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Launching a new product without market validation is a gamble. This guide walks you through a proven 3-phase approach to test desirability, viability, and feasibility—before investing heavily. Learn how to reduce risk, engage real customers early, and build a solid business case to support confident go-to-market decisions.
As a venture builder we know from several companies that launching a product or service without proper validation can lead to costly missteps. Commercial validation helps businesses to better understand whether their offerings are viable, desired, and financially sustainable before launching them. By doing commercial validation for new offerings early on, companies can get an early reality check for their product and are able to derive data-driven decisions which could lead to a go or an early stop, depending on the feedback of the market.
But how should you do a commercial validation, and how can businesses leverage it effectively? In this guide, we'll explore the significance of commercial validation, our approach in short, and how to apply it step-by-step to optimize your decision-making.
The starting point of a commercial validation is mostly triggered by disruptions in the business model of a company such as:
Each of these starting points require certainty and security when approaching the market. Commercial validation is helping companies to gain valuable insights before market entry. Here is why:
For the next chapters we will focus on the first named disruption in our list, when companies want to launch a new offering as this happens to be the main commercial validation trigger in our venture building projects.
From our experience, a commercial validation can be structured in 3 sprint phases to ensure a rapid and focused approach. Breaking down the phases into concrete working packages could look like this:
In this phase we want to ensure that we understand the environment we will operate in with the new offering and create a robust base for reaching the right target audience.
First, we start with a thorough market analysis and value chain analysis. We learned that conducting expert interviews in the early stage helps us learn quickly about the current dynamics both in the internal and external spheres and reduce uncertainty. During the first research phase we also map the most important competitors and get an understanding of similar offerings to sharpen our potential solution with the focus on the most important aspects such as:
Next, we need to dive into a target group analysis in this stage to get a better understanding of who the offering is for. In this regard, we also want to understand the distribution channel for the MVP and decide if we want to sell our product B2C, B2B, B2B2C or B2G. As some companies are launching new offerings the question arises if the product should be on brand and be validated as part of the parent company or if it should be introduced as a standalone solution with a whole new branding and clear differentiation from the parent company.
What guides us through this phase is a hypothesis board which is drafted upon the assumptions we define, categorize and prioritize them along the business model canvas fields according to a risk score. Two dimensions which we recommend using to rank the hypotheses and derive the risk scores are the “possibility that you are wrong (1=low; 5=high)” as well as the “impact on Business Model if you are wrong (1=low; 5=high)”. The top ranked hypotheses will reveal the riskiest assumptions which will be tested through experiments in the next step. By systematically validating or falsifying our hypotheses during the process, we can refine them during the validation and finally create a solid foundation for informed strategic decisions.
Next, we will define the buying center, which describes all personas involved in the purchase of a product or service in an organization and is used to structure our sales and marketing activities later. The buying center typically includes the following roles:
Sometimes, one persona in the buying center has multiple roles. Once the buying center is set up, we can move on to visually mapping the buying journey on the canvas by drawing customer touchpoints across the key phases—Awareness, Consideration, and Conversion—and specifying the related sales and marketing activities for each stage. The estimated duration of each phase is essential for a comprehensive understanding of the sales cycle and for planning the validation project.
Now that we have a clear understanding of the market dynamics, the potential offering for the right group as well as the buying center to understand who to approach, it is time to build the very first sales engine for our offering.
The components for the sales approach depends heavily on the product or service you want to validate. The operational checklist before starting the next phase might include the following parts you might want to set up before reaching out to the targets:
At the end of this phase, we have a setup to move into the next phase in which the outreach and sales activities will be done to test the offering.
After establishing a solid foundation in Phase 1, this phase focuses on generating leads and testing the market attractiveness of our new offering. It is crucial to engage in real customer and partner conversations to gain a comprehensive understanding of their needs, expectations, and the willingness to pay.
A systematic lead generation approach is essential for attracting initial interest in our offering. We employ various strategies, including:
The goal is to get to first sales calls to get real market feedback. We recommend using visualizations (sales deck, screens, etc.) in the meeting as it helps the potential customers to really get a better feeling of the offering and therefore validate the desirability accordingly. Even if we enter sales calls, we still have to stay open-minded and focus also on the valuable feedback we get. Based on initial customer interactions, we can refine our use cases and unique selling propositions (USPs) and adjust the value proposition based on the feedback.
Not all leads are equal. Therefore, we recommend prioritizing the leads according to their potential (revenue, size, etc.) as well as based on engagement levels and interest (“Hot," "Warm”, and "Cold"). In fact, a sales funnel optimization with clear structured steps from initial contact to closing deals will help us to efficiently allocate our sales resources. A CRM system will help as well to track interactions and manage follow-ups systematically. Depending on the number of leads you are planning to generate, a well-structured Excel file might also be lean and sufficient in the first step.
To prove the technical feasibility and smooth integration into customers’ processes, we conduct technical follow-up calls with prospects to address detailed product inquiries, resolve concerns, highlight benefits, and define the next steps.
Based on market reactions and early negotiations, we can refine our pricing model. By using A/B testing of pricing models we will identify the most acceptable approach. We might also test some pilot discounts & promotional offers to facilitate market entry.
At the end of Phase 2, we analyze the collected data and adjust our strategy for the final validation phase:
This stage also involves closing negotiations and securing commitments through Letters of Intent (LOIs), reinforcing the confidence of stakeholders and potential investors.
By the end of this phase, we have a strong foundation to decide whether our product or service has high market desirability and what final refinements are required before moving into Phase 3.
In the final phase of commercial validation, we analyze the outcomes from Phase 2 and develop a comprehensive go or no-go decision depending on the validation results.
With a clearer understanding of customer demand and market viability, we refine the business model and build a comprehensive business case. This includes:
Simultaneously, we revisit our key hypotheses, assessing which assumptions held true and which were falsified. This step is essential for reducing uncertainty before the final steps of the commercial validation.
Additionally, we assess potential go-to-market implications. In case of a potential go-decision, we outline next steps for full-scale commercialization, including:
This will also show us the necessary resources and investment needed from the relevant stakeholders.
By the end of this phase, we have a clear roadmap for whether to proceed with commercialization, refine the approach, or discontinue the project.
Interpreting commercial validation results is key to making informed go/no-go decisions. We assess the success of our validation based on:
If the commercial validation confirms our assumptions and shows a great product-market fit as well as a high profit potential in the business case, we can move on to preparing a comprehensive go-to-market strategy. This includes finalizing branding elements such as the name, messaging, and positioning to ensure a compelling presence in the market. The marketing and sales strategy is then tailored to drive acquisition, retention, and overall growth, while a partnership strategy is developed to secure strategic alliances that enhance market penetration. Finally, the execution roadmap is defined, assigning clear responsibilities to team members and establishing milestones to ensure a structured and efficient rollout.
We might also face scenarios in which the product or service has not proven itself to be worth pursuing. However, this might also be great news as the commercial validation helped the company avoid investing too many resources into a venture without a promising outlook.
Commercial validation is not just a box-ticking exercise—it’s a fundamental step in ensuring market success. A structured, data-driven approach minimizes risks and maximizes the probability of launching a viable offering.
Key Takeaways:
To support your own validation efforts, we’ve created a Commercial Validation Canvas — a practical resource designed to help structure your process, identify target audience interest, align marketing and sales activities, and build a well-informed go-to-market strategy.
