Entrepreneurs always have the next BIG idea. It is something that non-entrepreneurs tend to smile at, because they see risk, where entrepreneurs see opportunity. But entrepreneurs must be bold and confident, they must be overly optimistic if they want a shot at making it out of the shark tank alive and to justify the economic risks they are taking to pursue their venture. Because the hard reality is over 90% of all startups will fail.
And the number one reason why they fail is because of a lack of market need. 42% fail because they build a product or offer a service nobody, or rather not enough people, want.
What if all the passion and resources that go into a venture could yield better results?
The Holy Grail of Product/Market Fit
Product/Market Fit is a buzzword that has been introduced by Marc Andreessen, which refers to “the degree to which a product satisfies a strong market demand.''
Andy Rachleff, a famous VC, has an interesting approach to explain how the complexity of identifying product/market fit can be tackled. In a podcast with Ryan Hawk, Andy is boiling it down by saying:
Success as a startup depends solely on product/market fit and not on execution. The most talented manager in the world can fail if the dogs don’t eat the dog food.
So in order to turn this approach into a helpful tool, Andy defined the one question every startup should be able to answer:
What do you uniquely offer, that people desperately want?
When you have a moment, take some time to listen to the entire podcast?
Coming up with a unique idea is not so hard as such. After all, building a coffee cup that keeps your coffee warm for three days and also offers free WiFi is probably a unique enough product, but the tricky part is knowing how desperately the target market will want to consume that future solution.
As a consequence, many entrepreneurs and young businesses fail because it feels much more rewarding fast to build the product, rather than working on identifying a strong need, only to discover later that they have built something that is not in high demand. That is often a devastating lesson and a financial disaster on top.
Why use trial balloons?
Entrepreneurs should make every effort to know in advance if enough people will be interested in buying their product. And the only way to know if an idea is worth a shot is to validate it by collecting as much market insights as possible before spending time and money on building the actual product. And this is where Trial Balloons make every entrepreneur’s life easier.
What are trial balloons?
A Trial Balloon allows you to very quickly present an idea, product or service to potential customers before the product or service is actually ready to ship. Unlike a crowdfunding campaign, that can achieve similar results, a Trial Balloons allows you to test the market much faster, cheaper and more under the radar, compared to a full-fledged crowdfunding campaign.
Launching a Balloon is done in 3 simple steps:
Step 1: Set up a website
The goal here is to create a simple one-page website that is just good enough to communicate your value proposition. What is the problem you are solving and the value you bring for customers. Be as clear as possible to let people know what they will gain from your solution. Don’t start by describing your product, start by telling your audience why they should buy your product.
Having the right logo or the right design is secondary. You shouldn’t spend more than half a day on setting up your product or service page.
Priority number one is to find out how many visitors are actually interested in the value of your solution. One way to measure this is to ask your visitors to sign up to get notified once your product is ready.
Step 2: Generate traffic
Your new website is of course completely unknown to search engines so the only way to get visitors fast and generate traffic, is via paid ads.
The goal is not to attract any number of visitors but to have an initial idea about what type of visitors will be most likely to buy your solution.
You will achieve this by selecting specific keywords related to your value proposition and solution, that your target customers are most likely going to use on e.g. Google.
This will increase the probability that the right type of customers will see your ad at the right moment.
Have a look at how to setup a Google Ads campaign for beginners in this video on the Surfside PPC YouTube Channel.
Step 3: Measure and iterate
Now that you have attracted a certain number of visitors to your page, you want to see if they are engaged or if they leave the page after just a few seconds.
If they like what they see you want them to do a commitment to your future product like signing up for e.g. a pre-release notification. This is a crucial step because if visitors give you their email address then you have an opportunity to engage with them. You can for example ask them questions about what they like most about your product or what features they would want to see next. And probably the most thrilling thought is that this way you generate a first list of potential customers for when you are actually ready with your product or service.
Measuring this conversion rate* is the first indication towards validating if your idea can be turned into a business or not.
(*the ratio between the the page visitors and the visitors who actually sign up/commit)
Once you have launched your first Trial Balloon, you would want to start adjusting and tweaking your website content like messages, value proposition, pricing and so on step by step and measure how the conversation rates compare between your first, second and third iteration. The more you iterate the more market insights you will get.
Almost half of the startups that fail, do so because they haven’t really tested their business idea in a real world market scenario. You can considerably lower your startup risk by testing your ideas before you invest valuable time and resources into building the actual product or service.
This guide explains the number one reason why most startups fail and how you can escape the same fate by using Trial Balloons to get valuable market insights about your idea before you commit.