Validating Purchase Intention in 4 Easy Steps: The Smoke Test

Smoke Tests enable you to get all the answers you need at a fraction of the cost.

Let me guess: You’ve come up with a killer, game-changing concept, and you’re itching to get real-world market validation in a way that is quick, lean, and accurate.Good news. You’ve come to the right place.

If you’re a startup, incubator or intrapreneur, you don’t have the time it takes to build a product only to realize (months later) that nobody actually wants to buy it. The risk is just too big. You need to operate in a way that is cheap, quick and efficient.
That’s where Smoke Tests come in.

Whether you’re bringing a new product to the market, trying out a new idea or looking to unlock capital through concept validation —  Smoke Tests enable you to get all the answers you need at a fraction of the cost.

This practical and easy-to-use market validation technique differentiates itself from others because:

  • It puts a great deal of focus on actual “purchase intent”
  • There is a decreased risk of interviewer bias (e.g. assumptions made by the interviewer that can skew your data)
  • It provides a record of actual purchase intention, so there is less risk of recording data from respondents who don’t follow through when they express an intent to buy (e.g. in quantitative surveys).

This means that your end results will be more precise and reliable. And who doesn’t love a decreased margin of error?

What is Smoke Testing?

It’s a technique that enables you to gather real-world, purchase intent data on your product or service idea as if it was ready for launch.

You’ll have to create a website for your product or service, complete with images, product specs, and most importantly, a “buy” button. Consumer tracking tools will also play a key role, but we’ll get into that later on.  

The goal is to find out how many people will end up clicking the “buy” button, showing proof of their actual intent to buy your product. In the end, you’ll have the answer to a very important question: Will this concept make any money?

When is the Right Time for Market Validation?

It can sometimes be confusing to figure out the optimal time for your Smoke Test. But there are some concrete milestones you should have reached before you start:

  • Your concept is solid and you have a detailed outline of how to launch it
  • You’ve identified your target audience (e.g. people who are already paying for similar solutions)
  • You’ve researched the competition and found a unique selling proposition in your market space

How to Validate Market Demand in 4 Easy Steps

From a distance, it might seem like you’re about to climb Everest. But don’t fret: If you follow these 4 basic steps, you’re sure to get the market demand validation you need:

  1. Have a unique selling proposition
  2. Create a website that explains and sells your idea
  3. Set Up the right tracking tools for market validation
  4. Use digital marketing tools to attract potential clients to your website

Ready to take a more in-depth look at what it takes to achieve each step? Let’s do it!

Unique selling proposition

Step 1: Have A Unique Selling Proposition (USP)

A “unique selling proposition” or USP goes further than coming up with a great product or service idea. It refers to the exclusive added value your customer gets when buying your product.

Here are some tips to help you figure out if you have a strong USP:

  • You have empathized with your customer
  • You have identified a problem you want to solve
  • You have researched your competition
  • And you’ve found a proposition that is unique in your market space

In the end, your USP can basically serve as a tagline used to help make your product more memorable. Some good examples are:

  • MasterCard: There are some things money can’t buy. For everything else, there’s MasterCard
  • Youtube: Broadcast Yourself
  • BMW: The ultimate driving machine
  • Budweiser: The king of beers

Smoke test example: landing page for an ice cream toaster

Step 2: Create a Website That Explains and Sells Your Idea

In most cases, Smoke Test websites are built as a “prop” to help gather intelligence on buyer intent. You’re basically creating a space where you can track and study the behavior of your potential clients.

Don’t be daunted by this step just because you’ve never done it before. Creating a website these days is incredibly easy and can be free. There are a lot of drag-and-drop website builders that provide beautiful templates. Any of these platforms will do quite nicely:

In terms of content, here’s a list of essentials you can’t do without:    

  • A short but descriptive heading (use your USP!) with a striking image
  • 3 key benefits that explain the value of your product to the user
  • 3-4 special features (anything that makes your idea functional and unique)
  • Pricing
  • A form of credibility, convincing the visitor that the solution is both REAL and AUTHENTIC.
  • A CTA button e.g. buy now, shop now, book today, order now (they all work, depending on the type of product or service you’re pitching)

It’s also a good idea to upgrade your domain, instead of using free ones that are branded. Having a custom domain adds to the credibility of your website and most platforms have a pretty straight forward process. It only costs a few extra bucks and the return is well worth the extra cost.

Validate purchase intent through visitor recording

Step 3: Set Up Tracking Tools for Market Validation

Now that your website is ready, it’s time to start gathering some sweet data. But first things first: What exactly do you need to track?  

Here are 2 essential metrics you’ll need to focus on:

  • Number of website visits
  • Number of people who clicked on your CTA button

One of the easiest tools you can use for tracking is VWO insights. All you have to do is attach tracking codes to your CTA buttons and any other click-through options available on your website. There is also a 30-day free trial option, so you can try it out first before making a purchase.

If you need more detailed information on how to set up your tracking with VWO, click here.

Additional tools like VWO’s “heat maps” or Hotjar can be useful to help you track client behavior inside your website. These services help you track:

  • Where visitors place their mouse (e.g. indicating interesting features)
  • Scrolling behavior
  • Clicking (e.g. showing areas of interest)
  • Exit intent

If you want to get really serious about your results, you can even create 2 different versions of your website in order to perform A/B testing. The differentiating factors could be as simple as picking out 2 different headlines.

The idea here is to gather as much information as you can on conversion rates, buyer intent and which options are the most popular with your audience.

Smoke test example: advertisement for an ice cream toaster

Step 4: Generate Traffic for your Purchase Intention Research

Now that your website and tracking tools are set up and ready to go, it’s time to start generating some traffic.

Here are some useful pointers to get you started:

  • Study how other industry players advertise similar products and services
  • Find out who’s already paying money to use them
  • Put some thought into your key demographic (e.g. age, language and location)
  • Research the “high intent keywords” commonly used to find similar products or services

Knowing your audience will take you a long way in terms of creating effective ads that will generate traffic.

Now it’s time to set up your ads, and there’s a myriad of tools available to help you do it.

If it’s your first time doing a Smoke Test, I suggest you stick to these:

  • Google Adwords
  • Facebook ads
  • Drip campaigns (but don’t spam – make sure to use an email list)

Paid channels like Google and Facebook ads are great because they’re easy to set up and they allow you to work with your own budget.

Once you’re comfortable, you can even start running variations on existing ads and refine your copy and audience based on the results. The ads themselves can be a sort of dry-run to help you boost future marketing efforts.

One last thing: Keep in mind that you’ll need at least 1000 visitors for your results to be significant enough to base your learnings on.

How do You Analyze the Results of Your Smoke Test?

At this point, you might be wondering how you’re going to make sense of it all. How will you know your idea has the commercial viability it needs to go the distance?

The first thing you need to do is track your conversion rate which is:

North Star metric for smoke test

Once you have that part figured out, you just apply a simple cut-off rate:

  • Anything lower than 0,5% means the idea isn’t viable or still needs work
  • 0,5% or higher is a green light to take your idea to the next level!

If you do a little research, you probably notice that larger e-commerce stores consistently hit 2 to 3% conversion rates. But these stores have huge teams constantly optimizing their buyer experiences. A conversion rate of 0,5% on a landing page that was built by one person in a few days means there’s a LOT of untapped potential there.

High scores can be quite thrilling, but it’s important to remember that they’re not the end goal of a Smoke Test. The goal is actually to prove the commercial viability of your idea so that you can make some important decisions.

Final Thoughts on Smoke Testing

Smoke Tests won’t always pan out the way you expect them to, and sometimes you’ll have to iterate at various points in the process before reaching any meaningful results. It’s a trial and error technique that takes practice, creativity and a whole lot of patience.

It can be tempting to keep iterating and re-examining waning results but don’t fall into that trap. Stay unbiased, clear-headed and let the data guide your decision-making process.

You’ll either:

  • Move forward with a validated concept
  • Make some necessary adjustments before re-testing
  • Or cut your losses and move on to the next project

No matter how it turns out, you will have met your goal: To know if people will buy your product before investing time and resources into actually building it. In other words: you can’t really lose.

Would you like to test new growth opportunities, target audiences and value propositions faster and more productively than ever? We can help you go from manual, trial-and-error testing to cutting-edge, continuous validation.

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