For a company that regularly develops or handles new products or services, seeks to enter new markets with their existing products services, or seeks new customers in a related different industries, carrying out market validation prior to launch sales activities can dramatically boost effectiveness, income, profit and rates of success.
A sales team that was carrying out a market validation for new industry was getting initial results that were all negative. The team leader was concerned, and asked me “Does this mean we have failed?” I am frequently asked this question by teams new to market validation.
The answer is of course no. A negative outcome in market validation is a good thing. If you can determine early that the market is not sufficient to justify entry, great!
When a company decides to launch a new product or service without validating the market, only to find out later that this was a mistake, think of what has been lost:
- Product development costs
- Marketing costs
- Sales costs
Consider the cost of lost opportunity as sales, marketing, management, and R&D staff capacity has been used on an endeavor that brings little or no return as opposed to focusing on products that would have. This is perhaps the greatest waste of all, and it occurs far too frequently in companies that do not habitually validate markets prior to development and/or sales activity.
Market validation is used as a basis to determine the best course of action for the company. Be cautious of managers who pressure teams to find an outcome they desire in order to pursue their own product agenda. This is never in the best interests of the company.
So, if you carry out a market validation exercise, and find out there is no market, good for you! You just saved your company millions in cost and lost opportunity! The faster you can reach an outcome, even if it is negative, the faster the business can move on to pursuing other opportunities.
Making a habit of this will result in dramatically increased rates of success and business growth.