By Kristen Cooper. Published in the Indianapolis Business Journal on August 6, 2021.
Since April 2020, I’ve held virtual office hours for a minimum of two hours a week. These one-on-one, back-to-back meetings have been open to the public and take 40 minutes each. Most time slots are filled with first-time founders asking questions about what to do next. In about 95% of our conversations, we have to pause and take a few steps backward in order to proceed forward. Typically, founders collect very little data about their customer base.
When founders survey prospective customers (before launching the business), the information gathered will help determine a version of the product or service the market is willing to buy.
Successful companies have customers who want, need and are willing to pay for products/services over time. In order for the company to be sustainable, there must be enough customers willing to spend their money on the solution being sold. When you have a new idea for a business, it’s important to understand if there are other people who experience the problem you are trying to solve in a similar way. The only way to know for sure is to ask people who might become your future customers.
In what is known as the “customer development” stage, there is no need to convince anyone of your idea. It’s a period of study and research. This is the time to question how the market experiences both the problem and the solution. Answers validate or invalidate assumptions. That information will save you from headaches, heartaches and unnecessary spending. If you ask the right questions, you will reveal key buying behaviors, identify new market opportunities, and observe patterns that surface.
The first step in developing a survey is thinking about your audience. Who are your prospective customers? Open a spreadsheet and enter the names and emails of people you know who might purchase your product or service one day. Next, identify stakeholders such as the types of individuals (for example, moms, doctors, tailgaters, etc.) or companies that would be interested in the product or service. Shoot for a few hundred prospects to add to the spreadsheet.
Many marketing companies could carefully (and expensively) calculate the precise sample size for statistical relevance to reduce the margin of error. However, the goal here is to quickly understand the unknowns and identify the first batch of paying customers. Since most startups are on a shoestring budget, you can put together the survey yourself using a free app like oogle Forms, Survey Monkey or Type Forms.
A good survey asks questions prompting respondents to share information such as: what the problem is like for them, how much time and money they currently spend on the solution, the types of products and services they currently use to solve the problem (your competition), what an ideal solution might be, where they make purchases, frequency of purchases, and space to share additional ideas and concerns. Make sure to frame questions so you don’t get biased answers. Ten to 15 questions should suffice.
A realistic response rate ranges from 5% to 30%. Ideally, a minimum of 50-100 respondents would provide a decent-size sample to then interview. This means the survey needs to go out to hundreds of people. Most people’s immediate social circles are not that big, so it’s important to work with networking groups and industry influencers who can share the survey with their peers.
Online communities are a great place to share surveys. For example, members of The Startup Ladies often share surveys on our private Facebook page. Members want to help one another, so they fill out surveys and sometimes share them in their networks. Post your survey on all your social media platforms—especially LinkedIn—and ask friends to share.
When emailing the survey, provide a short note explaining the need to collect feedback for a new project that will focus on “X”. Include the link to the survey along with a due date. Don’t be afraid to email and post reminders.
Once the surveys are completed, look for trends. Anyone who provided additional constructive feedback is worth considering for an in-person interview. The data you collect will help you formulate more in-depth questions that can be used in focus groups and one-on-one conversations. Data will help you create the first version of the product or service and allow you to test out pricing.
Spending more time on the front end to understand prospective customers through surveys and interviews substantially increases the likelihood of consumer adoption at launch. Surveys lead to customer interviews. And several interviewees are likely to become your first customers. Sales is the best metric of market validation. Surveys and interviews are excellent fast and free methods to find your first customers.