It may sound simple, but it will definitely increase your chances of success if you know what the customer truly wants and will pay for. How to do this? Ask them! Or better yet, run a small test and observe what your customers actually want to pay you for.
How to Run a Focus Group
You probably already know a number of friends (or friendly contacts) who are likely to be your target customers. This can be a great opportunity to sit down with them and conduct a focus group.
Gather 8-10 people in an informal setting; a friend’s living room or a coffee shop at a quiet time of day. Explain in advance your business concept and what you are trying to achieve, noting that you are looking for honest feedback and helpful advice on how your business can best win and solve problems for people like them. You may wish to give a small gift or reward to those who attend, or hand out samples to create future brand ambassadors.
Be well prepared. Bring plenty of paper and pens, and a voice recorder to keep track of your conversations for later analysis. Try to keep your questions open-ended and focused on your group members’ actual current challenges and solutions, rather than hypothetical situations. If your business solves a particular problem, ask them probing questions about the problem, their challenges, and their current solutions or workarounds (this is your competition or lack thereof).
You may want to hand out a one-page sheet of questions with plenty of writing space and allow some time between questions for your participants to write down more detailed answers. This can help maximise your time, as all of the group members can be writing at one time, but only a few can be engaged in talking at any one moment.
Keep good faith with your attendees by finishing at the time you promised; 1.5 to 2 hours should be your ideal timeframe, and should allow your participants to express their opinions without feeling like they’ve spent the whole day with you.
Try to surprise them at the end with something special to keep them excited and positive about your business; they will tell others and this could be a great small-scale chance to grab some cheap PR.
Use SurveyMonkey and Ask Them What You Want to Know
One way to reach a larger audience is by using an online survey like SurveyMonkey that can be distributed to a large number of people by email. You might be able to identify 50-100 of your contacts, friends of friends, and other acquaintances that you can send a survey to and receive valuable feedback from.
The keys here are asking the right questions and keeping the survey short! Try for 5-7 questions that are qualitative (open ended) in nature. Keep in mind that customers don’t always know exactly what they want! Or they may want something that is impossible to achieve, and that is precisely why there is no business out there doing it that way.
Take some time to put together a smart and thoughtful list of questions, and this may open up a number of new ideas and directions for your business.
Actually Observe What Customers Will Buy: Set Up a 2-page Test Site
Ask a focus group of 10 people if they will buy your product, and four people might say yes. Then take the products out of your bag and ask those four to buy right there and then; chances are you won’t make four sales. The reality is people want to please and will probably overstate their intentions in surveys, leading you to overestimate key numbers like conversion rate, CAC, and revenue targets.
How to get around this? Set up a 2-page test sales webpage and allocate a CPC marketing budget to this page with Google AdWords. This only needs to be a simple 2-page website as follows, and will help you gauge two key metrics; actual cost per click to attract new customers with your chosen keywords, and your product’s sales conversion rate. Here’s how to do it:
Page 1 of your site is the landing page. It will have your logo and branding at the top, and will purely focus on selling your core product or service. Here’s where you put your best images, product/service descriptions, clear pricing, and a large button that says “Buy Now!” which takes the user to page 2. Don’t place any other links or distractions on this page.
Page 2 is a simple web page that contains a thank you message and a friendly “Out of Stock” notice, promising that if the customer leaves their email address they will be notified as soon as the item becomes in stock again.
Advertise on your favourite search engine with the keywords you have chosen over a period of a week with a budget of say US$500. You’ll want to have a reasonable sample size, so a week or more and a decent budget will help you get more relevant results.
How does it work? After a week of your test, you’ll be able to see exactly what your CPC is from search engine marketing. You have also set up a very basic 3-step sales-funnel as follows:
1) Customer clicks on CPC ad and comes to your site.
2) Customer visits page 1, and either exits or clicks the “Buy Now!” button through to page 2.
3) Customer either exits the site here, or chooses to leave their email address.
You can now see the percentages of people who clicked, browsed, “bought”, and left their email. Depending on how you have set up the pages, you may consider a customer who clicked “Buy Now!” as a “sale”, or if you want to be extra cautious, only regard those who left their email address as a “sale” in this test scenario.
Conducting a small test like this for a week will help you get hard numbers on some of your key costs and success factors when setting up your business. You may want to repeat the process while changing some variables such as price, or key marketing information, but try not to change too many things at once, as it will be hard to distinguish between what worked and what didn’t.
The bottom line is you can ask the customer what they want, or you can observe what they actually will pay money for; the latter is what you must intimately understand about your customer so that you can be confident going forward with your business.