We live in the startup economy, where new ideas spring up like mushrooms. Are they all worth investing in? Knowing that 90% of startups fail, most probably they’re not. So what’s the best way to avoid following in their footsteps? Validate your idea by building an MVP!
What is an MVP?
An MVP, which stands for a Minimum Viable Product, is a minimum set of features your users need to solve their problem. Eric Ries, the author of Lean Startup, puts it nicely:
“The minimum viable product is that version of a new product which allows a team to collect the maximum amount of validated learning about customers with the least effort”.
What is the purpose of building an MVP?
There are three main reasons for MVP building:
Getting feedback from target customers – checking if the product resonates with the target audience is the main reason to build an MVP. Their feedback can be used for further product development or to justify its discontinuation.
Winning stakeholders buy-in (including potential investors) – before applying for funding, it’s worth having an MVP to show potential investors your business is viable, sustainable, and executable. It will increase your chances of getting financing.
What is the MVP Development Process?
MVP development is based on the “build-measure-learn” process. The main goal is to provide an instant benefit while keeping development costs low and using data for future product decisions.
Following this methodology not only allows you to quickly release a product but also to validate your assumptions, discover what your users want, and modify your product so it solves real problems and meets market demand.
Approaches to building an MVP
There are a few approaches you can take while building your MPV:
No code MVP – validate your idea without any coding. It can be done through idea visualization based on marketing campaigns that explain how the product will work. The perfect example of this is a Dropbox video showing how the product would work before it was even launched. Users’ reaction to the video has proven to the Dropbox team that there is a huge demand for this kind of solution and that it was safe to proceed with the development.
Product-mockup MVP – deliver a sample of your product’s functionality. You can use the concierge approach, i.e. manually demonstrate how the product will work without automating any core functionalities. Simulating a fully-functional product, often referred to as Wizard of Oz, also involves manual work, but this fact is not disclosed to users.
Landing page – include the product description, main benefits, and unique value proposition. You can also create a contact form to collect emails from interested prospects to verify market demand without building the actual product.
Email – send an email campaign to your existing customers to communicate the main benefits of your non-existent product and to collect feedback.
Steps to Build an MVP
Start with market research
Sometimes business owners get carried away by coming up with ideas that don’t fit the market. Every product/service must fulfill a market need, otherwise, it’s doomed to fail. Conduct market research using both primary and secondary data. One way of doing this is surveying your prospects to check if your value proposition appeals to them.
You should also analyze the competitive landscape, learn what products are already available in the market, and how you can stand out.
Define your idea
Communicate your idea and figure out how it solves your target audience’s problems. What are the main benefits? Your MVP must be built around your customers’ needs, only after listing them, can you start the development process.
Design the user flow
Another important step while building your MVP is creating the user flow. Put yourself in your customer’s shoes. Define the process stages, i.e what your customer has to do to reach their main objective. Think through tasks rather than features. Only after you have the process figured out, can you start defining the latter? Which leads us to...
List your MVP features
It’s time to define your features. Write down all the features your product should have – think long-term! After you finalize your feature list for every MVP stage, you need to prioritize them. When you do this, select only those features that are indispensable for meeting your users’ needs. Next, classify each of them as high, medium, or low priority. After you’re done laying this groundwork, you can set your MVP’s scope and start building it.
Build an MVP
Start building your MVP based on the features that you selected for the initial product release. Remember that an MVP is not a “poorer” version of your final product! It still has to effectively address the needs of your target market. Make it easy to use and engaging.
MVP launch and feedback gathering
After testing your MVP you can finally launch it. Gathering feedback from the end-users is the most important and the most valuable stage. Once you collect user data you can commence product improvements, test new product versions, measure the quality, and test again. This process continues until the product is finalized.
How to measure if your MVP is successful or not?
After launching your MVP you must verify if it was a success or a failure. Here are a few metrics you can use:
A number of downloads or signups – if your app is popular and results in many user downloads or signups, it’s a good indicator that there’s a demand for it.
Number of downloads or signups – if your app is popular and results in many user downloads or signups, it’s a good indicator that there’s a demand for it
Number of active users - considering the fact that many users never return to the application, it’s worth checking whether the number of your active users is increasing or decreasing
Customer Acquisition Cost (CAC) - how much does it cost to acquire new users? Your CAC shouldn’t be higher than your customer lifetime value
Churn rate - how many of your paying customers leave
Net Promoter Score (NPS) - measures customer satisfaction to see how likely they’re to recommend your product to others.
Building an MVP is the best way to verify market demand. It saves you from spending time and money building a product which there is no need for. Not only does it allow you to gather invaluable customer feedback and win over potential investors but also run some usability tests.
There are various approaches to MVP building. Some don’t even need an actual product – for example, landing pages or emails. They require minimum effort while bringing significant benefits. When you take your idea for a test drive, remember to set some success criteria to check if you should continue the product development or not.
If you struggle with defining your MVP, or you’re completely stuck, feel free to drop us a line!