Business Testing Guide with No Apparent Investigative Leads

Many of these theories have been killed off only when some decisive experiment exposed their incorrectness.... Thus the yeoman work in any science ... is done by the experimentalist, who must keep the theoreticians honest. —MICHIO KAKU, theoretical physicist and cocreator of String Field Theory, Hyperspace Bove: than 5% of the 195,000 books published each year sell more than 5,000 copies. Teams of publishers and editors with decades of combined experience fail more times than not. The founder of Border’s Books lost $375 million of investor funding with WebVan.2 a nationwide grocery delivery service. The problem? No one wanted it. The moral is that intuition and experience are poor predictors of which products and businesses will be profitable. Focus groups are equally misleading. Ask ten people if they would buy your product. Then tell those who said “yes” that you have ten units in your car and ask them to buy. The initial positive responses, given by people who want to be liked and aim to please, become polite refusals as soon as real money is at stake. To get an accurate indicator of commercial viability, don’t ask people if they would buy —ask them to buy. The response to the second is the only one that matters. The approach of the NR reflects this. Step Three: Micro-Test Your Products Mtcro testing involves using inexpensive advertisements to test consumer response to a product prior to manufacturing 22 In the pre-Internet era, this was done using small classified ads in newspapers or magazines that led prospects to call a prerecorded sales message. Prospects would leave their contact information, and based on the number of callers or response to a follow-up sales letter, the product would be abandoned or manufactured. In the Internet era, there are better tools that are both cheaper and faster. We’ll test the product ideas from the last chapter on Google Adwords—the largest and most sophisticated Pay-Per-Click (PPC) engine—in five days for $500 or less. PPC here refers to the highlighted search results that are listed above and to the right of normal search results on Google. Advertisers pay to have these ads displayed when people search for a certain term related to the advertisers’ product, such as “cognitive supplement,” and are charged a small fee from $.05 to over $1 each time someone clicks through to their site. For a good introduction to Google Adwords and PPC, visit www.google.com/onlinebusiness. For expanded examples of the following PPC strategies, visit www.fourhourblog.com and search “PPC.” The basic test process consists of three parts, each of which is covered in this chapter. Best: Look at the competition and create a more-compelling offer on a basic one-to-three-page website (one to three hours). Test: Test the offer using short Google Adwords advertising campaigns (three hours to set up and five days of passive observation). Divest or Invest: Cut losses with losers and manufacture the winner(s) for sales rollout. HOUSE_OVERSIGHT_013908