How to Validate Your Marketing Ideas Without Breaking the Bank
September 17, 2018 / Share:
Be Our Guest is a new feature on the EC blog highlighting thought leadership from our community – advisors, entrepreneurs, members, and more. Today’s post is by Jordan Schneider. An entrepreneur and experienced digital marketer, Jordan is the Vice President of Marketing at DePalma Studios.
Want to meet with Jordan? Join the EC’s Advisor Program! Learn more about it here.
Early in my career I was lucky enough to land a management role in a fast-growing company.
From the time I started there when I was about 24 years old, to the time I left at 28, the company tripled in size.
Over that period, my team grew just as quickly. I went from one intern to a team of 10 full-time, direct reports.
It was one hell of an opportunity for someone early in their career, but it was not easy. In the beginning, I was completely outmatched by my responsibilities.
I knew I had to deliver results quickly. So I started doing two things:
Connecting with mentors who had experience in similar roles to mine
Reading a lot more books.
I didn’t have much room for error, and I was basically starting everything from scratch. So I knew I needed a way to rapidly test ideas with reliable results. I found myself reading a lot from the Stanford business professor, Jim Collins.
I would recommend any of his titles, but his book “Great by Choice” is particularly special to me. It was in this book that I found a repeatable approach to idea validation.
And it was a game-changer for me.
To Validate Ideas Fire Bullets, Then Cannonballs
In “Great By Choice,” Jim explains how companies innovate by describing how ships used to adjust their targeting in the days of cannon warfare.
When naval officers encountered a pirate ship, you probably think they immediately fired cannonballs.
But what if they missed? They only had so much gunpowder and only so many cannonballs. The difference between a hit and a miss could mean the difference between life and death.
So instead of firing a cannonball first, the crew would shoot bullets. Typically they would miss the first time, so they adjusted 10 degrees. If they missed again, they would adjust another 10 degrees.
And so on, until their bullets hit the hull of the other ship, and they heard a distinct “ping.” That’s when they loaded up the cannons.
I didn’t realize it then, but this small anecdote became the foundation of my approach to testing and validating ideas.
All Ideas Should Start as Bullets
The lesson is that validating your ideas — and making big breakthroughs — is a result of small, rapid testing.
Investing all of your resources into one cannonball shot lowers your chance of success. Plus if that shot misses, you’re probably dead in the water.
The idea that brilliant ideas strike us like a bolt of lightning is a lie. Innovation and creative breakthroughs most often happen through good ol scientific trial and error.
If you want to know if your idea is good or not, you need to fire a couple of bullets.
How I Started Validating Marketing Ideas
Flashback to 24-year-old me. After reading the Fire Bullets, Then Cannonballs concept, I immediately began applying it to my work as a digital marketing director.
Let’s face it, marketing is expensive, which is often hard for a business to deal with early on. So it’s critical that you make sure the investment is working for you.
In today’s environment, you must understand how to control your budget and measure your returns.
Otherwise, you’ll be reliving this John Wanamaker quote,
“Half the money I spend on advertising is wasted; the trouble is, I don’t know which half!”
I have to say, in my experience this quote is used as more of an excuse than a portrayal of reality. In the beginning, you should be focusing all your energy on establishing your revenue marketing channels. Those are the foundation for your growth.
But finding these channels is very difficult. And I know from personal experience how costly investing in the wrong channels can be.
Thankfully, everything began to turn around when I started firing bullets to test my ideas.
I realized that marketing requires a scientific approach, and I started creating hypotheses based on the evidence available to me. Then I started experimenting.
I dedicated as little budget as possible to achieve a reliable outcome from each experiment. This way, I was able to use rough math to calculate how much I needed to spend to get a statistically significant result from each channel.
The “ping” Jim Collins mentions will not occur right away. I was wrong about a lot of my ideas. But I realized it’s impossible to consistently forecast what’s going to work without testing it first.
So I stayed patient, kept going, controlled my costs, and before I knew it, I had several channels that started to show returns.
Once I had a winner, I invested as much as I could justify into that channel. I fired the cannons. Then I watched as the channel delivered the returns I’d worked so hard to find.
If it sounds like a lot of effort, that’s because it is. But in the end, the investment will be worth it. You’ll have found a lifeline for your business.
This is the art of Firing Bullets Then Cannonballs. It has helped me validate countless marketing ideas of my career. And it can help you too.
How to Start Testing Your Ideas
Alright, so I’ve explained the concept. Now it’s your turn.
Here’s the first few steps you can take to validate your startup idea right now. Start with these questions:
Which channels do you believe you can reach your target audience with your offer?
What is the smallest number of people you need to come through this channel to reach a statistically significant result?
How much will that cost you?
How do you expect that sample to convert into new customers?
What is an average deal size for your product or service?
Do the economics work out to a 10x rate of return on your spend?
Let me run through a fictional example, to help demonstrate what the heck I’m saying.
Let’s pretend I’ve started a dietary supplement company, and I want to establish my first marketing channel.
Let’s say my core product is a multivitamin. I think Adwords is a good place to start, because people are probably going to use Google to find a multivitamin.
Through my research I find that there are about 18k searches/month for the term “best multivitamin”, and the suggested bid for ad is $0.65 / click (this is technically the “low range”, but let’s keep pretending).
Since the cost is pretty low, I think I’d like to drive a sample of 150 people to the page. That should only cost me about $100. I believe my landing page will convert at 10%, but I decide to be conservative and say 5%.
That means I should be able to convert about 7 new customers with $100.00 in spend. My average deal size (because people typically repurchase) is $100. So if my math is correct, I should be able to make $700 by spending $100. So a 7x return.
Looks promising to me. Let’s fire a bullet and see what happens.
I find this approach to be especially valuable for startups. Think about taking this data into an investment meeting.
You’ll have proof of a channel that provides you with an average of 8-10x return on your spend, and you’ll be able to name several ideas you have to optimize that campaign and increase the return.
Trust me, you’re going to have a significantly easier conversation ahead of you with that kind of knowledge.
Today I’m at a new company, DePalma Studios. We’re a UX Design Firm based in downtown Nashville, so we’re in a relatively competitive space.
By applying these principles I outlined in this post, we’ve double in size over the past 12 months. And we have plenty more growth already in the pipeline.
I realize a lot of this is easier said than done. So please, comment on this post to let me know what’s stopping you from pursuing this now. I’d love to help you figure it out!