Today we discuss how business model validation works, how talking to your customer is the foundation for validating a business model, and eventually finding product market fit and sustainable growth.
Table of Contents
What is business model validation?
Business model validation is the process of checking and confirming that your business idea or plan is viable and has the potential to be successful. It involves using validated learning to gather evidence and conduct experiments to learn about the key elements of a successful business model. Key elements such as what the exact problem is your target customer experiences, if your business contributes to resolving the pain from the experienced problem, if your target customers are willing to pay for your product or service, if your pricing is reasonable, and if your operations and resources can support your business goals.
Why customer feedback is so important
The first and by far most important method to learn more about your customer is talking to your customer. As soon as you have a business idea, you should start asking your potential customer questions. You can ask them questions about the problems they experience in their life regarding your product, and how they’ve tried to solve the problem. This information allows you to refine and iterate your business model to better align with customer expectations. Customer interviews and feedback also help you validate your assumptions, test hypotheses, and identify any gaps or opportunities in your business model. By actively listening to your customers, you can make informed decisions, improve your offerings, and increase customer satisfaction, which is essential for the success of your business.
How to rightly approach customer interviews
There are many ways to start talking to your customer. But when you just get started, and you haven’t actually built your product yet, it is important to understand the problem that your product solves very clearly. The next step is to approach people that you assume are experiencing that problem. Ask if they’re experiencing that problem, and how/if they currently try to solve it. Send them a message on LinkedIn for example, ask within Facebook groups, or maybe the problem is bounded to a physical location where you can ask people about it face-to-face. It is important to create an overview of the results of all the different interviews. Then try to figure out if you’re on the right path with your current product idea, or if you have to pivot. All your future decision-making around your product will be based on what your customer is experiencing, therefore this step can not be skipped. There are tools to help you with business model validation, toGroundControl.com for example helps you with the process of validating your business model by conducting experiments, step-by-step. But obviously, there are many more tools like it.
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