Yes’s are neutral; no’s are predictive. When pitching a new business idea or product, focus on the no’s more than the yes’s. If 10 out of 10 people say that your idea is great, don’t count that as a positive — count it as neutral. In the ideation phase, people will say yes to all sorts of things. They’ll tell you they want the thing your pitching, but that often changes when someone has to use or pay for your real-life product.
On the other hand, if you get 10 “no’s” out of 10 responses, then that’s more directionally valuable. If everyone tells you upfront that they won’t pay for your product or service, it’s a sign that you should consider tweaking the concept.
There are exceptions to this rule, of course. If someone explained the idea of Twitter before it existed, many folks would have said, “No, I won’t use that.” Just because other people don’t believe in your idea doesn’t necessarily mean you should abandon it. You’ve got to trust your own gut. But, on balance, you should pay more attention to the no’s than the yes’s.
Niche audiences and passionate customers. To start, focus on quality over quantity. Attract a very manageable set of customers — maybe 10, 50 or 100 — and validate that they love your product or service. Don’t try and go after more customers until you get a small set of users/customers to deeply engage and start recommending it to other people. If people don’t love your product, go back to working on it before you go after more customers (Tip: Use Net Promoter Score as your guide).
Additionally, we often make the mistake of going after the widest audiences possible, in search of more customers. But it’s always easiest to find your first set of customers by providing a product for a niche audience that’s underserved. Yelp and Craigslist may be everything, everywhere, for everyone today; but they started as restaurants and classifieds in San Francisco. Engaging a small set of customers is a proven path to building your way to millions of users.
Conversion of your core value proposition. The surest way to know if somebody is going to pay for your product is to actually bring it to market. But you may be in a situation where you need more time or money. A great way to validate eventual customer demand is to test the value proposition of products that don’t yet exist. You’re measuring the conversion rate of your main selling points and benefits, to determine how difficult it will be to eventually get users/customers.
Read what other startup mentors have to say about how to gauge customer demand.
For example, you might put up a website with a mock landing page that spells out the product and it key benefits. Then drive traffic there by buying targeted visitors on Google, Facebook, Twitter or LinkedIn. If one-third or more of that traffic engages in some meaningful way — like registering or even clicking for more information — then there’s a good likelihood that a significant enough portion of that audience will eventually pay. But if 10% or less of that traffic engages, then the conversion of your core value proposition is likely not striking a cord, and it will be difficult to get paying customers or even free users.
Set it free — if it comes back it’s yours. A proven way to gauge customer demand… give it away for free. If you offer your product for free and lots of people clamor for it, it means you’ll have a good chance of attracting paying customers eventually. On the other hand, if you make your product free and it constantly feels like you have to push it, instead of getting an overflow of takers, then it’s a pretty clear directional sign that you’re going to have a difficult time with demand.
There are some exceptions. Sometimes turning a product free can deflate its perceived value. For example, if you’ve developed a complicated SaaS product targeted to thousands of employees at a company as large as Google or GM, giving it away for free may actually raise suspicions that the product isn’t high quality or does what it promises. Sometimes a high price creates its own legitimacy. But for the most part, if a lot of people don’t want your product when it’s free, it will be extremely difficult to get even a small set of folks to want to pay for it.