You have an idea for a new business startup. And before you jump in writing code, developing it or pouring money and effort into it, you want to validate if this could work at your targeted customer audience. Here is a methodology on how you could validate your business idea:
Step 1: Create a Coming Soon Sign Up Page
Go to www.launchrock.co. Create a sign in page, describing your idea. Put a nice photo. It takes less than 10 minutes, no technical skills and you’ll have a live website, with a sign up textbox to test your idea immediately. Launchrock provides you also with a list of subscribers, conversion rates and other information. You will get something like this:
Step 2: Advertise the Page to your Target Audience
Let’s say that your target audience is women, from 25 to 35 in Athens, Greece. You have to go to Facebook, create an ad using the demographics tool of Facebook, targeting this exact audience. E.g, you will see that there are 260.000 women in Athens from 25 to 35, with a suggested Bid of 9 cents to get a click to your signup page. For 50euros you can probably get 600 to 700 visitors to your sign up page. You can also dig into the filters of facebook more and select specific interests so that you pinpoint you targeted users even better.
Step 3: Measure your Signup Conversion Rate
Facebook and 50 euros will get you 700 targeted visitors who could be potential customers for you. How many of them sign up for your product/project/idea launch? Anything above 10% signup conversion rate is a nice indication. Too low conversion rates (e.g. 1%) means that you will probably have to spend a lot of money on marketing to get the sales. Or it means that this is not the correct customer audience for your idea. Experiment with different audiences, until you find out who converts better.
Step 4: Do Online Market Research
You have to think of some questions and ask people what they thing, through an online survey. Here are some ways to do this:
a. Go to www.skydrive.com and create an Excel Survey. Get the link and send it to your friends/linkedin connections/email list
b. Go to www.mturk.com and create a survey. E.g., tell users to visit your web site and then reply to 5 questions. Pay 0.20cents per response. With 20USD you will get 100 replies from all over the world. A lot of them may also signing up for your idea. E
d. Go to your LinkedIn, export the emails of your contacts using http://www.linkedin.com/addressBookExport and send them an online survey to help you.
Step 5: Do Offline Market Research
Create an offline survey. Get people who may fit your target audience and have a chat with them.
I suggest you target more than 200 surveys (online/offline) and more than 3000 visitors to your sign-up page to start making your first conclusions.