The Observe, Sell & Deliver Framework to test your assumptions
There are three methods you can use to test your business model assumptions. They come in three categories: observing, selling, and delivering.
Observation is a great way if your industry, your customer segment, the pain points and problems within it are unknown. There are different ways that you can observe your customers and their problems. One is through a re-enactment of the problem they’re facing.
You can do this through interviews where you ask specific open-ended questions allowing you to explore their point of view. The sort of questions you want to be able to answer after the interview are:
How is it currently being done?
Where are they looking?
What problems are they facing?
How many people do they talk to?
How would they make the process better?
What don't they like about it?
If they had a magic wand, how would they solve the current issue or make their life better?
Being able to answer these questions shows good understanding of the observed the market.
Observing customers and their problems gives you a greater understanding of what is happening, what's working, and what isn’t. You need to really get to know what your customers do before they encounter the problem, during the problem and after they’ve experienced the problem. To really gain insight, you need to look to understand why rather than just what is happening.
The next method is the sell method. This really helps us understand whether we have got the right solution for our customers. It helps us see whether our customers are actively looking for a solution and if our messaging is correct. Here are a few different ways you can implement the sell method:
Crowdfunding campaigns/ platforms
So without having massive distribution networks or warehouses full of products we can see whether customers are interested in what we’re selling. Posters are a very traditional way of doing this. If you've recently been to a supermarket you might see little posters on community notice boards. For example, there might be piano lessons in your area and if you’re interested in lessons you can rip off little stickers with a contact number.
If I came back the next week, and not a single sticker had been taken, I can quite confidently assume that there wasn’t really interest in piano lessons. However, If I came back and all of them were gone there is most likely a huge interest for piano lessons.
A more modern method is through landing pages and fake ads. A fake ad can lead people to a coming soon page where they are prompted to leave their email addresses. You can now (using the metrics recorded by the ad) quickly gauge how many people have seen your post, how many people have clicked through to your website or landing page and how many people of those actually signed up. It allows you to measure whether you can cost-effectively reach your customers, and whether customers are interested in your value proposition.
In order to get confirmation of actual interest, you need to get something that is of value from the user (The sort of thing they wouldn’t just give out unless they were interested). This could be a small fee of $1, $2, $10 etc or it could be their email and contact details. You want to ask the user to give something valuable to you because it helps you filter out people who aren’t really interested in your idea. If you’re truly interested and likely to buy the product you would happily give up your contact details or a few bucks.
Now, if your solution is business to business you're probably wondering on how you can apply this method to that. A very great way you can do this is with a letter of intent. A letter of intent is often known as a gentleman's agreement between the two parties. It allows you to very quickly on one to two pages explain what you're going to offer for the customer or the company. If you deliver on what is on the letter of intent, the business is more likely to follow through with signing a contract. It’s a quick way to gauge interest from businesses.
This is one of my favorite methods. It allows you to help solve the problem or pain point that customers experience, but in a very minimal way. I often refer to it as the MacGyver method. Without building the actual solution you can quickly see whether you can actually solve customers' problems. By using a combination of emails, existing open source software, and existing solutions you can mix them together to deliver on your promise/ value proposition.
We can gather information from our earlier interviews and attempt to deliver the solution to our users. Using our own existing networks of students, friends, family and acquaintances we can see what skills they have and what we need to accomplish our solution.
Quite quickly we can play matchmaker between the two parties via phone and email. You can deliver the actual value proposition without a single line of code and no website.
These are three effective methods that you can use to test your business model quickly and efficiently. You don't have to write lots of lines of code, build websites, or put a lot of money into it. You can quite quickly do it with just a bit of manpower, persistence, and passion.
This is really the core and underlying fundamental for this testing method. Using it we can very quickly build and test whether by selling, observing, or delivering. We can put our ideas out into the market, and we can collect valuable data or customer insights based on facts rather than assumptions. By collecting this data we can then establish whether we're on the right track or whether we need to change tact.
There are three key ways you can be testing your assumptions. They don’t require a lot of money, but they do give you incredible insight into your customer and whether they are actually interested in what you have