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Market Validation: The One Step You Can't Afford to Skip
By Laura Patterson - President and co-founder of VisionEdge Marketing, Inc.
Tuesday, 23rd November 2021
 

Marketing and Revenues Insights at 4Hoteliers.comYou’ve identified a new segment for growth, it meets all of your opportunity and accessibility criteria, you’re ready to start selling, right?.

Identify a few potential customers, contact, connect, qualify, and rock on. To that we say, “Whoa, Nelly, market validation comes first.” Here’s why this research step is growth-critical, product adoption, and how to do it.

Simply defined, market validation helps determine whether the market and/or customer segment you’ve decided to target will be receptive to your solution. It’s not about convincing someone to buy and teeing up the transaction–that is a closed sale. It’s about verifying that your solution addresses the needs and wants of the market and that people in the target market are willing and ready to buy your solution.

Market validation and selling share a common effort: conversations. However, the focus of the conversation and who facilitates it within your organization are generally quite different. These two steps that are the same.

  1. Define who to talk with.
  2. Recruit people for conversations.

That’s where the commonality ends. Everything that comes next is different, you will need to:

  • Select who from your team facilitates the conversation.
  • Create the discussion guide vs. script.
  • Prepare for the conversation.
  • Analyze the results.
  • Prepare the findings.

Why Should You Consider Product-Market Fit Before Selling into a New Market?

Perhaps you’re thinking, we already have customers who buy our product so we can skip validation of product-market fit, in order to make the deadline. After all, the potential new market, even an adjacent market, looks similar to the one we’re in, so it makes sense for your business. But, every market has nuances, which is why customer insights from a new market are crucial to market success and product adoption.

Here’s a simple example to illustrate the difference between selling and market validation and why market validation matters.

Let’s say you have a technology product that you’ve been successfully selling to commercial and government call centers. After careful research, you’ve identified 911 call centers as an adjacent market that seems perfect to support your growth initiatives. It scores high on all your major criteria. They have the same problem as existing customers. The 6,100 emergency call centers in the United States handling more than 200 million 911 calls every year (according to the National Emergency Number Association) makes the market size worthy of pursuit.

You’ve obtained a list of buyers, so easy-peasy. All your team needs to do is start selling.

You decide to leapfrog the validation step. After all, the target seems extremely similar to your current customers. You make some modifications to your website, create some relevant content, and spin up your business development team (BDT).

With minimal effort, your BDT tees up conversations; but after a few months of effort and numerous conversations, there’s still no forward movement on sales. What’s wrong? Maybe the target is incorrect. Maybe. But we wouldn’t advise you to abandon a segment that achieved a high fit and high accessibility scores.

How then do you make the sales goal?

We recommend that you take a step back and do the validation needed to ensure product-market fit. That is, “being in a good market with a product that can satisfy that market.” The concept, while often applied to startups and early-stage companies, is relevant for any company bringing a solution to a new market. Market validation is how you prevent market entry failures.

Solving and validating the product-market fit equation requires you to know why customers would want to use your product and how you are going to attract those customers to it. Hence the need for market validation.

Validation Research Wins the Market!

Validation is at its essence a research effort. It takes people experienced in all aspects of research, including those with expertise in crafting the discussion guide, facilitating conversations, analyzing data, capturing the insights, reporting on the findings, and making recommendations. Experts who conduct market validation know how to present a solution to the target market and gain the insights you need to decide whether your company should pursue the market and what, if any, modifications to your solution and/or process would be necessary to make further investment worthwhile. They avoid making sales pitches. In fact, your company name or solution name might not even be mentioned or, if it is, it might only be one of a variety of options.

This is very hard for members of the sales team to do because their primary mission is to persuade buyers to buy your solution from you.

Since market validation is research, it requires a structured research methodology. The research methodology for this kind of work typically encompasses a series of in-depth interviews (typically ranging from 20-45 minutes in length) with decision-makers, influencers, and buyers within companies in your target market. When validating an existing solution in a new market, we recommend focusing the interviews on verifying the following:

  1. The problem and its magnitude
  2. The likelihood and degree to which they believe the solution solves the problem
  3. The likelihood they’d entertain purchasing the solution and what they’d be willing to invest
  4. Their content and channel preferences for how they’d like to learn about the solution
  5. Their primary steps for identifying, evaluating, and selecting a solution

You may not be able to address all of these in a short conversation, so address them in the order listed. How you construct your questions is as critical and as important as what you ask. If this isn’t an area of expertise for you, tap experts with experience in research. For this work, it is more valuable to have people who are experts in research than it is to have experts in your market, or with your solution.

Laura Patterson is president and co-founder of VisionEdge Marketing, Inc., a recognized leader in enabling organizations to leverage data and analytics to facilitate marketing accountability.

Laura’s newest book, Marketing Metrics in Action: Creating a Performance-Driven Marketing Organization (Racom: www.racombooks.com ), is a useful primer for improving marketing measurement and performance. Visit: www.visionedgemarketing.com

Disclaimer: Any VEM information or reference to VEM that is to be used in advertising, press releases or promotional materials requires prior written approval from VEM. For permission requests, contact VEM at 512-681-8800 or info@visionedgemarketing.com. Translation and/or localization of this document requires an additional license from VEM. Note: All content within this website is property of VisionEdge Marketing. Any use of materials, including reproduction, modification, distribution or republication, without the prior written consent of VisionEdge Marketing is strictly prohibited. Reprinted with permission.

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