How to test a new business idea for free (and fast!)
11 Aug 2011
For many entrepreneurs uncovering a new product, business model or innovation is one of the most exciting things about being in business. This excitement often leads to the over-commitment of resources, time and money on untested ideas. With the Internet, market research no longer needs to be expensive. The search engines are an incredible tool to help us identify trends, interests and profile new business ideas with ease.
Below I explain our simple four step process for testing new business ideas (for free!):
Step 1 - Setup a (free) web-page
The approach of making an offer to the consumer before it actually exists is sometimes called shadow testing or a "dry run". It is of course important to be upfront with your intentions here with potential customers that the product or service is still under development / not immediately available.
What to do - If you already have a website, create a new page on your site and add some text and content about your new product or service idea. If you don't have a website, you can setup a page easily for free yourself on wordpress.org, the free blogging service. If you new idea is based on a new product you already have available for sale, setup a page on ebay or etzy.com.
Your web-page doesn't have to be perfect as this is just a quick experiment - the approach here is to attract online visits and enquiries to gauge interest, feedback and insight into your concept. In shadow testing, some companies actually take advance orders on a product that does not yet exist, while letting the customer know that the product will be produced if X orders are achieved. Another approach is to request an email sign-up, indicating that you will provide notification and a discount on the product / service to the first X sign-ups.
Step 2 - Identify Keywords
In most cases a successful new product or service already has a market actively looking for a solution. As such, the search engines are a powerful market research tool. Google provide a free service that gives rough estimates of the number of google searches on a keyword / search term per month in Australia and globally:
Link - Free Google Keyword Tool
You can use this tool to identify keywords that receive a large number of searches and experiment with what keywords google users are searching for. Keep a list of high volume and relevant keywords for refinement in Step 3.
Step 3 - Adwords Test
Google Adwords is a pay per click advertising service, where ads appear above and to the right of search engine results. You can list your advert to appear on as many search terms (keywords) as you like. When a user clicks on your advert, they are taken to a web-page of your choice on your website. Google provide a free $75 voucher to businesses trying adwords for the first time. You can sign up for this voucher here:
Link - Google Adwords Voucher Sign-up
Setup your adverts to link to your test-page created in Step 1.
Some Tips: Depending on the competition for your selected keywords, you may need a larger budget than $75 in order to appear in the first 2 or 3 listings for all of your keywords. Ensure you select the relevant geography for your adverts, otherwise your advert impressions may be inflated by global searches.
Step 4 - Test & Measure
Sit back and monitor your adwords campaign over the following week (or month) to determine the number of visits to your test-page. Use adwords to see the keywords that are resulting in the most visits to your web-page. Most importantly, you may receive enquiries through email or phone via your test-page, which will give a good indication of the viability of your concept business and potentially identify your first customers. For the advanced tester - Setup Google analytics and adwords to measure conversions on your adwords keywords. Also see google analytic results on the average time on the web-page, this is often a good indication of interest levels.
Some Final Words
These simple steps can be used to gain some insight into a new business concept easily and with little cost in less than a week, particularly for online businesses. Once you have identified a successful niche, it is now time to invest additional time and resources into shaping and refining your concept.