We propose a novel method to test the binary black hole nature of compact binaries detectable by gravitational wave (GW) interferometers and, hence, constrain the parameter space of other exotic compact objects. The spirit of the test lies in the "no-hair" conjecture for black holes where all properties of a Kerr black hole are characterized by its mass and spin. The method relies on observationally measuring the quadrupole moments of the compact binary constituents induced due to their spins. If the compact object is a Kerr black hole (BH), its quadrupole moment is expressible solely in terms of its mass and spin. Otherwise, the quadrupole moment can depend on additional parameters (such as the equation of state of the object). The higher order spin effects in phase and amplitude of a gravitational waveform, which explicitly contains the spin-induced quadrupole moments of compact objects, hence, uniquely encode the nature of the compact binary. Thus, we argue that an independent measurement of the spin-induced quadrupole moment of the compact binaries from GW observations can provide a unique way to distinguish binary BH systems from binaries consisting of exotic compact objects. © 2017 American Physical Society.