06. Validation Experiments & Hypotheses
Lean experiments to de-risk the coalition loyalty model before full build. Focus: Chicken-and-egg dynamics, dual-sided adoption.
Hypothesis Framework
Testing 10 core assumptions across problem, solution, pricing, and channel. Prioritized by risk to viability.
Hypothesis #1: Business Loyalty Pain 🔴 Critical
We believe that independent local businesses (coffee shops, boutiques) will actively seek coalition loyalty solutions if they struggle to compete with chain rewards programs. We will know this is true when 60%+ of interviewed owners confirm as top-3 pain AND 5%+ business landing page signup rate.
Risk Level: 🔴 Critical | Evidence: Supporting: 79% consumers prefer local (Nielsen); Contradicting: None; Gaps: No direct interviews.
| Metric | Fail | Min | Success | Home Run |
|---|---|---|---|---|
| Interview confirmation | <40% | 40-60% | 60-80% | >80% |
| Landing signup | <2% | 2-5% | 5-10% | >10% |
Next if Validated: Solution tests | If Invalidated: Pivot to single-business tools.
Hypothesis #2: Consumer Switching Friction 🔴 Critical
We believe that local-loving consumers will switch from chains for unified rewards if points accrue across neighborhood businesses. We will know this is true when 70%+ survey respondents say they'd use app weekly.
Risk Level: 🔴 Critical | Evidence: Supporting: Starbucks 31M members; Gaps: Adoption intent untested.
| Metric | Fail | Min | Success | Home Run |
|---|---|---|---|---|
| Weekly use intent | <40% | 40-60% | 60-80% | >80% |
| App download interest | <3% | 3-7% | 7-15% | >15% |
Next if Validated: Consumer pilot | If Invalidated: Focus B2B-only.
Hypothesis #3: Coalition Value 🟡 High
We believe that business associations will promote LocalPerks to members if it drives neighborhood foot traffic. We will know this is true when 3+ associations commit to pilot in outreach.
Risk Level: 🟡 High | Evidence: Supporting: Buy-local movements; Gaps: Partnership interest.
Next: Neighborhood pilots.
#4: Business Enrollment Ease
Owners enroll in <10min if QR-simple. Success: 80% completion rate.
#5: Cross-Redemption Appeal
Consumers redeem across businesses. Success: 40%+ intent.
#6: Business Pricing Fit 🔴
$29/mo viable if saves acquisition costs. Success: 50%+ WTP.
#7: Coalition Fee 🟡
$199/mo for 50 businesses. Success: 2+ pre-signups.
#8: Association Channel 🟢
Acquire via chambers. Success: 20% referral rate.
#9: Neighborhood Density
20+ businesses/neighborhood critical. Success: 60% join intent.
#10: Chicken-Egg Resolution
Cluster launch works. Success: 30% cross-redemption in pilot.
Experiment Catalog
Experiment Prioritization Matrix
| Exp | Hyp | Impact | Effort | Risk Skip | Priority |
|---|---|---|---|---|---|
| 1 | #1 | 🔴 | Med | Fail | 1 |
| 2 | #2 | 🔴 | Low | Fail | 2 |
| 3 | #4,10 | 🔴 | High | Fail | 3 |
| 5 | #3 | 🟡 | Low | Stall | 4 |
8-Week Validation Sprint
Weeks 1-2: Problem Validation
| D1-3: | Launch pages |
| D1-7: | Recruit 20 biz/30 cons |
| D4-14: | Interviews + ads |
Weeks 3-4: Solution
| D15-21: | WoZ setup |
| D19-28: | Deliver to 20 biz |
Weeks 5-6: Pricing/Channels
| D29-35: | Surveys + pre-orders |
| D36-42: | Assoc outreach |
Weeks 7-8: Decision
| D43-52: | Synthesis + Go/No-Go |
Minimum Success Criteria (Go/No-Go)
| Category | Metric | Must Achieve | Nice-to-Have |
|---|---|---|---|
| Problem | Biz confirm | 60%+ | 80%+ |
| Problem | Cons signup | 5%+ | 10%+ |
| Solution | WoZ NPS | 30+ | 50+ |
| Pricing | WTP $29 | 50%+ | 70%+ |
| Overall | Crit hyps valid | 7/10 | 10/10 |
Go: All musts met | No-Go: <70% | Total Cost: ~$6k, 200-300 hours.
Pivot Triggers & Contingencies
Experiment Documentation Template
## Experiment: [Name] **Date:** [Start-End] **Hyp:** #X ### Setup - [Details] ### Results | Metric | Target | Actual | Pass | |--------|--------|--------|------| ### Learnings - [Insight] ### Next - [Steps]