How to test your idea: Advertising

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One of the biggest challenges after you’ve come up with an idea for your new business is to know if people will buy it. You need to find this out as quickly and as cheap as possible. Often inexperienced entrepreneurs make the mistake of having a fully functioning product or service and then go in to the market to sell it. In some cases people are interested and it works out fine but in a lot of cases the product or service is not something the market wants. In these cases it would have been more useful to try to sell the product / service or something similar to get the feedback right away.

Advertising

One way you can test if people are interested in your product / service is to run simple online adverts (eg through facebook/google ads) for a similar product / service. It’s very cheap to setup a website (using wordpress) and with google analytics (allows you to track users) you can get some idea as to how many people are interested in your product / service. Generally you would only use this technique when there is a significant cost / time to develop your product / service. You never want to be in a position where you’ve heavily invested your time and your money and then enter the market with your new venture. It’s best to know as soon as possible for as cheap as possible

As well as being able to see if people are clicking on adverts for your website you can also see what pages they go to. The main thing to track is if they click on the buy button which when clicked can display this product / service is out of stock. This is one of the best ways to test if people will buy your product / service. It may not apply to every product or service but it does have a broad application.

Surveys

Surveys are useful particularly open questions which can give you insight in your consumers way of thinking. But there is a huge difference between someone ticking “Yes” to Would you spending €100 on this service? versus someone clicking on the buy button.

False Negative

Generally this method is good for low priced products / services. Often you can have a good idea for a new business and use the above technique and get negative feedback. One thing to note is how people buy. Generally there is a positive relationship between cost and the potential consequence of choosing the wrong product/service and the use of recommendations. People will generally not spend €500 on something without seeking recommendations from friends, amazon reviews or youtube videos etc. Also, even if the cost is low there could be a high risk attached to buying the wrong product / service. eg baby sitter. It’s important to note that in some circumstances the above technique is not suitable.

The following post was based on the advice by “The Four Hour Work Week” by Tim Ferriss

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