In today’s Basic Bananas TV episode we are talking to dear friend Sean Malarkey about product validation at his place in Santa Barbara.

You might have a fantastic new product idea for your business, but are people going to buy it? Before you spend thousands and thousands of dollars on developing your product, find out whether your market would pay for it!

In this short video clip Sean shares two great case studies to give you some simple ideas:

1:17 Great strategy to test a new product idea
1:50 The profitability test
2:13 Australian Chai Tea strategy
3:10 Tea business turned into a $500k/year business

So please make sure you test the market first and do it fast so you can move on to marketing your new product as fast as possible.

Sean has also got a great podcast called MoneyPillow, check it out here: http://www.themoneypillow.com/

As always please feel free to share this video if you know someone who can benefit from this tip!

 

Christo Hall: Hi there guys. Welcome back. I‘m here with a very special guest today, a good friend over here in Santa Barbara. Mr Sean Malarkey is a very successful entrepreneur and a smart guy and an all-round good bloke. So he‘s going to share a tip with us today on product validation. Is that right?

Sean Malarkey: That‘s right. I‘m actually going to share two examples. I have a podcast called The Money Pillow that I‘ve been interviewing great entrepreneurs, I‘ve heard just some amazing ideas on how they validate their products. I thought I‘d share a couple with you.

The first one came from a gentleman named Daniel Vatello who sells a repair kit for when you drop your iPhone or cell phone in the water. He can, with this repair kit, 90% of the phones, he can bring them back to life. To validate this product and to validate this price point and make sure he had something he could sell, he spent a couple hours building a fake website that had a Buy Now button that when you click the Buy Now button it went to a page that said, “I‘m sorry. We‘re sold out, but check back. We‘ll have some more in stock soon.”

Then he went to Google, ran advertisements to that page for people typing in, “Repairing my damaged iPhone,” and then measured how many people clicked on the ads, went to his page and clicked the Buy Now button. And after two or three days of running ads he determined that based on the cost he was spending for the traffic to come to it and the people that were converting, clicking the Buy Now button, that he had something that he should actually go and manufacture and produce because it could be profitable.

Christo Hall: Awesome. Very smart.

Sean Malarkey: I thought it was incredibly smart. It cost him $200 to $300, and that‘s turned into a several hundred thousand dollar a year business.

Christo Hall: Yeah, before ever producing the thing.

Sean Malarkey: Yeah, actually I had another example that comes from Australia. This particular individual is an Australian, she‘s sells a Chai tea. Her name is escaping me at the moment, I feel so bad not remembering it… Anyway, maybe I‘ll remember it in a minute. She, to validated her idea rented a booth at the market; I think it was Brisbane or Melbourne you have the markets that operate on a Saturday or Sunday. And she rented a booth and wanted to know if her tea was any good. She thought she had made this amazing Chai tea. So she wanted to know if people would be willing to buy it.

So she set up a booth and started selling it. Her first day cleared I think $300 in sales from that, with about $150 in cost in a few hours. But more importantly, the feedback she got was that her tea was amazing and people were hooked. That business has now turned into close to half a million dollar a year tea business. I think it‘s the number one Chai tea business in all of Australia.

So just another cheap way; I think it cost her $50 for the booth at the market and maybe $100 on a Saturday, she had a fulltime job at that time. So she rented this booth on a Saturday, and over the course of about eight more weeks and doing this over and over again and expanding to a couple more markets, getting feedback, she realized that she had a business she could run with and quit her corporate job. Her name was Anthia Cahill. She‘s turned that into a half a million dollar a year business that operates basically two or three days a week, and now has a wholesale site.

Christo Hall: Very cool. There we go, a couple of great tips. I think setting up the website, just to test it, what an awesome insight.

Sean Malarkey: Yeah, both of those I thought were great ideas. People get ideas for businesses all the time or they have businesses and they‘re just not sure if they‘re viable ideas, and they use these quick little easy, cheap ways to validate their idea and have created multiple six figure businesses.

Christo Hall: Right, rather than going out and spending their lifesavings before they‘ve ever tested the market.

Sean Malarkey: Yeah, because the spray idea involved getting manufacturing done in China, which required putting several thousand dollars down to manufacture what he was selling. And the tea woman didn‘t want to quit her job, but she thought she had something.

Christo Hall: Test the market first. Very cool.

Sean Malarkey: Yeah.

Christo Hall: Genius. Couple of golden tips there. So thank you very much.


Christo Hall:  Hi there guys. Welcome back. I‘m here with a very special guest today, a good friend over here in Santa Barbara. Mr Sean Malarkey is a very successful entrepreneur and a smart guy and an all-round good bloke. So he‘s going to share a tip with us today on product validation. Is that right?

Sean Malarkey:  That‘s right. I‘m actually going to share two examples. I have a podcast called The Money Pillow that I‘ve been interviewing great entrepreneurs, I‘ve heard just some amazing ideas on how they validate their products. I thought I‘d share a couple with you.

The first one came from a gentleman named Daniel Vatello who sells a repair kit for when you drop your iPhone or cell phone in the water. He can, with this repair kit, 90% of the phones, he can bring them back to life. To validate this product and to validate this price point and make sure he had something he could sell, he spent a couple hours building a fake website that had a Buy Now button that when you click the Buy Now button it went to a page that said, “I‘m sorry. We‘re sold out, but check back. We‘ll have some more in stock soon.”

Then he went to Google, ran advertisements to that page for people typing in, “Repairing my damaged iPhone,” and then measured how many people clicked on the ads, went to his page and clicked the Buy Now button. And after two or three days of running ads he determined that based on the cost he was spending for the traffic to come to it and the people that were converting, clicking the Buy Now button, that he had something that he should actually go and manufacture and produce because it could be profitable.

Christo Hall:  Awesome. Very smart.

Sean Malarkey:  I thought it was incredibly smart. It cost him $200 to $300, and that‘s turned into a several hundred thousand dollar a year business.

Christo Hall:  Yeah, before ever producing the thing.

Sean Malarkey:  Yeah, actually I had another example that comes from Australia. This particular individual is an Australian, she‘s sells a Chai tea. Her name is escaping me at the moment, I feel so bad not remembering it… Anyway, maybe I‘ll remember it in a minute. She, to validated her idea rented a booth at the market; I think it was Brisbane or Melbourne you have the markets that operate on a Saturday or Sunday. And she rented a booth and wanted to know if her tea was any good. She thought she had made this amazing Chai tea. So she wanted to know if people would be willing to buy it.

So she set up a booth and started selling it. Her first day cleared I think $300 in sales from that, with about $150 in cost in a few hours. But more importantly, the feedback she got was that her tea was amazing and people were hooked. That business has now turned into close to half a million dollar a year tea business. I think it‘s the number one Chai tea business in all of Australia.

So just another cheap way; I think it cost her $50 for the booth at the market and maybe $100 on a Saturday, she had a fulltime job at that time. So she rented this booth on a Saturday, and over the course of about eight more weeks and doing this over and over again and expanding to a couple more markets, getting feedback, she realized that she had a business she could run with and quit her corporate job. Her name was Anthia Cahill. She‘s turned that into a half a million dollar a year business that operates basically two or three days a week, and now has a wholesale site.

Christo Hall:  Very cool. There we go, a couple of great tips. I think setting up the website, just to test it, what an awesome insight.

Sean Malarkey:  Yeah, both of those I thought were great ideas. People get ideas for businesses all the time or they have businesses and they‘re just not sure if they‘re viable ideas, and they use these quick little easy, cheap ways to validate their idea and have created multiple six figure businesses.

Christo Hall:  Right, rather than going out and spending their lifesavings before they‘ve ever tested the market.

Sean Malarkey:  Yeah, because the spray idea involved getting manufacturing done in China, which required putting several thousand dollars down to manufacture what he was selling. And the tea woman didn‘t want to quit her job, but she thought she had something.

Christo Hall:  Test the market first. Very cool.

Sean Malarkey:  Yeah.

Christo Hall:  Genius. Couple of golden tips there. So thank you very much.