It’s always painful when a business doesn’t pan out the way you hoped. Personally I’ve found it’s more frustrating to start a business that almost takes off than one which fails outright.
In 2016 I started a subscription box sending boxes of high-protein snacks every month. Initially it grew fast. But as influencer marketing became saturated and new competitors sprang up, the cost of acquiring new customers jumped and growth dropped off. My mistake was not validating the marketing side of the business upfront.
Products can fail for many different reasons. An analysis of 101 failed startups by CB Insights found 20 different reasons for failure. Using a good product validation process is key to minimising the risks to your success.
Product management guru Marty Cagan has worked with some of the biggest names in Silicon Valley. He identified ‘The Four Big Risks‘ which lead to failed products.
This post will show you how you can run better product validation for your early stage SaaS. Use these four types of validation to remove your blind spots and bulletproof your product idea.
- Value: whether customers will buy it or users will choose to use it
- Marketing: whether you can bring in new users in a cost-efficient way
- Usability: whether users can figure out how to use it
- Feasibility: whether you can build what you need with the time, skills and technology you have
Whether customers will buy it or users will choose to use it
The most common reason for startup failure (42% of failures) is that people simply don’t need the product. That’s why establishing compelling value is the most important part of the validation process.
The other risks only matter if your product is something people want to use, so this is where you should be spending most of your time.
Properly validating the value of your product idea could fill a whole post (/book), but a few key pointers:
- Figure out what problem your product is trying to solve, and who for
- Discover whether your target audience view this as a valuable problem to solve
- Are your target audience A) searching Google or asking in communities for advice on this problem, and even better B) already paying for solutions to it?
- Nothing beats speaking to your target customers. I’m happy to be the millionth person to recommend The Mom Test, it’s a short book full of practical tips that walks through this.
- Don’t ask people if your idea is good – you won’t get an honest answer. Instead, ask about their existing behaviours and habits: “What’s your biggest problem with managing your ecommerce store?”, “How are you currently solving this problem?”, “What are the implications of not solving this problem?” etc.
- Once you’ve validated that the problem exists, you need to validate that people will pay for your solution. It’s time to build your MVP and start selling it
Whether you can bring in new users in a cost-efficient way
22% of startups surveyed by Failory failed due to marketing problems. That’s why finding marketing channels that work for your business is key. If you can’t get in front of your target customers, it doesn’t matter how good your product is.
There are no guarantees about which marketing channels will work best for you – you have to test. A few top principles of testing:
- Taking on 5+ channels at once risks spreading yourself too thin. Instead focus on 2-3 channels at a time. This will also make it easier to see where you’re not achieving traction so you can drop a channel and move on to the next.
- Make sure some of the channels you are testing with have fast feedback loops. Think ads, marketing in communities, cold email/LinkedIn. If you are only betting on channels with slow feedback loops (e.g. SEO, organic Twitter growth etc.) it’ll be months before you can see whether any of your marketing is working.
- Don’t abandon testing a channel too quickly. You can’t expect to find the best approach for every channel straight away. Test different messaging, see what gets the most interest and then iterate on the winners.
If you have no marketing experience it will be harder to tell when a channel isn’t working. But as you gain experience it will become easier to see what good performance looks like.
Whether users can figure out how to use it
People are notoriously impatient with poor user experience (UX). One study found 88% of users are less likely to return to a site after a bad user experience (source).
So if you want users to stick around, the effort they put into learning how to use your software has to be proportional to the value you’re delivering. If I download a cocktail recipe app I don’t want to spend more than a minute or two working out how to use it – I could’ve made an Old Fashioned in that time.
On the other hand, a business user who’s switching to a new CRM probably knows how much time a better CRM could save them, and will be willing to invest time in learning how to use it (if they think the product looks good).
To validate usability, make sure you are regularly checking in with a few of your target customers as you build to get design feedback and ensure it’s usable. If you have a more complex product where usability risk is more of a concern, it’s smart to validate user flows using wireframes before you build anything.
Remember that as the maker, you will never be able to provide an objective opinion on the usability of your product. Of course it all makes complete sense to you, you’ve spent hours thinking about how it should fit together!
Whether you can build what you need with the time, skills and technology you have
How big of a part feasibility should play in your validation process depends on how many technical unknowns there are in building your product. If your product is simple and you’re very confident in how you can build and scale it, this is less of a concern.
At the other end of the spectrum, you might have a more complex product. Or, it might seem simple but you have little technical knowledge and aren’t sure what would need to go into building it.
Feasibility risk raises useful questions for small teams and solo founders:
- Do you have a clear plan for how your product can be built?
- If there are a lot of unknowns about whether you’ll be able to build it, how might you build an MVP that tackles all the big unknowns?
- If it will take months to build your MVP, can you scope down to the 2 or 3 most important features? This will reduce feasibility risk and also allow you to validate the value of your product in the market sooner
For early stage SaaS businesses, these four types of product validation aren’t created equal. Validating value and your marketing are crucial if you want to create a successful business.
Not having perfect usability from the get-go isn’t going to kill your product (unless people straight up can’t use it). Likewise, not validating feasibility upfront might slow you down but probably won’t stop you from building your product (eventually).
Still, any of these four areas – if left ignored – can kill a startup. Five of the top six reasons for startup failure link directly or indirectly to these areas.
Use your product validation process to validate these points early. You’ll remove some of your biggest blind spots and give your product a stronger foundation for growth.