I’ve seen the rise and fall of over 50 startups first hand. If I had to choose one reason behind the success or failure of those startups it would be market need. But here’s the deal with market need, it’s tricky.
A need for a solution in the marketplace doesn’t always mean opportunity because most problems are bearable.
How to know if a problem is bearable or need an imminent solution is what I want to share with you today.
In what I called, the ultimate guide to building an audience and preselling products and services, I ask one key question:
How likely are you to build a product if 100 people pre-paid for your idea before you built?
Rule of thumb: people wouldn’t mind committing to your upcoming product or service if the value proposition will clearly solve big problems and address urgent needs.
In the guide, I show you how to forget about building the product, finding investors, co-founders or any resources you believe you need to get started, and instead, focus on proving the need for your idea through presales.
- Kale Panoho about the steps he followed to presell over $200,000 in annual gym memberships before securing a location or buying a single workout equipment.
- Christopher Gimmer how he generated over $2,000 the week he launched Snappa.
- Paul Towers about the experiment he ran to validate the concept of Task Pigeon before writing a single line of code.
- Tom Morkes how he presold $41,000 worth of services with just an idea and a promise.
Before you go and check all of those interviews, in this post, I will summarize the steps you need to take to validate your idea and presell it before investing a single dollar.
Define your value proposition
Put your idea on paper in one sentence using this format:
For (target customers) who are dissatisfied with (the current alternative), our product provides (solution X) unlike (the competition).
This is the idea (hypothesis) that you want to test in the next stage.
Build the presale audience
While it may seem convenient to put a landing/coming soon page up with a sign-up box, in our competitive environment with many similar products and services, rarely will people trust and buy from you without an extra effort from your part. This extra effort is what I hope you get out of this post.
I spent so much time raising funds for my first startup that I neglected the simplest things I could have done to build value. Out of all of the companies I started and was involved in starting over the years, it is my first venture that taught me the most. Through this first startup, I rewarded users for their eco-friendly actions.
Let me break down how my execution changed over time in the first year.
- List and reach out to potential investors from university alumni, club members (I played tennis), acquaintances, and referrals.
Outcome: I met with close to a hundred potential investor within 5 months. 10 of them were interested but wouldn’t invest until I show progress. My answer, how will I make progress without funding? I didn’t know what’s possible.
- Create and promote a landing page to attract early adopters.
Outcome: close to a hundred joined but when I reached out, only 5 answered and agreed to have a call.
- Get out and attend every environmental event and meet every recycling facility in the region.
Outcome: over 500 people signed up but more importantly, I built relationships that turned out to be key to the next stage.
- Presell “featured” spots in the web app to highlight premium key stakeholders like recycling facilities.
Outcome: surprisingly, people bought. I sold 10 featured spots at $200 each/month without a web or mobile app.
- It’s your responsibility to go out and meet each potential presale buyer, on and offline.
- Forget about the product, first, find a way to simulate the solution without it.
- To presell a product or a service, you need to build relationships. A landing page with a signup box doesn’t cut it, it’s certainly not enough.
Make the presale offer
The closer your offer is to the price of the product, the better. In other words, incentivizing buyers with a discount is encouraged but you want to make sure they’re not just buying because of the 30 or 50% off or first few months off. If so, this can help you boost sales today but hurt you in the future.
Depending on your product, there are many channels you can leverage to offer the product for presale. Kale Panoho gathered his potential buyers at the location of where he hoped the gym to be at. When people saw he was serious about starting and had taken the time to negotiate a deal with the owner to lease the place, they were more likely to commit even though the gym was empty.
I drove to every single potential buyer and sold them the premium plan face to face, one manager at a time. Tom Morkes used webinars and emails while Paul Towers and Chris Grimmer focused exclusively on email.
As a rule of thumb, the more expensive and the more unique your product or service is, the more personalized your presale approach should be.
This was a quick summary of the guide that you can access here. Post your comments below. I’d love to hear your thoughts, stories and questions.