Every startup idea looks perfect until tested in the real market. I understand that you have worked hard on your research about the startup. Some of you might even have taken feedback from your friends and family about your idea. But, friends and family generally do not give honest opinions because they know you personally. They see your reflection in your business idea, which is not a good way to test your startup idea.
I mean, how many of your customers will know you personally? I hope you get my point. A report from Fortune states that around 42% of startups fail because of a lack of market need for their product or service. The best way to test your startup idea is by spreading it among strangers. This method will immediately tell you how strangers are responding to your startup. So, let’s begin our process behind testing your startup idea in the real market.
Method to test your startup idea
I will be assuming that you are at a very early stage of your startup. You have not built an actual product yet, and everything is only in your head. Maybe you have not even thought of a name for your startup. Well, good news, you are on the right path. I will tell you the step-by-step method of testing your startup idea just now.
Before jumping into the method, I need you to understand that we do not have a product. We are just trying to understand how people will react to your startup idea. If you receive a response on your startup idea, it is worth building a product. Here is the first step of our method.
Establish startup presence on the Internet
The first thing you need to do is establish your startup presence on the web. A legit company has a website, information about the company, social media accounts, a logo, etc. But, all we need is a one-page website, a sentence that explains what your startup does, for example, I teach entrepreneurs how to establish a startup, and a paragraph that provides details about your startup idea. We do not need to create a social media account, but you can if you want to.
To establish a startup presence, give a name to your startup if you have not already. Try to pick a name that does not necessarily speak about the business. For example, Apple has nothing to do with fruits, and Amazon has nothing to do with the forest. If you have ten ideas, buying ten domain names will cost you at least $100 or more. Instead, buy only one domain worth maybe $10 and use it for testing purposes. Also, the same goes for the startup logo. You can outsource it to a freelancer for $5-$10 and re-use it for all your ideas.
You have startup name, domain, logo, and a brief description to test your startup idea. Now we need a hosting service for our one-page website. I know it can be a little expensive, but I will tell you about a free tool for web hosting. Google provides a free tool named Blogger, where you can host your one-page website for absolutely free. If you do not know how to use Blogger for web hosting, you can watch tutorials on youtube.
Simply build a user-friendly one-page website in HTML, CSS & JavaScript. This website should contain a name, logo, startup idea in one sentence, startup idea in detail, and a call to action button. The call to action button must ask for contact or email for the visitor. This type of website is usually called a landing page.
Generate traffic on your startup Website
We have established our startup presence, and now it is time to bring people to our landing page. There are two methods for generating traffic on your website or landing page. The first is organic traffic, and the second is paid traffic. Since we have a new website without SEO, there is no chance of getting organic traffic. That brings us to our only option, paid traffic.
There are many options for paid traffic like Facebook ads, Google ads, Quora ads, and many more. To be logical here, we did not create any social media account, so we are left with only google ads. The targeted location and keywords are some of the best things about Google ads.
Again, you can watch Youtube tutorials on google ad campaigns. It is also okay to run social media advertisements if you have created social media accounts. Keep your ads budget between $30-$50, and do not make a clickbait advertisement. Remember that we do not have any product, and we are just figuring out if there is any demand for a product that we are thinking of building.
Using this method, you can target your audience and make them visit your website. Once you start getting traffic on your website, try to analyze the user interaction on your website. That brings us to our next step.
Analyze the response
First, look at how users interacted with our landing page or website. Somebody searched our keyword on google, and our advertisement appeared in the search result, which we call an ad impression. Then a user clicked on our advertisement and landed on our website, which is called an ad click.
Once the users landed on our page, they read details about our startup idea and showed interest by giving us the contact details. In simple words, we generated a lead. I want you to understand this process for a clear picture of customer interaction.
We need to analyze three responses we have just discussed, ad impression, ad click, and lead generation. Ad impression tells us how many people are looking for something related to our idea. Ad clicks show us how many people are looking specifically for a product related to our niche. And the number of leads is telling us how many people are interested in buying our imaginary product.
I am taking an imaginary ad campaign result to simplify the analysis here. I received 1000 ad impressions, 50 people clicked my ads, and out of 50 people, only 5 gave me their contact details. If you look closely, 1000 people are searching for our product, out of which only 20% of people care to look into what we have to offer, and out of those 20% people, only 10% are interested in buying our product. In a nutshell, out of 1000 people, only 0.5% of people are willing to pay me for the product. So we have a conversion rate of 0.5%.
In general, less than 10% of the people click on the ads, and rarely 1.5%-3% of people get converted into customers. Their numbers vary from industry to industry. So it is better to do a little research on your industry and then compare the results. A high conversion rate means there is a demand for your idea, and you should continue it. If you have a low conversion rate, you should probably drop the idea and move on to the next one. People visiting your website and leaving without giving contact details means people might not be willing to pay for the product. In this case, also, you can drop the idea.
In conclusion, we created an online presence of our idea that looks like an established company. We generated traffic on our landing page and told people about our product. We tried to analyze how people reacted to our product and see if they would pay for it. We did not ask for any payment or credit card details from the visitors. We consider the leads as conversions. We have tested our startup idea in the real market with less than $50. You would have probably worked for over a year and then realized people are not paying for your product. But, this method will take a week or two to show the results. We will see the demand for the idea and decide whether working on the startup is worth it or not. I hope that this method saves you a ton of time and money. If you liked the process of testing startup ideas, then please share it with your fellow entrepreneurs.