Real-World Verification of Product-Market Fit

Most companies rely on creating “minimum viable products” and testing customer feedback or conducting focus groups or marketing surveys to test new products. There is another method companies should try: “heat testing,” or testing consumer response to online advertisements. Heat testing is revolutionary as it takes place in the real world. Unlike focus groups or surveys that rely on what consumers say, people who click or like an ad show genuine behavior and interest, which can be a stronger form of feedback.

Since the invention of surveys in the 1930s, companies have used market research to gauge consumer needs. Focus groups produce input on behavior and attitudes. Tools such as aggregate analysis explore the trade-offs consumers make when considering purchasing a product. Large panels predict the market opportunity for a particular product.

What do all these market research methods have in common?

None of them take place in a real-life setting. In any case, consumers are aware that they are part of a research effort. What does this mean for a product marketer? They get a wealth of data on how people behave. to identify their behavior and attitudes. What’s missing? data and insights about real behaviour.

There is an easily accessible way to solve this problem: online advertising as market research.

Responses to a digital ad – clicks, likes, email signups – are more reliable indicators of purchase intent because they reflect how consumers behave when no one is watching. Advertising testing gathers real-life data on how customers are responding to new product concepts, brand changes, and other big strategic moves. We call this type of research “temperature testing” – finding the spark between the offer and the target audience, which is the birth of product-market fit.

Here are three solutions heat testing offers to marketers:

1. Confirmation of demand for new product concepts

Let’s say you’re working on a new beverage concept: a soluble tablet in exotic flavors like elderflower and hibiscus that enhances a glass of water. The product offers sustainability benefits – no overpacking, no water transport – and the ingenious approach to flavors makes it feel a bit of a luxury. It’s also customizable: combining flavors creates a personalized mix.

There’s a question everyone wants to answer before launching a new product like this one: Will someone buy this thing?

Conventional market research has a number of shortcomings in answering this question: babbling in focus groups, key views, the large number of conditional questions in surveys (“would you buy if you ___?”), and ethnographies and the like are not conducive to the pace of innovation necessary to stay relevant.

Fortunately, ad platforms are amenable to multivariate testing, making it easy to quickly access data-driven insights. Platforms like Facebook, Instagram, Twitter, LinkedIn, and Google provide instant access to millions of consumers who can be segmented into separate audiences and targeted with multiple ads highlighting a new product. Some ads work, some don’t, and provide data on where to rearrange variables.

Test variables may include the description and features of a new product; the positioning, branding, messaging and creative style that brought it to life; target consumer groups and calls to action to attract them; and other factors, such as pricing, that make up elements of a marketing campaign.

When it comes to the beverage product, you can test out three locations (Sustainability, Luxury, and Personalized Party), each brought to life with a few ads. (A position’s success or failure should never be due to ad creative alone; using at least two creative approaches minimizes false positives.) And since your company wants to develop a younger client base, you can target three different audiences between the ages of 25-34. Name them Planet People, Holistic Hipsters, and Spirits-Free Spirits – with ads.

Just like in a regular marketing campaign, ads, landing pages and supporting content are combined into a consistent user experience. However, a few elements are not like a regular marketing campaign: a) presence of “under development” or “soon” to reflect the status of the product concept, b) lack of pre-existing customer data, and of course, c) multiple marketing strategies being tested in parallel .

How do you know if there is demand for your beverage concept? When a potential customer gives your company their email address for a product that doesn’t exist yet, you’re up to something. In an age where privacy is increasingly valued, email is the currency; a high rate of email registration is the best possible verification of the request without actually creating the product.

2. Finding new customers for an existing product

Heat testing can also identify growth opportunities for existing products. Repositioning an old product for new audiences is risky: New messages or images can alienate an existing customer base.

Testing new positioning with new audiences on a small scale determines product-market fit, giving brands the opportunity to unlock additional revenue streams without significant investment. Also on a small scale, additional testing of winning positions with core audiences can pinpoint the risks posed by new messaging.

3. Find out how the target audience reacts to offers

The purpose of heat testing is to find heat (the match between product and customer) and the marketing elements that will create that match. Heat testing is not A|B testing in environments where traffic already exists and users are automatically redirected to variations of available web pages to guarantee random sampling.

The testing strategy through heat testing is different. Because the product and/or audience is new, traffic to landing pages needs to be generated, often where a brand lacks an existing mechanism to attract leads.

Generating this traffic for new product concepts is not a chore, it’s an opportunity to learn. Will a “soulless” millennial audience respond more to the Personalized Party position or the Sustainability position? What combination of positioning, creative style, and audience works best to create records for each concept? How many people signed up to learn more after reaching the landing page? How much does each email registration cost and what can we infer about the customer acquisition cost? Does behavior vary by ad platform? Answering these big, important questions eliminates the risks of expensive new marketing initiatives.

. . .

Heat testing is revolutionary as it takes place in the real world. Every click on an ad is data. Every save or like is data. Every landing page view – yes, data. When you compare the performance of each campaign variable, you learn a lot about how to position a new product. Best of all, these learnings are statistically valid.

Our approach to innovation takes Eric Ries’ concept of the minimum viable product (MVP) to a whole new level. in his book plain startBased on real user feedback, Ries embraces the benefits of launching an MVP and improving post-launch product. The heat test means the MVP may be even more minimal than Ries imagined – meaning it’s not even a product but still something consumers can respond to.

Finding product-market fit through heat testing requires iterating over many variables, so sticking to scientific principles is essential for a valid conclusion. But gaining insights into purchasing decisions based on real-world behavioral data is well worth the effort. Final product? A ‘heatmap’ showing the most responsive audience segments and the most effective ways to engage with them.

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