Specific Forums
- 04:36 Matt: The first thing I ask is, “How do you plan on starting your business?” One guy I know wanted to do a health food mail out. He felt like he had a great idea so I asked him, “How do you know if you’re going to actually be able to make money at this?” He had some decent ideas for getting the word out about his product, but didn’t really know whether or not there was genuine interest. How do you talk to people about it? Forums. In this case it’s a great idea to go to a health forum, where you can post a thread and share his idea with people. You’ll find out pretty quickly whether or not you’ve got a profitable idea based on how people respond.
- 04:53 Sean: You can do that, and you might get some good feedback, but it’s even better if you can find out what people are already talking about and what problems already exist. That’s how you can know if people want or need your solution.
- 08:35 Matt: You may even find when presenting your idea that people are already using a similar product or service, but they have some complaint or criticism that can inform how your product can meet their more specific need. Now your idea has gone from just a basic idea to a refined idea. You may feel like you have a great idea and that may be true, but as you’re discovering what peoples’ real needs are, you’ll be able to adapt your product to meet their needs.
- 09:45 Sean: It seems that some people who are just starting out get excited about something they’ve made, and think that entrepreneurship is about making what you want and finding people to buy it. Do you find that’s pretty common?
- 10:05 Matt: Absolutely. I tell people that they’ve knocked out the first step. The second step is to find out if people are willing to buy exactly what you have in mind, and most of the time they’re not. To maximize your return, you’ve got to be willing to dig deeper and uncover more specific needs, then adapt your product to meet those needs. In my example with my friend who had the health food mail out idea, he did this step and got some great feedback. He was able to refine his idea and come up with a better product. The next step he took was creating a landing page that talked about the product and had a signup form for people who were interested in it. This was a great tool because he could use it to gauge interest and calculate conversion rates.
- 11:56 Sean: So he just had a landing page with a title, a promise describing the problem the product would solve, and an email list sign up form. Had he made the product at this point?
- 12:05 Matt: That’s the beauty of this. He hadn’t yet made anything, but he had an idea of what he wanted to do from the forums.
- 12:15 Sean: Did it say, “Sign up to get this thing,” or, “Does this sound interesting?”
- 12:20 Matt: He tried both. He had landing pages that talked about it as something that was in the works, and he had landing pages that talked about the product like it was already there.
The Power of An Effective Landing Page
- 13:10 Sean: I’m leaning more toward talking about the product like it’s already there as the stronger option. That’s similar to the Kickstarter model in that most campaigns position the product as having already been made. Whereas saying, “Hey, we have this thing we’re going to make if enough people are interested” is a weaker approach.
- 14:45 A great example of this is Scott, one of our community members. For those listening to the podcast, we broadcast live video to our Community members. Cory, our resident video guy, is here behind the scenes producing the show from his iPad. We run a program called Wirecast that allows us to switch between cameras and broadcast live video. Scott made a web interface that allows Cory to open up a web browser and run Wirecast from the iPad. I encouraged Scott to put up a landing page for it, so he got a domain and now has a sign up for people who are interested at WireController.com.
People aren’t interested in signing up for a newsletter, they’re interested in a solution.
- 16:20 Now, here’s what I did with Learn Lettering that got really good results. Before I actually made it I put up a landing page, but the mindset that I had when making the landing page was, “The product is done and this is the press release for it.” Imagine that it’s done and you want to get people excited about it. You have to tell them all about it. “This is what it does, this is what’s included, this is how it’s going to help you, and this is how it’s different from other offerings.” I spent three months on this landing page writing all of the content, making illustrations, giving the page a really nice flow, and it ended up being about 6,000 pixels tall. All the way at the bottom of that page, I had a sign up form. I didn’t put the sign up form on the top “above the fold” like everyone else does so I could get a bunch of people signing up.
People aren’t interested in signing up for a newsletter, they’re interested in a solution.
- 17:41 The people visiting my page were interested in lettering, and seeing me talk about it was getting them interested and excited. If this product were to have existed by the time they got to the bottom of the page and there was a “Buy Now” button, they would have bought it because the copy got them excited and talked about the product as if it existed. If you make a landing page, talk about the product as if it’s done. You want for people to be so excited by the time they get to the end of your copy that they would have bought it, and that’s when you ask them to sign up and give you their email.
- 18:44 Matt: Was it like taking pre-orders?
- 18:53 Sean: I was building a list of people so that when I put out the actual course I had thousands of people who were already excited about it and ready to buy it. I didn’t actually take pre-sales, but I know a lot of people do that as a method of building capital so they can make the product they’re selling. For me, it’s a brand thing. You have to decide how you want your brand to come across to people. Personally, I love the brand experience where I purchase something online, and it shows up on my doorstep in two or three days. Compare that to paying for something, only getting a brief description of it, maybe not even seeing a picture of it, and not getting it for four weeks. That affects the brand perception. It depends on the product you’re doing and whether or not you’ve got the resources to make it without pre-selling it, but you’ve got to consider how that affects your brand. Think of your landing page as a press release.
Let the name of the product take a backseat to what the product can do for your customer
- 21:31 The big title you see when you go to Learn Lettering is not “Learn Lettering.” What you see is, “Make a Living As a Hand Lettering Artist.” You can have your product name there, but you have to make the page about what the customer wants. If you want to convince people that your product is the solution they’re looking for, you’ve got to talk about it as if it already exists. You’ve got to give as much detail as possible and answer the question, “Why should the customer care about this?” You want your copy to be so compelling that when your customer gets to the end of it they’re already ready to buy and they happily give you their email address.
- 22:27 Getting email sign ups is a form of validation because it shows interest. It’s not the same as collecting credit card information. An email list sign up doesn’t equal a sale, but you can have some kind of idea if you use the average conversion rate of 3% to 5%. About 5% of people who sign up will actually purchase the product, so if you do the calculation after you’ve gotten some email list sign-ups, you can tell whether or not the product has enough interest.
- 23:23 You can increase interest by promoting it regularly, but rather than just tweeting the same thing or sharing the landing page over and over again, offer some new content around the product. Make a video about the product and link to the landing page, or write a blog post and link to the landing page. All these new pieces of content are excuses for you to share the landing page again. People aren’t going to be upset that you’re providing new content for them about the thing they’re interested in.
Lead People Through Valuable Content Around Your Product
- 24:19 Matt: I really like what you’re saying about using unique content to grab people’s attention and drive them to your landing page. I like the idea that after looking through a 6,000 pixel landing page, the customer is so ready to buy that they’re sad because they can’t buy it yet, but stoked to sign up for updates.
- 25:16 Sean: So, talking about Twitter, I want to talk about two different scenarios. First scenario: You don’t follow someone so you check out their page to see what kind of content they share and you see them posting the same thing over and over again, “Check out my page. Check out my page. Hey, have you checked out my page?” Do you see how spammy that is? I would filter that out and would choose not to follow them. Second scenario: You already follow someone, but every time you see them show up in your feed, it’s the same thing, “Check out my page. Check out my page.” I’m probably going to unfollow that person, not because I don’t like what they have to offer, but because of the way they’re trying to communicate it.
- 25:46 Compare that to the experience of coming to someone’s Twitter feed and seeing that they recently shared a blog post about this thing, and a few days ago they shared a video about this thing. People don’t see that as someone spamming them with their product, they see it as new content and value being provided on a subject they’re interested in. On the surface, they’re not seeing it as all of these things that are funneling to the landing page, they’re seeing it as unique pieces of valuable content and they’ll follow you. You’ve got to give people unique content and let them go through that to the page you want them to be on.
- 26:49 Recently on the seanwes podcast I did a three part Value-Based Pricing series. These were the longest, most intense episodes we’ve ever done, just jam packed with solid value. I obviously did these episodes to promote my new course at ValueBasedPricing.com, but I was providing unique information. I wasn’t just saying “Go to ValueBasedPricing.com.” over and over again. It was me saying “Here’s some new value. Here’s some new value. Here’s some new value,” and each of those funnel through to the landing page.
- 27:42 Matt: You’re actually giving people something they can put into practice, not just saying “Go buy my course and then I’ll give you some content.”
- 27:49 Sean: And those people are already primed because they’ve already gone through your content. Doing it this way is stronger than using something like Google ads or Facebook ads. Those are valid ways and they work, but you have to think about the user’s experience. When someone comes to your landing page through an ad, you haven’t really had a chance to build a relationship with them before you ask them to give you their email address. When you take them through your content, they’re getting to know you a little bit and you’re priming them. Yes, you could pay a few thousand dollars for ads and get a couple hundred leads that convert at .5%, but what if you could write some content and get a couple hundred leads that convert at 10%?
- 29:05 Matt: Couldn’t you use ads as a strategy to lead people to your valuable content, which will ultimately lead them to the landing page?
- 29:34 Sean: Some marketers would say that you would convert more if you lead people directly to the landing page, but it really depends. It’s a balance. Maybe you do convert more by sending people directly to the landing page, but the quality of the smaller number of people who convert after having gone through your content would equal more sales. Maybe you get a list of people who will convert at 20 or 30% because they’re so well filtered. What do you care more about?
Do you want people who are actually going to buy from you, or do you just want to fill your email list with a bunch of names you have to pay for, resulting in poor conversion rates?
- 30:29 Matt: Use your content like a filter. Don’t just send them to the landing page, but send people through your content. The people who really want what you’re offering will sign up on their own.
- 30:38 Sean: I personally prefer that method. It works really well for people who don’t have money up front. If you have money, you can purchase eyes and get people to your site, but if you don’t have money, content is the way to attract people.
- 30:56 Matt: What I meetuptell people is “You’ve got to have some skin in the game.” Don’t just come up with an idea and ask your Facebook friends.
- 31:06 Sean: Scott, the Wirecast guy, needs to start blogging about Wirecast. He needs to start doing videos about Wirecast. It doesn’t matter whether or not it’s about his specific product. He’s bringing people into his realm and associating himself with Wirecast, so that once people have grown to see him as the Wirecast guy and trust him, they’re ready to buy his product. Not to mention the search engine benefits. The more content you share around the product, the more search engines are going to promote you in the results.
Meetups and Networking Groups
- 32:37 Matt: How do you feel about meetups and networking groups for validating an idea? I was thinking that going to meetups would be a good way to talk to people and gauge interest, especially with people in your industry.
- 33:10 Sean: At meetups, even when someone isn’t really interested in your idea, they’ll say that they are because they want to be nice and make a good impression. The nice thing I will say about pre-sales is that it really confirms that people are really interested in something. So someone at a meetup says they’re interested and then you pull out a card reader and say, “Great, you can pre-order it now.” They’re not just going to pull out the plastic to make you happy, they’ll only pre-order if they’re really interested.
- 33:58 Matt: If you’re still in the process of validating or refining the idea, conversations with people at a meetup might give you some valuable feedback. Obviously, you’re not going to use all of the feedback, but it’s good to keep an open mind because you’re hearing it from a unbiased third party.
- 34:49 Sean: The number of people you can fully engage at a meetup is pretty limited. Maybe a dozen or 20 max in an evening. That’s not really a lot of people. Someone might think that 20 sales is a lot, but I like to think a little bigger. Because of the internet, you don’t have to limit yourself to local sales, even if your product has a very small niche. You can gather a large audience even from a very specific niche through the internet. I would be less inclined to make sales in person and would rather leverage those in-person conversations for something deeper. You can build a relationship with these people. Rather than just validating your idea or giving you their email, they might be interested in fostering some back and forth and giving you real feedback on an app, or referring you to other people in your industry, or maybe even tweeting your launch out to their followers.
Your product will have a much wider reach by developing relationships, as opposed to treating acquaintances like potential customers for a relatively small number of sales.
- 36:55 Matt: So what would Sean do at a meetup? He would form a relationship with people who would tweet to all of their followers about his launch. You don’t want their credit card numbers, you want their follower’s credit card numbers.
- 37:19 Sean: The strongest point of meetups is building relationships. It’s not like “Hey, I went to this meetup and I got this guy to give me his email address.” That’s not what it’s about.
Networking Through Online Communities
- 38:24 Matt: What about online networking, like Facebook groups?
- 38:32 Sean: Or the seanwes Community. People are collaborating, sharing stuff, and getting great feedback. They’re also growing their network, because as the community grows it encompases a pretty substantial audience. It’s a great place to bounce ideas off of other people. What I love about the Community is that it’s the kind of people you actually want feedback from. If you go and post something on a public forum, you may encounter trolls and negativity and the feedback is not so great.
Online networking is a good idea, but you need to find the right kind of people.
- 39:32 Matt: Finding reliable communities can help you validate your idea and the seanwes Community is a perfect example of that. I know the people in the seanwes Community are already having that experience and it’s helping everyone involved. I’ve also networked with contractors online, many of which I’ve never met in person, and have gotten huge commissions from their work.
- 40:15 Sean: The people I’ve met through the Community are all people I want to collaborate with. I’m not even hiring outside of that group right now because the quality of people in there is so high. If you find a nice curated group like that, get in there, find a core group of people you can bounce some ideas off of, and get some really good feedback.
3 Steps to Validating a Business Idea
- 40:47 Matt: My final question here is: What are the top three things Sean would do to validate a product or idea? If someone were to walk up to you right now and say “Sean, how do I promote my brand new idea, product, or service?”
- 41:25 Sean: First, are people already buying this? Are you seeing that people are buying it, talking about it, and are interested in it? Don’t be scared away if you see someone already doing something similar.
Competition is a good thing, it’s market validation.
- 41:51 You’re not Apple. It’s extremely hard to create a new market and get people to want it. Apple can do that because Apple is crazy. If you can, you’re probably not listening to me, you’re out there doing it. You want to go into a market that already has some validation. Look for someone else doing something similar and see that as a good thing. People need to hear something seven times in order to internalize it (Related: seanwes podcast e153). If you apply this concept to competition in a market, someone else is actually priming your customer. That customer may have their first exposure with your competition and that’s okay. It may be that by the time the customer comes to you, they’ve been primed sufficiently by your competitor, and now they’re ready to buy.
- 43:48 Second, start putting out content about the product. Start writing about it or making videos about it and gauge the interest of people who already follow you. Even if you’re going into a new market and you don’t already have a following, start putting out content. It’s not going to take off immediately, but go where the other people in your industry are. That might be a popular forum, Reddit, or Youtube. Whatever it is, go engage with people there and make yourself known in that space. When people start to discover you and they go back to your website, they should find valuable content. Gauge the response to that.
- 45:39 Lastly, you want people to sign up. Give people an incentive for signing up, and when they do, ask them right away, “What are you struggling with? If you could wave a magic wand what would you change?” As you filter your replies and see a recurring problem, that’s what you want to focus on. If that matches with the product you already had in mind, you’re golden. If not, consider pivoting or adapting it to what people are actually interested in.
- 47:06 Matt: If you’re just starting out with a business idea, it’s a really good idea to research as much as you possibly can about it. Every industry has it’s own lingo and terminology. You have to learn how your target industry talks and works. As you do that, it becomes easier to network with other businesses and competitors.