It is not glamorous or cool, and involves the potential for kick-in-the-teeth rejection.
Many are mourning the decline of print media (evidenced in the recent announcement of BusinessWeek’s sale for a pittance to Bloomberg), but the upside of the online world is that if you search carefully you will find gems of knowledge such as Understanding Markets by Rob Adams, featured by Inc. Magazine.
In his latest article, Adams talks about 100 Phone Calls, a principle I’ve heard him address multiple times in conference sessions and private discussions. The idea is simple, but very difficult to do, simply because it requires work, is not glamorous or cool, and involves the potential for kick-in-the-teeth rejection. Now who would eagerly jump into that? Entrepreneurs who are serious contenders.
To find out if there is a market that is large enough to sustain a new line of business, you need to make 100 phone calls.
To your target audience.
The usual reaction here is Whoa! What!? Where am I going to get those names? How will I get them to talk to me? What if they don’t want what I’m selling?
That’s it! That’s exactly what you do want to know; and know it now before you spend too much capital designing and building the wrong product.
So where are you going to get these 100 names? The exact same place you’re going to get them when you’re ready to unveil your product. You need to know today who your customers are going to be, how much your cost of acquisition per account will be, and how many potential customers exist. You not only need to know how many names you can get your hands on, but you need to know how productive your leads will prove to be from a marketing-response standpoint. If you’re going to sell through telemarketing, for example, interviewing 100 potential customers will give you a good indication of what your future sales forecast should be.
Read more to understand Adam’s reasoning. I can tell you he speaks from experience and has helped multiple successful entrepreneurs put this principle into practice (and has helped others avoid certain failure).
Adams is an author, an active investor, and is director of the prestigious Moot Corp competition at the McCombs School. He is currently working on an ambitious plan to leverage the entrepreneurial resources of The University of Texas at Austin to increase new venture startups and provide additional real-world experience for students.