Lean STartup Experiments
Our team of 3 identified a potential problem and solution in the Property Management industry.
In two weeks we set out to use Lean Startup Experiments first to prove if the problem existed and then validate if the proposed solution would be a valid business idea for a startup to pursue.
POTENTIAL Problem
When home owners move, some of them want to rent out their home instead of selling it. These people don't know how to find a good property manager to rent and maintain their home after they've moved out.
Provisional Persona
A rough persona was created quickly based on our assumptions. This focused us on which users we want to try and find.
Anna
Demographics
Married 29 year-old professional
Homeowner in Midwest city
- A job change or move makes her an accidental landlord
Needs and Desires
Needs to find a property manager to preserve and monetize her biggest investment
- Wants to know what to expect from a property manager:
How much should I pay for a manager?
What services should I expect?
Who can I trust with my home?
- Needs to get information and make a decision quickly
Provisional User Journey map
The rough journey map that we created is a guess at the existing problem and solution that people currently face.
Potential solution
The initial solution that we envisioned was "Yelp and Kayak for property managers." This included:
Clear service offerings
Immediate pricing
- Trusted reviews
Experiment 1
A standard experiment loop board was used to track experiments as we ran them.
Plan
Customer Individuals who want to rent a property longterm
Problem Finding a good property manager (PM) is difficult
Solution Not trying to validate a solution in the first experiment
Riskiest Assumption People using a PM found the process of finding one painful
Experiment Talk to 6 people who rent their property
Success Metric At least 3/6 describe finding a PM with negative words
Method
Potential users were recruited via an internal mailing list and a brief screener survey asking questions like "Do you own property that you rent out long-term?".
A discussion guide was created to outline the questions to ask the users.
Fifteen minute calls were conducted with 8 users. Three of the 8 users self managed the property and the other 5 used property management services.
Results
Synthesis of the insights learned from the users was done using affinity mapping of sticky notes.
Results 5/5 of the users who used Property Mangers described the process with negative words
Validated? The problem that "Finding a good property manager is difficult" was VALIDATED
Surprises The biggest pain for users was not knowing where to start or that property managers exist
EXPERIMENT 2
The surprise learning from the last experiment prompted a focus on validating the problem that people don't know where to start when it comes to renting property.
PLAN
Customer Property owners looking for property managers
Problem Don't know where to start
Solution Website giving intro to PM industry
Riskiest Assumption People are searching on google to learn about PM (we heard stories previously of asking friends or coworkers)
Experiment Put up a PM 101 page with Google AdWords to drive traffic
Success Metrics
1. 50%+ visitors read the information (spend >20 sec on page)
2. 20%+ visitors want to act (click “Compare Local PMs” button)
METHOD
Strikingly was used to create a landing page at rentalguru.net and Google AdWords drove traffic to the site. Google Analytics allowed for tracking success metrics.
The "Compare" button goes to a screen that tells users that the comparison list is not yet ready, but if they enter their email address they will be notified when it's ready. The button and email entry will help judge if users are feeling a need for comparing Property Managers.
Results
3 days, 25, 541 ad impressions, 82 ad clicks, 19 compare button clicks
Validated?
1. 41% of visitors spent > 20 sec on page (goal was 50%) INVALIDATED
2. 22% of visitors clicked "Compare" button (goal was 20%) VALIDATED
Surprises 65% of visitors were on mobile phones, 7% on tablets (the site was responsive)
EXPERIMENT 3
Users spent less time reading that we expected, but more people clicked the "Compare" button, so the third experiment focused on understanding if the need to compare property managers can be solved by a directory website.
PLAN
Customer Property owners looking for property managers
Problem Need to quickly find and choose a Property Manager near to the property
Solution Website to search for and compare Property Managers near the property
Riskiest Assumption Comparison and choice is what's needed by property owners
Experiment Put up directory website of Property Managers in Texas (needed to limit scope and Texas was most common with our interviewed users)
Success Metrics
1. > 20% of users who arrive on page conduct a search
2. > 20% of searchers view 3+ pages (to represent comparing multiple options)
METHOD
Brilliant Directories was used as a quick way to create a directory site. Google AdWords and Analytics were once again used to drive traffic and monitor metrics.
Results
2 days, 33,335 ad impressions, 38 ad clicks, 24 searches
1. 69% of visitors conducted a search VALIDATED
2. 50% of searchers visited 3+ pages VALIDATED
Surprises The search terms included 14 different cities in Texas (initial assumed was that only the top 4 Texas cities would be searched)
FUNNEL
The below is a funnel of when users drop off the website. It shows that the biggest drop off is that after a user visits a details page, they rarely visit a second one.
The team interviewed with 2 users as we watched them use the site to get qualitative feedback on why this might be the case.
It was determined that due to the layout of the details page users were not noticing the key information on them, such as price, and were therefore not interested in seeing more details pages.
Next Steps
The two week sprint was over and we had validated that there was a problem around finding Property Managers and it could be solved by a directory website.
One next step would be iterating on the website to improve the funnel.
A second next step would be to run experiments to validate a business model and prove that by solving this problem a business could thrive.