Internet Business Part 5 – Market Testing

As part of your financing song-and-dance presentation, you had to present some market testing data. Every investor wants to know that there is a market for the product you propose before they invest.

A market is simply a group of people. It might be a group defined by gender, age, interest in a particular subject, or residence in a specific city.

Market testing is simply the process of finding out what the market wants and needs and how your product or service meets those wants or needs.

The first thing that pops into one’s mind when we think of market testing is probably focus groups or surveys. They imagine hitting the mall and randomly asking a group of people to try something and then tell them what they think.

While these methods can be useful when performed by an expert, they run a high risk of gathering data about what people want the surveyor to think about them rather than what they actually think about the product. There are advanced techniques to organize surveys and focus groups to avoid these problems, but it is important to hire a professional firm if you go this route.

A better route for Internet businesses is to test online. Are you trying to decide on whether your product should be red or blue? Put up a web-page with a picture of your red product and your blue product and make your visitor click the picture or caption under the picture to proceed to the next page. Be sure to have software that switches their left and right or top and bottom locations so that isn’t actually being measured instead. Then send some PPC traffic to the page as though the product already existed. You can review your logs to see how many preferred the red over the blue.

Try to never ask “what if” questions in surveys. Instead, ask “which” questions in an environment that feels like the prospect is actually on his way to ordering the product. That will always give you the best results.

Sometimes you will need to estimate the total size of your market. The demographics of Internet users in English-speaking countries is now just about the same as the demographics of the overall population. That means you can generally use industry market data from non-Internet sources and apply it to the Internet.

There is a great deal of resistance to change in some areas though. Several companies have attempted to start Internet grocery stores. That hasn’t worked very well. The idea seems very solid and everyone is part of the “grocery buying” market, but people are more comfortable hopping in the car and driving to the grocery store than they are in ordering on the Internet and having it delivered.

However, when you call it something else, it becomes very successful. Schwans has run a home delivery service for premium ice cream and an ever expanding line of gourmet food items since long before the Internet. Their Internet site is converting a whopping 50% of visitors into orders. Amazon also added a gourmet food line and has done very well. Their grocery section has suffered though. Simply the word “gourmet” vs. “grocery” makes all the difference even when we are talking about a block of cheese or some frozen pizza mini-bite snacks.

Your investors need to know that YOU know your market. So, by all means, get to know it by market testing. Don’t just ask your prospects what they want. Try to sell it to them and see what they actually buy (even if your site ends with a page saying “this product not yet available” right when you get to the checkout process).