In my earlier post this week, I described 2 ways you can use Google Adwords to test a new idea. In that post I talked about testing your positioning and how your new idea stacks up against the competition. Let me expand the concept further with 3 more aspects you can test.
Think about using Google Adwords to also test the following:
- Pricing -- Once you have the positioning refined, you can start testing pricing assumptions. Most entrepreneurs make a lot of assumptions about their pricing. Instead of assuming, do some high speed A|B testing and ONLY vary the price across multiple ads (keeping the refined positioning constant). For example use the positioning copy that you wrote and tested, then write several ads along with different pricing -- e.g., "Only $9.99/mo" "Only $4.99/mo" "Only $19.99/mo". Now look for pricing trends in the click through rates. You can also test different prices tied to different benefits to see if changing your positioning/benefits changes perceived value and what customers would be willing to pay.
- Demand -- Will you run the ads and have "no clicks" or close to no clicks? What will demand be like? How quickly will you run through your ad budget? This will help you understand if you have the positioning and pricing right, and tied to the right keywords. It will also help you understand if you have a viable idea.
- Cost of Customer Acquisition -- You'll learn a lot about how much you have to pay per click to get visitors to the landing page (they are NOT customers yet as they are not buying, just visiting). It's a start. It's not the total cost of customer acquisition (just SEM costs as of today) but if you can be clever and get people to the site for 5 cents, that's a lot different than if it costs you 50 cents or a $1.
Testing on Adwords is not perfect, but you'll usually learn a lot quickly and spend very little money. And, you can do it before a single line of code is written, a prototype of your product is built, or you have rolled out your new service. After Adwords testing is complete, it may be a good time to start speaking with potential customers.
If you give the Adwords testing approach a try, please join the conversation by reporting back in the comments section with your experiences and refinements. Enjoy!