Your friends are lying to you.
I hate to start off so bluntly, but every entrepreneur must remember this:
If your friends say they will buy your product idea, that does not mean they actually will buy your product.
We have an entire blog written about why you can’t always trust your feedback loop, but let’s recap.
Your friends and family are extremely biased because they know you, they care for you, and they would hate to do anything that might hurt your fragile ego, including crushing your startup dreams by telling you that your idea is absolute shit. What your friends and family don’t understand is that criticism is exactly what you need. Without it, you will go and spend a year building a product that no one wants, all because you never received appropriate constructive criticism.
So how do you go about getting real, useful feedback from friends, family, and other people in your target market?
The answer is by asking about their pain points and their process, instead of talking about your idea and hypothetical future events, like if they would purchase a product or not.
In this post, we’ll discuss how you can find out if your product is something that people would pay for in the following five steps.
- Research and understand your customer’s process and create a hypothesis as to what their pain points are
- Understand what pain points exist in that process
- Understand the impact of these pain points
- Rinse and repeat
Ready!? Alright, let’s go!
Research and Map Your Target Markets Process
Most problems that a product solves are simply friction points in a process. It’s up to you to research and understand what points in that process cause the most friction and what the impact of you solving that problem will be for the customer.
Start by using the following websites, and websites like them, to understand your customers process:
Every industry has specific forums and blogs where members discuss problems they are having. You should be finding those communities, researching them, and starting to engage with them. This DOES NOT mean ask them to fill out a survey or visit your landing page. It does mean that you should offer genuine and helpful advice when you can and asking good questions.
For Beam, a startup that I’m building with a cofounder that I met in the Nugget community, we found the following links on Quora that helped us understand our target markets process and pain points.
After researching the problem, take some time to think through and understand what your customer’s’ process is and how your solution may fit in. This hypothesis will help you frame the conversations that you’ll have with potential users.
Now that you understand your target market’s process, you’re ready to start to talk to customers.
Discuss and understand how your target market sees their process
The first question that you should ask when talking to a potential user is simply “Tell me how X process works for you”.
By asking this question, you’ll get them talking broadly about the process so you can verify if the way you mapped their process in step #1, is accurate. Ideally, a pain point will stick out when your interviewee starts to talk about their problem. If they don’t mention any pain points or problems with the process, you’ll have to start asking some probing questions. These can include questions like:
- What part of this process takes the most time?
- Is there any part of this process that costs more money than you’d like?
- What is the most inefficient part of this process?
- What tools do you use to help you with this process currently?
- What part of this process provides you the most value?
- How happy are you with the current process?
- If you could improve one thing about this process, what would it be?
- Do you use X tools to help you with this process? If so, do they do what you need them to do?
These questions should help you hone in on the most painful parts of your customer’s process. Your last question should be “So it sounds like, X, Y, and Z are the biggest friction points in this process, is this accurate?” If your prospect answers yes, then you’ve discovered three pain points.
Now you have to understand if these are pain points that your customer would actually pay to have solved, and you do so by understanding how big of an impact these friction points have on your customers.
Understand the impact of these pain points
Just because a problem exists, doesn’t mean someone will pay for it. It is up to you as an entrepreneur to find and focus on the problems people are willing to pay to have solved. Simply asking if someone would pay for a problem will yield false positives more often than you want and is an unscientific approach.
After you’ve determined what pain points your interviewee is experiencing, ask them the following question: “What would it mean to have X problem solved for you?” The answer to this question is likely to involve creating extra revenue, saving time, or saving money.
This is a valuable question because every SaaS solution should either make your customer money, save them money, or save them time. If the answer to this question is a significant amount of money made, money saved, or time saved, then you likely have something people will pay for.
Once you establish what the impact of solving the problem will be, you can ask one of these follow-up questions:
- How much time would it save you if you didn’t have to do X
- How much money would it save you if you could solve X problem
- How much money do you think you could make additionally if you could solve X problem
These questions will also help you understand how much you can charge. If your product is intended to boost revenue, you can likely charge 10% – 25% of the expected additional monthly income that your product is supposed to make your customer.
If your product is intended to save them money, you can likely charge 10% – 15% of the annual savings that your product is intended to bring your customer.
Understanding how much you can charge for a product that saves a person time is slightly more complicated. Start by learning how much time your product would save someone. Then understand the value of their time regarding things they could be doing otherwise (find their opportunity cost), and how much this person is worth per hour. If someone spends 4 hours doing something nonvalue-add every month, and could otherwise be doing an activity that makes them $400 in that four hours every month, you could likely charge them 10%, or $40 in this case, of their missed opportunity cost per month.
Rinse and repeat
You’ll need to have multiple interviews with your target market to be confident that you understand your customer’s process, pain points, and how much you can charge them. The answers to these questions will likely change as you interview more and more people.
I would aim to have anywhere from 5 – 10 positive and similar interviews in which your interviewee confirms your hypothesis before starting to build your solution.
Luckily, we wrote a blog post a few weeks ago about getting customer development interviews that you can read here. So now that you know how to figure out if your idea is brilliant or not, you can go out and do it!
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Nugget is an online incubator & community. We help founders start and grow profitable side projects.