Market validation is the process of presenting a concept for a product to its target market and learn from those prospective buyers whether or not the idea is worth pursuing.
This process typically takes place early-on in the conception stage, before any significant investment has been made in developing the product.
The two most common approaches to market validation are:
- Interview people in the target market, such as the buyer and user personas.
- Send out surveys to these personas.
The key is that market validation research must include direct contact and feedback from people in the product’s intended market.
Why is it so important?
There are many reasons why an organization conducts market validation before committing to the development of a new product or service. Here are some of the key benefits:
For an existing organization, the product management team would need to present its executive staff with evidence of market validation before execs green light the project and allow the product manager to begin assigning a budget, development time, marketing tasks, etc.
For an entrepreneur seeking funding for a new product idea, venture capitalists and other types of investors required evidence of market validation before agreeing to fund the entrepreneur’s company.
Beyond its ability to help teams secure resources to bring their product concept to reality, it’s an inexpensive way to uncover problems with your product idea.
When an organization comes up with an idea internally for a new feature or an entirely new product, the idea might at first seem viable, even ingenious.
But until that product team subjects its idea to a true test—for example, conducting customer validation interviews to learn whether or not they would be interested in the product—the team could be missing the following major flaws in the idea:
- Target users don’t need a standalone solution to solve the problem your product concept addresses and they’ve already discovered a simple and inexpensive workaround that they’re satisfied with.
- The consensus is while they like the idea, they don’t think it’s important enough to pay for.
- The companies in your target industries don’t allow enough budget for your solution.
For these reasons, even a good idea can fail to achieve the all-important objective of product-market fit.
The value of market validation is that an organization can uncover those problems before committing any significant time or resources to a product concept. That makes this the most inexpensive way to learn that an idea isn’t worth pursuing.
The market validation process varies by company. It’ll also vary by industry and the type of user persona the product team is seeking feedback from. Different demographics will have their own preferred methods of communication.