A trio of lads were selling smoothies at a music festival. A sign above their humble stall reads: Should we give up our jobs to make these smoothies?
Festival-goers could answer the question by throwing their empties into two bins: one marked YES, the other marked NO. By the day’s end, the YES bin was full. The next day, they all gave up their jobs.
That was the beginning of innocent, now a £500 million company (give or take).
Before innocent had a business plan, a brand, or even a name, the business product had been tested.
Too many businesses these days go hell for leather developing their products or services before actually testing their products, or what’s known in the business world as test marketing.
If innocent’s original customers hadn’t liked their products, this budding trio could have gained valuable feedback and tweaked their recipes until they were launch-ready, without wasting time, money and resources. Or, who knows, perhaps the entrepreneurs could have gone into a totally different field? Like, um, smoup?
You’re excited about launching your new business. We know the feeling – we’ve been there. But, for the sake of your business, do not rush into launching your product or service until you have tested its potential and fully identified or established a market.
Test marketing is important even for firmly established businesses. Those that don’t test and tweak can lose loads of dosh and, worst case scenario, go bust.
Have you heard of Clairol’s Touch of Yoghurt shampoo, Heinz’s vibrant ketchup EZ Squirt, Crystal Pepsi, or the social media site Friendster? Exactly.
So, we’ve clarified that you do need to test your idea, but how do you test your new business product or service for free – or at least without blowing all your start-up funds?
If you have a product or service aimed at a mass market, you might want to consider buying a question in what’s known as an omnibus survey, delivered by the likes of mighty market research companies Ipso Mori or TNS. These provide a more representative and robust sample, but they are not cheap.
The world of test marketing can be expensive, with companies and expert freelancers frequently sponging off start-ups with their specialised market research apps and surveys.
This brings another danger: you spend so much time perfecting that you never launch your product or service, or another company beats you to it!
There are just three things you need to find out before you launch:
- Is there a market for your product or service to be profitable?
- Do people actually need or want it?
- Will customers actually buy it?
The earlier you test in the development of your new product or service, the better.
1. Find a free test ground
There are plenty of public spaces where you can find a free test ground.
Once you’ve worked out who your potential customer is, then you can identify where your target audience usually hangs out. Make sure your test ground is relevant to the product or service you want to sell.
Just like a music festival is ideal for testing smoothies, you might like to think about university or college campuses, co-working spaces, farmer’s markets or find your audience through local classifieds and social media sites. If you ask nicely enough, you can usually get a test ground for free.
The easiest test ground is of course, friends and family. Just make sure it’s not your friends and family though, as you don’t want biased results. Ask your friends to gather up the people they know and test it on your behalf.
In the early stages of test marketing, qualitative feedback is often more valuable, as it’s less easy to misguide you down the wrong road and helps with fine-tuning.
Simply asking for volunteers to test your new product or service in the future, even if it’s not ready, can help you gauge interest levels in your idea.
Embrace your own lovely and raw start-up energy. Potential customers will respond better, even when you make mistakes. (You will make mistakes).
Keep your interactions real, genuine and human. Kindness never costs, but it often gets rewarded.
Think about the difference between speaking to a stallholder at a farmer’s market and a supermarket customer service line. There’s a difference. The same goes with the magical feeling when we receive physical handwritten mail. Harness the personalised approach, which is so much easier to do when you’re a start-up.
2. Test ugly (then tweak)
Never test with a finished product. Rough prototypes, mock-ups, and test services are a lot cheaper and quicker to produce. In fact, it’s better for your company’s success if you use a raw and crude prototype or service, as you’re more likely to receive detailed feedback compared to if the product looks complete.
You can then take this test prototype or service and develop it into what’s known as a minimum viable product – or MVP – a simple form of your product that you can sell.
This MVP will allow you to receive real-time, real-world customer feedback before you tweak it into the final, shiny offering, with all its bells and whistles.
The result? A product that your customers actually want, without forking out a fortune early on. Simple eh.
3. Free stuff, hello!
Who can say no to something for nothing? Offer free samples – again in a targeted space – to get a sense of how they perform.
Don’t offer free samples to people you know. Go out of your usual circles to avoid bias. You will need to be a bit creative here, to ensure you receive genuine feedback from the right audience.
In order to keep your costs down, keep your samples sample-sized. And don’t give away everything you have!
If your business is an educational service you could, for example, offer a short complimentary introductory workshop to local businesses on the proviso of receiving qualitative feedback afterwards.
How not to test new products: We once saw a new cooking sauce brand giving away trolley loads worth of full-sized glass jars on the streets of London. Hands grabbed several jars at a time, without the brand getting any feedback. They’d have done better offering tiny sauce sachets with a QR code to get quick feedback. That cooking sauce never did get sizzling. Funny that.
4. Ask your early customers (and critics)
If you already have a few customers, just ask them for feedback! Early adopters are amazing fountains of knowledge and opinion.
Don’t just leave it to your staff to make the call. There’s power in asking for advice as the founder or CEO. Customers are more likely to be direct with the head honcho and give richer feedback about their entire customer experience.
Never shy away from speaking to your most critical and seemingly-unreasonable customers. They are often the people to provide you with the most valuable inputs. If you can win your critics over, you might just be onto something.
We all need critics as they are more likely to tell you the truth. You might learn that your product is perfect but your distribution is devilish, or that your service is sound but that your payment system is painfully slow.
You might also find that your customers are not your target audience, so you can adapt your marketing strategy to reflect your actual rather than intended customer.
Customers are particularly brilliant at testng two ideas against each other. Give your treatment group (aka a random selection of customers) one product/service/promotion and compare their interest to your control group (aka your standard customers).
5. Use technology (and data analytics)
When you’re just about to launch your business product or service, what you need isn’t nit-pickers, it’s numbers: pure quantitative data to say YES! This is the time for surveys.
If innocent was starting out in 2020 instead of 1998, we wonder if the entrepreneurs would use technology to collect that valuable quantitative data that set them up for smoothie business success? Perhaps they’d have a QR code linking to a YES or NO landing page instead of the bins? Or perhaps they’d collect data on an iPad at the music festival? (Richard Reed, if you’re reading this….)
Technology has opened so many doors to free, cheap and mass test marketing.
If you have an online business, one of your main channels to drive acquisition might be PPC (aka Pay-Per-Click, the likes of Google Adwords and Bing Ads).
You can use tools to identify keywords that aren’t going to cost you a fortune, create a few different adverts and landing pages and set up A/B tests. You can then identify which ones convert best by using analytics. That way you’ll be able to keep acquisition high and costs low. Just how we like it!
We love the way Adobe Systems approaches innovation, democratising it internally across their entire company using their Adobe Kickbox scheme. One of the ways employees can test ideas is by receiving a prepaid credit card to buy online ads for the products and services that don’t yet exist.
The advert links don’t mention Adobe or go anywhere, but the team can count the clicks to identify whether the idea has legs and can actually sell. Adobe’s Kickbox innovation toolkit is now open-source – why not give it a whirl?
6. Build on your competitors
There’s rarely such a thing as a unique business product or service anymore. There’s bound to be someone who has also looked into your idea and might even be running with it.
Treat your (potential) competitors like a proper case study. Examine how well they are performing, what they could be doing better, and consider if there are any gaps in the market. Then you can set about perfecting their existing imperfect product.
The key to any test marketing is to keep it simple and stay agile. If you find your new product or service isn’t performing as expected, never be afraid to go back to test marketing and try a different approach.
If you want more advice on test marketing, then the Founders Hub community highly recommend the book The Lean Startup: How Today’s Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses by Eric Ries.
If you’re a business owner looking for ways to get ahead, you should join the Founders Hub community for free. Network with other founders, promote your business, get advice and solve problems faster.