05. User Research & Validation Plan
Strategy to validate the coalition model, mitigate "chicken-and-egg" risks, and prove unit economics before scaling.
1. Key Assumptions & Risk Assessment
LocalPerks is a two-sided marketplace (Merchants & Consumers). Validation must occur sequentially: Supply (Merchants) first, then Demand (Consumers).
| Assumption | Risk Level | Validation Method | Success Signal |
|---|---|---|---|
| Problem Assumptions (Merchant Focus) | |||
| Indies view "neighbor" businesses as allies for coalition, not direct competitors. | CRITICAL | 1:1 Interviews | >70% willingness to honor points earned elsewhere |
| Merchants are dissatisfied with current single-store loyalty solutions (Square/Toast). | HIGH | Competitor Audit & Interviews | Specific complaints about low redemption/engagement |
| Solution Assumptions (Consumer Focus) | |||
| Consumers will download a dedicated app for local rewards vs. using credit card points. | CRITICAL | Landing Page / Fake Door | >15% conversion on "Join Waitlist" in target geo |
| Consumers understand the "Coalition" concept (Earn at Coffee Shop, Redeem at Bookstore). | HIGH | User Testing (Figma Prototype) | Users successfully explain the concept back to researcher |
| Business Assumptions | |||
| Merchants will pay $29-59/mo subscription PLUS 5% redemption fees. | HIGH | Sales Pitch / LOI | 5+ signed LOIs in pilot neighborhood |
| Settlement mechanics (monthly floats/payouts) are legally compliant without banking license. | CRITICAL | Legal Review | Clean opinion letter from fintech counsel |
2. Merchant Discovery Interview Guide
Target: Independent Owners (Coffee, Retail, Books) in Walkable Districts
Part A: The "Chain" Pain (15 min)
- "Who is your biggest competitor right now? Is it the shop down the street, or Starbucks/Amazon?"
- "How do you currently get customers to return? What tools do you use?"
- "Walk me through your experience with [Current Tool]. What frustrates you about it?"
- "Do you feel you have a shared customer base with [Neighboring Business X]? Do you ever collaborate?"
Part B: Solution & Economics (15 min)
- "If I told you that you could acquire customers from [Neighbor Business] by accepting their points, how would you feel about that?"
- "We are considering a model where you pay a 5% fee only when a customer redeems a reward. How does that compare to your acquisition costs?"
- "What is the biggest risk for you in joining a coalition like this?"
3. Validation Experiments
Exp A: The "Neighborhood" Landing Page
Goal: Validate Consumer Demand & Geo-Density.
Setup: Create landing pages for 3 specific neighborhoods (e.g., "LocalPerks Ballard"). Run geo-fenced FB/IG ads.
Value Prop: "One card. 20 local shops. Free rewards."
>300 signups per neighborhood within 2 weeks with <$2.00 CPA.
Exp B: Concierge MVP (No Code)
Goal: Validate Settlement & Operations.
Setup: Recruit 5 businesses on one block. Use simple physical stamp cards with unique QR codes. Founder manually tabulates points in Excel daily and settles cash weekly.
Businesses consistently honor the "cross-shop" redemptions without confusion or refusal.
4. Survey Strategy (Van Westendorp Pricing)
Targeting Business Owners to validate the $29/$59 price points.
"Consider a service that connects you to 30 other local businesses, allowing their customers to earn points they can spend with you, and vice versa. It includes a mobile app, marketing dashboard, and automated settlement."
- At what monthly price would this service be so cheap that you would question its quality?
- At what monthly price would this service be a bargain?
- At what monthly price would this service begin to seem expensive, but you'd still consider it?
- At what monthly price would this be too expensive to consider?
5. 8-Week Validation Timeline
- Conduct 20 Merchant Interviews (Focus: Cross-promotion fears).
- Consult Fintech attorney regarding "Stored Value" laws in target state.
- Identify 3 target "Pilot Neighborhoods."
- Launch "Support [Neighborhood]" consumer landing pages.
- Run $500 ad spend per neighborhood.
- Secure Letters of Intent (LOI) from 2 Business Associations.
- Manual pilot with 5 friendly merchants.
- Test "Earn here, Redeem there" mechanics manually.
- Validate the 5% redemption fee model acceptance.
- Analyze Pilot Retention (Did businesses quit?).
- Calculate Customer Acquisition Cost (CAC) from ad tests.
- Finalize MVP feature set based on pilot feedback.