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This post is part of a series on practical methods for stress-testing your ideas (and ultimately validating your sparks of inspiration). Missed the introduction? Check it out here.
The Market-Maker Method
Running a Proxy Simulation
This is the most powerful—and involved—validation method of the idea validation methods discussed. It’s ideal when your idea is high-stakes and you need a high degree of confidence on whether the idea is viable. If the stakes are extreme, it can be a good idea to chain validation methods together—begin with the Contrarian Method or Alignment Method, refine the idea, run the Customer-Centric method, refine the idea, and run the Market-Maker method.
Where this method really shines is when your spark will result in a highly-innovative new product or service which doesn’t have a clear comparable from a competitor in the market, or where the new product will take quite a bit of customer education before a market for it can be developed.
With this method, you essentially create a marketing campaign to validate the spark as if it’s a product or service which is already available (or will be available soon). You then measure the performance of this campaign closely to evaluate if the market responds to it positively. There are a number of digital platforms that can facilitate this effort without significant capital investments : Kickstarter, Indiegogo, and Quirky are examples.
If your spark does involve the production of a tangible product, there’s an elephant in the room to call out should you create a proxy on one of these platforms (or a similar one) : your idea could be appropriated and brought to market by a competitor if your go-to-market teams aren’t capable of moving from prototyping to mass production quickly (4-6 months). If this is a concern for your business, you should obfuscate your “real” idea somewhat by building the simulation around a comparable idea—something that has similar characteristics and would allow you to validate the underlying assumptions of your spark without publicly revealing the particulars of your product design.
Another option is to build the assets needed to run the proxy simulation on your own website—landing pages, simulated marketing content, and rich media. You could then build a paid ad campaign to drive traffic to the page(s) and measure the results. In this way, you mitigate the risk of appropriation by a competitor somewhat (if the only entry point to the landing page is a paid ad campaign built from a random sampling of the publisher’s traffic). An advantage of this approach is that you can create a reasonably detailed psychographic profile for the traffic you’re advertising to, which further builds confidence in the results of the campaign. The downside of course is that paid ads cost money—expect an expenditure of between $1,000 and $5,000 (USD) to acquire enough traffic to be useful for your purposes. We’ll dive into this method in much greater detail in a future post for those of you who find it interesting.
What You’ll Need
Confidence in the validation will be higher if your team contains a mix of people with the following skill sets :
Someone with a working knowledge of statistics and a strong handle on marketing analytics (what to measure, why, and how to measure it) ;
Someone with a a working knowledge of design related to the product or service that your spark would ultimately become ;
Someone with a working knowledge of digital marketing content creation, and ideally also funnel design for landing pages (perhaps eCommerce, depending on what your spark is) ;
Someone experienced in building and monitoring paid ad campaigns (if you’ll forego an external host for the simulation in favour of building it on your own website).
Optionally, some working capital for paid ads (if building the simulation on your own website).
What You’ll Do
Choose the testing approach that you’ll take to run your proxy simulation (ex : Kickstarter or hosted on your own website) ;
Choose what people resources you’ll be able to assign to the project (who works on it and what their skills are will influence how you execute) ;
Create a bare-bones project plan and checklist for tasks/to-dos (treat this as a minimum-viable plan, create only as much detail and polish as needed to align the work team). As relevant, this planning document should include :
Optionally, a visual sketch or map of the customer journey (I find this extremely useful for grounding your thinking, and helping to align the team to it) ;
Pricing/price breaks to test ;
Offer(s) to test ;
Marketing content to test (features and benefits, points of value, and hooks) ;
A critical path of events after the simulation goes live (what promotional or other actions need to happen, under what conditions, and when) ;
Success and failure conditions for the simulation—what would give you a strong indication that the idea will be taken up by the market and be commercially viable?
Create the visual assets and any rich media which you’ll need to communicate the idea to the consumer segment you’ll test again (ex : images for Kickstarter, your website, and/or paid ads) ;
Create the landing page for the testable idea (whether on your Kickstarter page or your own website) ;
If on your own website, create and test the purchase mechanism (buy button/cart or other mechanism which is a strong indicator of intent to purchase) ;
Create any supporting promotional content you’ll use (ex : email campaigns/drips, paid ad campaigns ;
Design and implement any measurement protocols that you’ll need to determine intent from the test group (conversion triggers, tracking on buttons, “purchase” tracking, et cetera) ;
Conduct a dry run of your simulation with both your internal work team and a few trusted parties who weren’t involved in the work to create it (thereby hedging against the burden of knowledge) ;
Activate your assets, publish content, and begin the campaign (executing on the critical path outlined in it) ;
At the end of the simulation, evaluate the data and generate insights from it. What does it tell you about the idea? Look to your success and failure conditions to determine if there’s a case for commercial viability.
Pros of this Method
The closest of the four methods to getting actual market feedback without running a pilot or building a working prototype ;
If you build your marketing assets and media in a smart way, they can be re-used if you validate your spark and decide to greenlight the product or service (or, you can at least use the experience to shorten the amount of time to create new marketing assets) ;
If you design your customer journey for the test intelligently, you can also build an opt-in contact list to promote the product or service to when it launches ;
New potential customers will be exposed to your business and its products or services (if your landing page design includes links out to the “real” website).
Cons of this Method
Can be time-consuming to execute upon, depending on the level of depth which you build into the simulation. If you treat it like a real product or service launch, then expect it to take about as long to plan and execute—in this case, the benefit that you’re primarily gaining is testing the market without investing time and capital in building the real product. And if you build the real product, then your marketing campaign for the real launch is essentially complete ;
The most expensive of the four methods (though significantly less expensive than prototyping/piloting or going to market on hopes and dreams alone) ;
Some risk of damage to your brand if money changes hands and the marketed product or service isn’t delivered (the risk of this is highest if you host the simulation on your own website, under your own brand banner—less so if it’s hosted on an external platform like Kickstarter) ;
Executing this method can get quite complex, and there’s a good chance that you’ll need people on your team with very specific skills related to content, marketing analytics, and design.
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