One of my favorite tactics for validating new markets comes through bottoms up research because it gives a nice reality check on market demand.
A bottoms up assessment comes from talking to potential customers, truly listening to them, and partnering with them on what an ideal product or service would look like.
A bottoms-up approach involves trying to get as many meetings as possible with your potential future customers. For enterprise software, you will inevitably take meetings with individuals on the periphery of your target market, learn about them and their responsibilities, and then ask for introductions to individuals closer to your target users and buyers(i.e., part of this is graciously and patiently navigating your way to the people you would like to be talking with).
If you are in a startup, you often need to leverage your network and your network’s network to get as many meetings as possible with people who are close to your target users and buyers. If you are in an established business with existing customers, you can possibly shortcut this by hitting up your “friendly” customers and partnering with your Sales team to try to get in front of the right people.
Once you have people to talk with, ask them questions that show a sincere desire to learn about their existing processes and tools, what works well, where they have challenges, etc. You are there to listen and learn and to develop relationships with them. As you engage with them, also look for opportunities to ask objective, non-leading questions to help evaluate hypotheses you are trying to validate.
There are three surprisingly telling (albeit somewhat soft) metrics to pay attention to here:
Can you get meetings — People and companies with significant challenges are much more willing to meet than those who are not experiencing challenges, and they are typically greatly appreciative of the opportunity to be heard. If you can’t get meetings with potential future customers, this could be a sign that they do not see the value proposition in meeting with you.
Openness and collaboration — Again, if people have significant challenges that they want solved, they show a greater aptitude to be open, candid, and collaborative in working with you. Since some of the information you may want to learn may be close to home for those you are meeting with, people’s willingness to share that information with you is a great, soft metric to consider.
Levels of engagement — People usually respond with levels of engagement proportional to the size of the challenge they face (the need). If you encounter a lot of individuals who seem genuinely interested in what you are doing and who might even be willing to partner with you as you iterate on an ideal product or service, this is a win on multiple fronts.
This approach to validating markets is obviously only focusing on aspects of market demand, but its value is real feedback from the market (see my earlier post on market assessments for other important dimensions to consider). It does require a level of grit and perseverance as you can’t necessarily allow early opinions to dictate your views. You have to stay with it long enough to see real trends. That said, it has the benefit of building relationships that can often be leveraged in the development of products and services if you decide to move forward with the opportunity.
If you have any thoughts, please post a comment. I would love to hear from you and to hear any other thoughts or experiences in the area. And, if you are interested, feel free to check out my earlier post on a multi-dimensional framework for assessing markets.
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