th images menu user export search eye clock list list2 arrow-left untitled twitter facebook googleplus instagram cross photos entrep-logo-svg

The 3-Step Approach for Testing Out Your Business Idea

Here's how to learn the most from your potential customers and get honest feedback
By Vanessa Van Edwards |
The 3-Step Approach for Testing Out Your Business Idea

Let’s say you wake up one day and decide the world needs a better mop, and you’re just the person to make it. Before setting out, you interview prospective customers. “Are you looking for a better mop?” you ask someone. The person searches his memory for all the times he’s wrestled with a mop or hated the smell of it, and he ignores the fact that most days he doesn’t care about his mop and can’t even remember the last time he used it. The hits, not the misses, fill his mind. “Yes,” he tells you. “I am looking for a better mop.” You’re thrilled to hear that and go off to design it. Eight months later, with $20,000 of R&D money invested, you come back and ask him to buy it. “Nah,” he says. “I’ve already got a mop.”

 

What happened there? First, something psychologists call “confirmation bias.” It’s the tendency to look for information that confirms your beliefs and ignore what doesn’t. And second, “positive test strategy,” when we consciously or unconsciously ask questions that generate answers supporting our beliefs. These phenomena working in tandem make us feel more reassured, self-confident and driven, but they also create traps for entrepreneurs and prevent us from getting good, honest feedback from our customers.

 

Fortunately, they can be overcome. Here’s a three-step approach. 

 

1. Replace assumptions with hypotheses.

Make a list of all the assumptions you have about your customers -- their price points, pain points and preferences. Now reframe them all as hypotheses. For instance, if your assumption is that customers want more options to customize your product, your hypothesis is that if you offer more customization, revenues will increase. If you think customers will buy more of your product at a lower price point, your hypothesis is that if you lower the price, customers will buy more product more frequently. 

 

And if you think investing more in social media will improve customer loyalty, your hypothesis is that by spending a portion of every day responding to customer comments online, you will drive up your retention rate.

 

2. Test the hypotheses.

This might be through interviews, surveys or A/B testing. 

 

For that customization hypothesis, you could create an A/B test on your website: Some customers will see customization as an option, and some won’t. Do the customized offerings sell better? For the price hypothesis, set up exit interviews with 20 customers who didn’t buy your product. (Email programs can be set to ping people who go through a sales sequence without buying.) Was price their chief reason for bailing? And finally, for your social media hypothesis, track each customer who was engaged on social media to see if they buy more frequently than the average customer. 

ADVERTISEMENT - CONTINUE READING BELOW

 

3. Ask better questions. 

If you do surveys or interviews, be careful not to ask leading questions. If you ask a customer, “Was price a large part of your decision not to buy?” they are more likely to say yes. Price is always a factor, but it’s not always the factor. To get at the factor, let your customer fill in the blank. Ask, “What was the biggest factor in your decision not to buy?” Then she might answer, “The delivery window was too long.” Now you know where to put your effort.

 

When you let your customers lead you to the truth, it will allow you to set aside your own flawed assumptions and answer their needs better. That way, they’re happier, and you’re not stuck with a warehouse full of unwanted mops.

 

 

*****

 

Copyright © 2017 Entrepreneur Media, Inc. All rights reserved.

This article originally appeared on Entrepreneur.com. Minor edits have been done by the Entrepreneur.com.ph editors.

Latest Articles

How Much Money Are College Entrance Exam Review Centers Making?

A close look at revenues and profits of MSA Group and AHEAD Learning Systems

byPauline Macaraeg | October 20, 2017 14:00:00

Which PH Tycoons Are Partnering with Their Potential Disruptors?

PwC’s 2017 Philippine Startup Survey says big businesses are tying up with innovative startups

byLorenzo Kyle Subido | October 20, 2017 13:00:00

The Most Common Habit of Self-Made Millionaires

Develop this habit if you sincerely want to retire as a self-made millionaire

byBrian Tracy | October 20, 2017 08:00:00

Sorry, Millennials -- You Are Not Entrepreneurs

Younger entrepreneurs should look to their older counterparts for guidance to be successful

byDavid Meltzer | October 20, 2017 06:00:00

Transform Vulnerability Into Your Wonder Woman Superpower

Being more human may just be the answer to leading superhuman disruption

byDr. Patti Fletcher | October 20, 2017 02:00:00

With 100 Stores and Counting, This Restaurant Proves That "Lutong Bahay" Will Never Go Out of Style

Kuya J opened 100 restaurants in just two years

byTrixie Zabal-Mendoza for Yummy.ph | October 20, 2017 00:00:00

PH Tech Firm Launching Blockchain-Powered Rewards Platform in the US and Thailand

Appsolutely’s LoyalCoin aims to be a unified loyalty program that can be used across different...

byLorenzo Kyle Subido | October 19, 2017 14:00:00

Uratex Founder Natividad Cheng Named PH Entrepreneur of the Year by Ernst & Young

Founders of Cebu Landmasters, Happy Skin Cosmetics and Fruitas also win awards

byPauline Macaraeg | October 19, 2017 11:00:00

Why Job Titles Don't Always Reflect the Value of Employees

What if our job titles moved in real-time, based on the value we are adding to the business instead?

byJeremy Bloom | October 19, 2017 08:00:00

6 Science-Backed Ways to Make Your Office More Productive

Consider adding some Gerbera daisies to your office, plus plenty of natural light and LED lighting

byMoe Kittaneh | October 19, 2017 06:00:00

"The Right Time" Is a Myth. Here's How to Make Every Time Work for You

Life is too uncertain to wait around for the "right time"

byShakir Akorede | October 19, 2017 02:00:00

Where Did the Richest Filipinos Go to School?

Which school produced the most billionaires and millionaires in the Philippines?

bySasha Lim Uy for Esquiremag.ph | October 19, 2017 00:00:00