Product validation is an essential process of a successful launch. By conducting it, entrepreneurs can verify initial assumptions and assess real market demand for their idea. Although the phase is so important, it’s still often overlooked, and we continue to see a large proportion of new digital products failing.
As many as 95% of launches eventually disappear from the market. Why? CB Insights looked specifically at startups and found two main reasons for their failure: 38% ran out of cash or could not raise more capital when required, and 35% discovered there was no market need for their product after they had released it. The latter means many businesses struggle with product idea validation or skip this phase altogether, working solely on assumptions.
Why is product idea validation important? Because it helps inventors achieve product-market-channel fit by testing the initial hypothesis. If product-based businesses are to scale and grow, they must accumulate and sustain a genuine userbase that will use the tool regularly. If the new product doesn’t add unique value or solve real problems for real people, it’s doomed to fail.
As part of the product idea validation process, companies conduct extensive market and user research. The analysis is vital to building an understanding of real-world market conditions, clarifying the target audience, defining user needs and pain points, and checking whether the problem innovators want to solve actually exists. It’s all about making sure the right audience receives the right product through the right channels.
Meanwhile, businesses often rush straight into the development phase, convinced that their tool will truly disrupt the market. They fail to ask the necessary questions that could help them improve their product or adjust its features to true market needs before they start building it. As a result, many of them release full-fledged tools only to find out they have no users.
In this article, we have gathered the top criteria for product validation, basic frameworks for the process, and the best tips from experts from businesses such as Bolt, Shopify, Dwolla, and more.
Top criteria for product idea validation
To avoid product failure, innovators can check their ideas against specific validation criteria and frameworks designed to guide them through their product development journey. Board Of Innovation suggests these four criteria we describe below.
Many new launches fail as simply there’s no demand for them on the market. A successful product is a product people are actually buying. It should solve their problems and offer a unique value. To make sure an idea meets these requirements, it’s necessary to research the targeted audience and evaluate their willingness to spend money before the launch. Once you gather feedback, you can leverage collected data and check the real market demand for your product.
The questions below are useful when assessing a product’s desirability:
- Will this product solve real human problems?
- What is its unique value proposition, and is it truly unique?
- Will people buy it?
Businesses often discuss the risk of potential failure. However, inventors should also be prepared for astonishing success. Think of the scenario: a product is a perfect market fit, demand is rising… but a company doesn’t have enough resources or capacity to meet it. That’s why it’s important to prepare a scale and grow plan – this plan examines the action required to handle increasing popularity of the product.
To evaluate startup viability entrepreneurs can answer the following queries:
- Is the proposed business model scalable?
- Can we sustain the product in the long run?
The set of tools and technologies tailored precisely for the launch is a must. Unfortunately, the greatest product concepts remain only concepts if you can’t build them. Feasibility analysis with your team and, or external vendors provides a perspective on a company's technological and operational capability to achieve the demanded outcome.
Businesses can assess launch feasibility by examining solutions to matters like:
- Have we chosen the right, time-proof technology stack?
- Can we deliver this product from an operational perspective?
Great products should profit the company but should also benefit society. Integrity criteria provide a deeper understanding of the business in terms of social acceptance and its influence on the environment. Implementing company values in all decisions and giving back to the community plays a significant role in achieving genuine success.
To check a product’s integrity, entrepreneurs should consider inquiries as:
- Will this product have a positive impact on society and the environment?
- Does it respect the current working and living standards?
Innovators who can answer the above questions positively (and provide specific arguments to support them) have greater chances of driving their new product to market success.
Useful product idea validation frameworks
Apart from product validation criteria, businesses can also benefit from a number of tried and tested frameworks designed to guide them through the product validation process. These include Lean Startup, Customer Development, Design Thinking, and Google Design Sprints.
No matter which framework you opt for, we always advise you to first ideate on the solution to identify a specific hypothesis. Next, define the target audience and unique value proposition, evaluate risks, and test the hypothesis against the previous findings. Finally, experiment with the results.
Here are examples of validation frameworks:
- Lean Startup: Leans on detailed validation, results in building the right product from the start, and only requires adapting changes as needed.
- Customer Development: Focuses on a deeper understanding of customer pains, hypotheses are tested, and problems’ solutions are validated.
- Design Thinking: Based on multi-lane actions taken in a non-linear way, a team explores parts of the process and applies results agilely.
- Google Design Sprint: Involves a five-day sprint, and results in answers for the critical questions without building or launching a minimum viable product.
To learn more about the methodologies, head to our article about the frameworks for product idea validation.
Insights on product idea validation from the experts
How do the experts validate product ideas in practice? Specialists talk about the benefits and the difficulties of the validation phase, what to focus on when conducting the process, and how to adjust it to the individual needs. Here’s what ten professionals had to say about their approach to the product validation process.
Deciding on key features of a product
General understanding of what makes a successful validation process is a starting point. Then, it’s important to focus on more specific criteria applicable directly to your launch. For Daniel Thomason, during his time at Wise, the goal was for products to be “instant, transparent, convenient, free.” There’s also another key aspect to consider – the risk.
“The important thing is that we don’t fill our entire portfolio with those riskier bets.”
Product Manager at Google
Wise included startup projects only as a part of their services. This approach allows businesses to explore new ideas while simultaneously profiting from well-established products. (Source: “Building Efficient Fintech Products” interview)
Choosing the right type of product validation
There isn't one right way to run the validation phase. You can conduct the process in various ways. Krystian Bergmann, Senior Product Manager at Netguru, explains two types of process.
“In the validation process, I most often use two approaches. The first is a classic "double diamond" ... The second preferred approach is the lean startup approach.”
Senior Product Manager at Netguru
The classic process is based on multiple, cheap prototypes and “allows you to recognize the user's needs and focus in-depth on the values provided by the solution.” However, it requires extra resources (such as time) and creates waste.
The second type of validation relies on quick market assessment and “allows you to instantly verify the real business impact of the product and achieve the time to market.” Though assumptions are verified from the get-go, changes have to be implemented iteratively during the process.
To achieve the best results, it's a great idea to match the type of validation process adequately to each project dynamic.
Having a coherent plan with objectives
NASA also shares how they conduct the validation process, so let's look at the essence of the agency's complex procedures.
“There are five major steps in the validation process: (1) preparing to conduct validation, (2) conduct planned validation (perform validation), (3) analyze validation results, (4) prepare a validation report, and (5) capture the validation work products.”
The agency approaches the process with a clear framework of expected results. First aim is for a product to "fulfill its intended use when operated in its intended environment." Then, they consider a human aspect by checking the UX and UI design effectiveness, and also by ensuring safety of the product. At last, NASA makes sure that they solve all problems discovered during testing before they launch the final product. (Source: NASA System Engineering Handbook)
Making it inexpensive and straightforward
Martin Luenendonk, Co-founder of FounderJar, underlines that product validation can be both cheap and simple.
“To find your product-market fit, you have to answer three questions: Can it be built? ... Should it be built? Will people be able to use it?"
Co-founder of FounderJar
Then, the goal is to answer the above questions in the most efficient and inexpensive way. (Source: altexsoft article)
Evaluating existing market competition
Learning from others' mistakes is certainly safer – and more profitable – for inventors. According to Nimi Kular, researching existing market competition gives a bigger picture of the actual state of the market you want to join.
“One way to make sure there is a healthy market to sell to is to look closely at your direct competition. Find out what they are doing and how it compares to what you are planning to do.”
Senior Product Marketing Manager at Shopify
Answering questions such as “How long have others been in the service?” or “Are my competitors successful or have they experienced massive financial losses?” can give a rough insight into how far your product can get. (Source: Shopify article)
Making it (an interdisciplinary) team work
An excellent product validation requires insight from diverse specialists. By engaging multiple departments at the early stage of the process, businesses avoid the development of faulty ideas. Adrian Pica presents a journey a product has to go through at Bolt to actually be launched.
“The Product Manager has a discussion with the team and puts together a list of potential ideas. We all look at the merit of the ideas, the data, the potential uplift that a new feature might bring, and then speak with the engineering team.”
VP of Product Management at Bolt
However, although the company accepts the new product, it doesn’t go straight into the production phase. Instead, it makes its way to the company’s to-do list according to the priority. (Source: “How Successful Product Management Is Helping Bolt Scale” interview)
Checking the real value proposition
For Jim Semick, Founder of ProductPlan, a product is not about the features but its real value proposition. Meaning, what people are really gaining from it.
"By thoroughly understanding and documenting this qualitative value through customer interviews, you can set your product apart from the competition."
Founder of ProductPlan
We can measure the value in various categories, such as money savings or health benefits. Customer feedback is one way to check the product's real value proposition. (Source: ProductPlan article)
Focusing on problems over solutions
Although it may seem less exciting, shifting focus from problems over to the solutions is beneficial in the long run. Benjamin Schmitt, VP of the Product at Dwolla, explains that their team is highly oriented towards customers' pains. They gather customer validation information through interviews or support teams and then work with the gathered data.
How do they know which problems are a priority? Benjamin admits that’s the tricky part. Dwolla uses an internal tool to create rankings of problems. Afterwards, they align problems with themes, and after some discussions, they create the roadmap.
“Our roadmap is theme-driven, and then aligned with the theme, we'll look at what are the best bets we want to place.”
Vice President of Product at Dwolla
(Source: How Dwolla’s API is Changing the Way Businesses Manage Payments interview)
Judging the root of a problem
Customer feedback is crucial, but so is checking its accuracy, says Helen Björk. Customer pains can have many causes and solving them may be out of the company's reach.
"Because some of that feedback, especially around usability or product, might not be fixed, studies say there are many reasons why they're experiencing that problem"
Product Manager at Northmill Bank
Then, Northmill Bank combines users' opinions together with competitors’ approaches toward similar issues. As a result, they decide whether there’s any action they can take to solve the problem. (Source: How to Build a Bank That Solves Real Customer Problems? interview)
Experimenting with the tools
We can test each validation criteria with various sets of experiments, says Pedro Sousa, ex-Senior Product Manager at Netguru. Then, we can use the results of experiments individually but also treat them as the basis for further trials.
"Customer interviews are often the starting point, and in the format of those interviews you can use ‘The Mom Test’ framework."
ex-Senior Product Manager at Netguru
There are many options here: from solutions trees, through assumption mapping, and ending on learning cards. It's important to decide on the tools to provide efficient results in each validation category.
The right approach to product idea validation
All practitioners of product development realize the great importance of conducting the validation process, regardless of its complexity. We can perform the process in many ways. It can take the form of answering a few questions or be a five-day sprint – the key is not skipping the phase.
Problems over solutions approaches increase the chances of creating great products. Experts agree that entrepreneurs must research their audience instead of building products solely on their assumptions. Customer validation and a focus on users' pains plays a major role in product validation. It’s also crucial to research the existing market and competitors to see if there is still something to gain from the business you want to join.
Product validation is an essential element of creating an executable and sustainable business model that makes the most out of investors’ money and reduces the risk of failure. Make sure to validate ideas to make it to the 5% of successful launches.