Your research has uncovered a market problem that your company may be able to solve. Congratulations! It’s worth celebrating, but keep in mind that your work is about 30% done. Just like you wouldn’t run off and marry someone you just met, your decision to move ahead with committing company resources to this particular problem must be based on more than just recognizing its existence. You must see if there is a fit – a true opportunity for your company to make money – validation that this market problem is a keeper.
Identifying a market problem is essential, but not sufficient. You and your team need to confirm that:
- Your company is in a good position to deliver a solution to the problem
- You solve problems for a large potential market and they’re willing to invest in a solution
- The customer is not satisfied with options currently available
This is what we call the “market problem success triad” – the 3 ingredients that must be in place to conclude that you’re on to something with real potential for your company.
Market Validation Success Triad
You might be a little deflated to realize how much is left to do, but keep in mind that this is difficult stuff. Per a 2016 Pragmatic Marketing survey, 40% of product managers surveyed said they have a hard time adding innovative features. What makes it so hard? Well, none of it is easy, but validation is definitely challenging, involving both qualitative and quantitative analysis.
To improve your chances of success, here are 3 things no one tells you about market validation:
1) Avoid Market Problems when numerous players are already established
It’s one thing if you have an existing product that addresses the market problem. You may need to look around at what competitors are offering to make sure you match up well and are inspiring your current customers to be loyal. If, on the other hand, this exercise would truly lead your company to pursue a new problem, it’s critical that you take a hard look at what companies or other solutions are already there. Referring back to the success triad, the customer needs to be dissatisfied with the options currently available – and you should be confident that a bunch of competitors aren’t already serving or entering the same space.
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An Insight into the Problem with Finding Market Problems
2) Minimize Market Problems that only lead to “Me Too” capabilities
Just like a good investment portfolio your market problem backlog should be balanced. The obvious problems we capture from existing users or customer success are always with us. These items must be mixed with a) market problems that, once vetted, will give you compelling functionality vis-a-vis your competitors, and b) a few market problems that have the potential to be game changers for a specific product and beyond.
3) Pursue opportunities with the highest importance and lowest satisfaction and when players are not established
As we have mentioned, validation is both a qualitative and a quantitative exercise. To confirm the potential win for your company, you’ll want to verify that the target customers feel strongly about the bottom two circles in the Venn diagram – that the problem is important to solve, and the currently-available solutions are failing to satisfy them.
Essentially, you're looking for uncharted territory, a valuable win for the customer if their problem gets solved, and lastly, confidence that your company is in a good position to deliver. When you score a market problem high in all three of those areas, you’ve got a strong argument to make to management and the potential for a winning product. If your research doesn’t confirm those factors, that’s okay. Move on to identifying the next market problem. Deciding what problems not to solve is just as valuable as identifying the ones that are worth pursuing.
Problem with Finding and Validating Market Problems
Watch Michael Smart, Founder and Managing Principal of Egress Solutions, address the challenges of finding and validating market data in the webinar hosted by Pragmatic Marketing.