Don’t Rely on any Evaluation Other than A Potential Licensee
I want to talk about how to evaluate your product idea.
I get this question all the time. People want to know: “Hey, do I have a good idea?” It’s something that I’ve spent a lot of time thinking about. Just the other day a bunch of really smart people showed me all the different ways to evaluate an idea using questionnaires, check-lists, and online evaluation tests. While these tools may help guide your thinking, they don’t show you if you have a GOOD idea. Can a check-list really evaluate whether you have a good idea or not? No! No one can do that: not your friend, not your family, and definitely not some online test. No online test will be able to determine whether a product has real-world significance.
The only way to know if your idea is great, or in this case marketable, is to show your idea to a company because that is the only opinion that matters. Most companies know their customers pretty darn well. They know enough about what works and what doesn’t and they will know if your product is likely to sell among their customers.
But at the end of the day, sometimes even companies get it wrong! It comes down to the consumer! It really does! I’ve seen a lot of ideas, including my own, that get licensed but when they are put on the shelves the customer doesn’t like them! I thought my product was a great idea, the company thought my product was a great idea, but at the end of the day the consumer didn’t purchase it. Here’s one example of a product of mine that didn’t sell well at retail. Oh well, can’t win ‘em all.
So, how can you know whether your product might be licensed and purchased? You can ask yourself a few simple questions. This is what I do, I keep it pretty basic. Here are four questions to ask yourself to help evaluate whether people will want your product.
- Can I describe my idea in one ‘juicy’ sentence? - Can I describe it in such a way that someone says “Hey, could you show me what that is?” or, “Hey, I want to know what that is!” or, “Hey, I want that!” and even, “Hey you solved that problem!” It’s important to be able to do this, so you need to practice. It needs to be emotional, you need to get them to jump out of their chair and say “Hey I want that!”
Steve Jobs had an excellent one-line benefit statement with his introduction to the iPod. He said, “How would you like a thousand songs in your pocket?” He didn’t explain what it was. He didn’t explain how it’s made. He didn’t talk about some of the features. The big benefit was right there in the statement! That was huge! That’s what you need to do: make sure your one line benefit statement is that strong.
- Can you do a quick demo? Can you show how it works? – This is very important. If your idea requires people to rethink how they do things, or you need to teach them how to do it, it is too complicated! If your idea needs an ad, forget it! It’ll cost too much money. If it’s too complicated, I’m walking away. Just like they say on Shark Tank, ‘I’m out!’
- Does your idea have a big market? - If you are going to license your idea to a big company they want to make sure they sell a lot of product! They want to make sure a lot of people want it! If the product only has a small number of people interested, companies won’t want to take on risk.
- Your idea needs to have a lot of potential licensees. - If you have one product and there are only three major companies that could manufacture or sell it, and they are super-big-mega companies (think Ford or Chevy)…I would go the other direction. Big companies tend not to innovate. They don’t do that. They wait until some smaller company innovates, then they go ahead and enter the market with some variation of it. They are market takers not market makers! Don’t go after those big companies. Make sure there are a lot of midsize companies that you could submit your idea to. This is so important that even before you make a prototype or sell sheet, you should determine how many companies are in your market space and see if they are innovation friendly!
Now, I have an additional fifth question for those who want even more detail. This step is not necessary right now, but eventually someone will need to do it.
- Is it manufacturable? How do you make it? – If you know how it could be manufactured, that information can be great. Having your idea drawn up and seen by a contract manufacturer can help determine a price point at which it could be sold.
Do you have to do this? No. I would rather the first four steps be completed before this one. The bottom line however is that this needs to get done, but not necessarily now or even by you. Most of the ideas I see people do not know if it can be made or not.
These are the questions I ask myself before examining an idea. Treat these questions like a checklist for a successful evaluation of your product. If people jump out of their seat when they hear your idea, it’s probably a good one. If you can show people how it works easily, it’s likely a great idea. And if the marketplace is wide and deep, then go for it!
Would you like to watch my YouTube video on this topic? Here it is: