Validation of a B2B start-up idea is a crucial step in any entrepreneurial journey. According to Statista, around 42% of start-up failures can be attributed to the lack of market demand for the product. Therefore, it is essential to ensure that your product or service can meet the real-world demand. In this blog, we will discuss the process of validating a start-up idea and why it is necessary.
What is business idea validation?
Validating a business idea is essentially to test the feasibility of the idea in the real world. It is not just about having a good product or service idea; it’s all about making sure that the market is interested in what you’re offering. The objective is to evaluate and determine if there is sufficient demand for your product/service to justify investing the time, resources, and effort into it.
So why do you need to validate an idea?
Before starting your own B2B business, as a founder, it’s a good idea to ensure that your idea makes sense. This includes conducting market research and market analysis, defining your ICP, finding out the pain points of your potential customers and what they really want, and determining if they will actually pay for your product/service. This is a proactive measure that can help reduce risk and prevent you from wasting your time, money, and resources on something that your target customers may not like or buy.
What are the advantages of idea validation?
Validating your business idea and checking if it is good is a lot more than playing it safe. Getting honest feedback from your potential customers not only helps to reduce risks, but also helps in building a strong case for your product/service, especially when you’re approaching investors, crowdfunding platforms, or banks for funding. It offers proof that your idea has market potential.
Further, validation enables you to determine if people like your idea, which can help to make your product/service better and more effective. Understanding your target customers’ preferences also lets you customize your product, as well as marketing strategies for optimal appeal.
HubCredo’s step-by-step idea validation process
Let’s consider a real-world example of HubCredo’s client, a SaaS business, and how we helped them launch the beta version of a product for which they needed suitable prospects, after doing a successful idea validation.
They needed help in getting the right prospects, reaching out to them, and signing them up for their beta product. Their ICP was evolving, and there were unknowns such as which industry would be more receptive to their products.
Market Research
We began by researching the market thoroughly, identifying the client’s existing competitors, assessing any gaps that the client’s product could fill and the unmet needs that could set their offering apart. Based on the market research, we identified and created 4 ICPs.
Outreach Channels
To engage with other businesses effectively, we built a website for the client, essential marketing materials, and an effective pitch deck. We leveraged various channels such as LinkedIn and email outreach, cold calling, Twitter Developer, and Reddit communities. Using these different approaches, we built a prospects database of 2,000 prospects in a month and reached about 200 prospects per week via channels like LinkedIn and email campaigns.
Efficiency Metrics
Recognizing the importance of success in the initial outreach, the client set a target of achieving a success rate of around 2%-10% from their campaigns. We were able to achieve an impressive open rate of 42% and a reply rate of 12% from the email outreach campaign. We also put into place a continuous monitoring system, wherein we tracked the metrics continuously and identified improvement areas, which were put into action.
Meetings Secured
We were able to secure meetings with potential customers for our client while being transparent that their product was still in the beta stage. This enabled us to build trust and set realistic expectations. In just 2 months, we had around 45+ quantified leads who were interested in our client’s project, which resulted in 15 product signups.
Wrapping Up
To conclude, as an entrepreneur, if you have a start-up idea, then it is vital to validate it effectively before you actually get into product development. Do your market research, engage in outreach, refine your messaging, secure meetings, and measure and track your success metrics. By following these steps, you’ll be able to navigate the early phases of entrepreneurship easily, increasing the chances of building a B2B business that stands the test of time.