I am starting an experiment using the principles of The Lean Startup to see if there is a business possibility around a product idea that I had. I’m not going to go into detail on the product because I don’t want traffic from this blog to affect my data, but the product is a natural version of a common item associated with sleeping.The product idea is just an idea at the moment – so far, I have invested zero money and very little time researching the physical development of the product (prototype creation, sourcing of raw materials, manufacturing, packaging, etc.). Before I make the investment in the physical development of the product, there are a number of hypotheses that I’d like to prove either right or wrong.
My first hypothesis is that people will pay money for a naturally produced version of the item in question, as the existing market only includes synthetic products.
A follow-up to the first hypothesis is that the demand mentioned above will come mostly from the inherent health benefits of using the natural version over the synthetic version, with some additional motivation coming from the environmental benefits of the natural version.
The little bit of research I have done on the development of the product has revealed that the natural version of the product would have to be replaced for a new one about once a month. My next hypothesis is that people will not only pay for the natural version of the product (as mentioned in Hypothesis #1) but they will pay for a new one every month in the form of a monthly subscription.
My last hypothesis for this learning cycle is that people will pay $25 for the product and will pay that each month (see Hypothesis #2).
Experiment A to prove or disprove hypotheses 1-3
In the spirit of Lean Startup, my goal is to get through the Build-Measure-Learn cycle for the above hypotheses as quickly as possible. I have spent approximately 3 days putting together a website that should prove or disprove the hypotheses. I want to see if people will actually pay $25 for the natural version of the product and subscribe to receive a new one (and pay) each month, so I am making that possible (in a very basic way) on the website.
The goal: I am going to use a free Google Adwords credit to send $100 worth of clicks to the site. I will move forward if I can get 2 people to actually pay for my product.
The risk: It should be noted that I might be making a bad mistake by grouping hypotheses 1 and 3 together in one experiment rather than approaching them one after the other. Grouping them together could lead to bad data. For example, if nobody ends up paying, I wouldn’t know for sure whether it was because they had no interest in the product itself or no interest in subscribing to monthly deliveries of the product. This is a calculated risk that I’m going to take, though, with the reward being speed in getting through this learning cycle if it ends up working. If the bad situation in the example looks like its starting to pan out, I will make a few tweaks to the website to test single purchases rather than subscriptions.
Tools I used for the experiment
My focus in putting together the site was on tools that are free/cheap and quick to implement:
- Domain name – $8
- Hosting account – $5/month
- Twitter Bootstrap theme from wrapbootstrap.com – $12 – Given my slow web design skills so far, this purchase made building the website a lot faster for me. I could have used WordPress and one of its free templates, but I wanted the practice of building a site from scratch.
- Google Adwords $100 Free Credit – Free – These are pretty common. Mine came with my hosting account purchase.
- Google Analytics – Free
- Google Docs – Free – I set up a quick customized form for a registration page. I will experiment removing this to see if it had an affect on conversions.
- Mailchimp – Free – Added an email newsletter sign-up on the site.
- Paypal – Free before payment fees – I created a Buy Now button using my personal PayPal account and added the code to the site.
I will follow up with a post on the progress of the experiment.