I encourage you to read this post from Eric Gagnon of the Business Marketing Institute (BMI). While it is geared for tech start-ups, it provides some basic guidance to help you avoid the “reality distortion field” — that is the entrepreneur’s blind vision that defies the actual facts of the situation — and suggests how you can conduct simple market tests and evaluations and, if necessary, change course before you get too far down the track.
The testing ideas are worthy of special review.
To See If You Have a Business, TEST!
Market testing isn’t just for big corporations who can afford to hire fancy research firms. Any start-up or new product launch can run a few simple market tests, using direct mail and the telephone, to test the effectiveness of marketing deliverables, advertising media, and the value, price, features, and benefits of their product, to answer the question: “Do we have a business?”
Market testing for a start-up or product launch is no big deal. What I’m talking about here basically amounts to printing mockups of your ads, brochures, and sales materials for your product, sometimes even before your product is even ready to sell, and getting these materials in front of a dozen, or two dozen, likely prospects for your company’s product or service, and then asking these prospects for their feedback and advice on these materials, and your product. Then, after the copy and presentation of your marketing deliverables is dialed in, run a smaller version of your marketing program to gauge your product’s sales response.
Market tests for start-ups and product launches run in two stages:
1. The Initial Market Test
The initial market test is a very basic test done 1-3 months before the product is publicly launched. The purpose of this test is to gauge the response to copy and presentation of your marketing deliverables and, to a lesser extent, gather information on the kinds of “marketing media” you should be using in your marketing program, such as mailings, ads, trade shows, Internet, etc.
In this initial test, you put samples of ads, brochures, Web pages etc. in front of representative prospects and other contacts in your market, and informally interview them for feedback on how well your sales copy presents and sells your new product, and how they get information on other products in your industry—i.e., what kinds of trade publications they read, what kind of mailings they get from other companies in their field, what trade shows they attend, Web sites they access, etc.
This initial market test is often done while your company or start-up is operating “under the radar,” and by contacting these potential prospects and other trusted industry contacts before your product is even ready to sell.
2. The “Live” Market Test
The “live” market test, which is usually run before your launch date, or as a scaled-down version of your marketing program during the product launch phase, is mainly a test to gauge the sales response of the marketing media you’re using in your program: Print advertising, direct mail, Internet search engines, e-mail, trade shows, etc.
The “live” market test may include all of the activities of your marketing program, but on a smaller scale: For example, you may be running a reduced, two-month schedule of print ads, sending out a half-dozen or so mailing tests to selected lists, and testing the effectiveness of your Internet marketing program.
Once you have worked out the basic sales copy and presentation of your deliverables in the initial market test, and you’ve generally defined the methods and media you intend to use to market your company’s product, the purpose of the “live” market test is to help you establish sales response: response rates from mailings, number of inquiries received from ad placements, click-throughs from search engine tests, etc.
The “live” market test seeks to answer the ultimate question for any start-up, and for many new product launches in established companies: “Do we have a business?”
The Value of Market Testing
I’ve run market tests that have gone on to generate millions of dollars in sales volume for new ventures, and I’ve run tests that have convinced clients to close up shop and walk away, saving them millions in money they (or their investors) would have thrown at a bad venture. You learn something useful from every test, and everything you learn can be put back into your marketing program to make it more effective in its next implementation.
Often, however, the results of any test won’t be clear-cut, and will require another test. And usually another one after that. That’s where your commitment, staying power, and your ability to rapidly execute another market test means the difference between giving up on a venture, or finding the key to breaking through the market and generating enough sales response to make the business profitable. With each new test, you’ll learn at least one important piece of information that will help you sell your product better.
Now this advice certainly applies for established, as well as start-up businesses. Clearly, effective testing requires you to measure your marketing impact, and here you need to look at what you’ve been doing all along, and decide if you can calculate how much business the activity is generating. Then you must test variations and new ideas and see where they take your business.