This is a guest post written by Tom West, Co-founder and CEO at HyperHQ. Hyper is a team of people who’ve all built extraordinary technology businesses. Tom shares his knowledge of crossing the gap between idea to live product.
Minimum Viable Product (MVP) is a simple strategy to gauge what customers want in a product. Its name explains it all – the most minimal and lean version of your product that allows functionality essential for demonstration. MVP allows for rapid deployment (with a minimum spend) of a product that’s ready to test and generate maximum learning in the startup process.
An MVP is key for your business development – here’s why:
- It validates your product idea and helps mitigate prototype risk. Instead of wasting energy and resources, your MVP delivers functionality that allows people to test it out and give you feedback. You can gather your MVP/customer interaction data and analyse it – giving you a clear indication of whether you’re moving in the right direction.
- It’s the primary element of your marketing strategy. Through your MVP, you are making a value proposition to your potential users or current sign-ups. You can start defining your brand, your voice, and start growing your user base.
- It helps you raise future funds and appease potential investors. Your MPV is a tangible and validated first version of your product. Investors will feel more confident investing in your product if they have the opportunity to see it in action and to see the feedback you’ve received on it. This translates to scalability and revenue opportunity.
- It is also worth keeping in mind that the more value you offer in your MVP, the more willing your users will be to overlook any incomplete features or bugs that might be present. In fact, if you are willing to invest in the quality of your MVP — in other words, have the specific features you offer at their best possible version — the value of your product is likely to increase. User experience is too often overlooked in the race to the finish line, but it can make or break your idea in the end.
Types of MVP – Low Fidelity vs High Fidelity?
There are two overarching MVP categories – Low-Fidelity MVPs and High-Fidelity MVPs. Your choice between the two will depend on where you are in your startup journey.
Low-Fidelity MVPs are more of an early-stage solution used to:
- Get a better understanding of your audience’s problems.
- Investigate just how valuable a solution to this problem really is for potential users.
- Understand which solution would be most effective for users.
High-Fidelity MVPs are a more complex strategy, aiming to ascertain:
- How much your audience is willing to pay for your product, in the event you optimise your product and go ‘all out’ with features.
- Test your product adoption and gauge who your first users will be to spread awareness about your product.
- Help you further solidify your marketing strategy, e.g. your call to action.
- Explore any room for growth and scalability.
Depending on which stage you’re at of product development, there are a few MVP options to validate and collect valuable data from customers. Here are a few MVP options, and why their effects may serve you better or worse through your journey.
Landing Page MVP
Briefly, a landing page is a singular page describing your product, including the features and advantages of your product that constitutes your unique proposition pitch. It’s essentially what you’d direct investors to if they had your business card and wanted to find out more. Most importantly for an MVP, it’ll contain a call to action button – this could be a mailing list sign up or ‘read more’. A great landing page will make it as easy as possible for the user to convert or to take action of some sort. The ‘call to action’ must be enticing and simple, such as an eye-catching design.
Here are the quick benefits:
- Landing pages are a concise rundown of your unique value proposition. By including a sign-up button, it’s simple to detect whether your service resonates with users before you embark on building out a complete prototype.
- For marketing purposes, using multiple landing pages with different messaging strategies, it’s easy to tell which one peaks more interest with your intended audience.
- By collecting email addresses, it’s easy to follow up with these people and ask them why they took an interest in your product.
Landing pages are relatively inexpensive and efficient to create and deploy. Generate a quick lean cycle by spending a little money on Google Ads to generate some visits and have some data in your lap in a few days.
The drawbacks of Landing Page MVPs are the lack of sign-ups – if your landing page appears to be a failure, there are no customers you can contact for feedback as to why they’re not drawn to your product.
Wizard of Oz and Concierge MVP
These MVP names aren’t as weird as they sound, and rather extremely simple to grasp. Remember The Wizard of Oz? How behind the facade there was just a little guy pulling some levers? The same concept applies with your MVP. It’s essentially an illusion of a functioning prototype that’s being operated by humans.
The advantages are:
- It’s much more cost-effective to mimic a functioning system than to have it fully developed and automated with algorithms – you can do this after you validate your product and raise capital. Generally, if you have a basic smartphone or computer knowledge you can operate the Wizard of Oz MVP yourself – or, you could contract an entry-level help desk operator to take your users through the process seamlessly.
- You pretty much get a snapshot of what your system could look like in the future, rather than waiting months or years to see what your product – you can predict it through your MVP.
- The data you get from this MVP is quite accurate as the user believes the process is fully automated.
Zappos (an internet shoe retailer), was acquired by Amazon in 2009 for $1.2B. At the time, purchasing shoes online without physically trying them on was bizarre and not widely practised in business. So, Zappos went to local stores, photographed shoes, advertised and sold them online by returning the store and sending them to the customer – who had no idea Zappos didn’t actually own any stock. Utilising the Wizard of OZ MVP, Zappos quickly gained momentum and became a billion-dollar store without any convoluted solutions or heavy fiscal commitments.
The disadvantage of the Wizard of Oz MVP is it’s complete reliance on human competency, if you have an experienced tech wizz operating your MVP for investors then you’re in safe hands; however, it can be difficult to find people to work your illusion seamlessly.
The concierge MVP works in very much the same way, except the user knows that there is a human operating the process (the users are aware of this upon demonstration). This is a viable option; however, the data is more prone to bias as the user knows there’s human intervention on the MVP.
The main difference between the two is that the Wizard of Oz MVP tests a specific hypothesis, whereas a Concierge MVP generates ideas and is much more malleable.
Aardvark connected people with questions to people with expertise. Cardmunch managed to transcribe blurry photos of business cards better than any other Optical Character Recognition (OCR) system at the time. Neither had any of their own technology or algorithms to automate this process – the technology was operated by human beings.
Cardmunch and Aardvark leveraged existing technology and their own human resources. Instead of building complex algorithms, both used what they had. As a demonstration, this was simple and effective – albeit a little slow; however, the value was apparent.
These names keep getting stranger, no? The idea behind piecemeal MVP is to use existing tools and solutions to deliver your product or service. An example of this is Groupon – essentially a digital coupon website for the American marketplace. Groupon’s MVP was powered by third-party resources. Instead of building a content management system themselves, they ran on WordPress.
It is another minimal way to present a product to potential users or investors by investing a minimal amount of money (or even nothing) in a product. A piecemeal MVP consists of elements from multiple sources collated to create a foundation for your product. It’s a taste of what could be if you had the money and resources to put your own original MVP together.
Before starting on your MVP, always be sure of any associated risk you’d have within your product and if there’s a way to avoid it. The main risk to be wary of with Minimum Viable Product is creating one that is too lean and doesn’t provide sufficient functionality to back it’s proposed value. Be real with yourself on your timeframe and financial resources and don’t let the MVP take up any more financial burden than what it’s worth. At the end of the day, it’s a failsafe to ensure that you ‘fail gently’ before you throw everything you have at an experimental idea.
Your main aim with an MVP is to learn from your customers, what they want, and how they respond to your solution to their problem. Don’t focus on too much on bug fixes – focus on making the value so promising that the user will overlook current issues in your MVP.
Depending on your goal for data acquisition and investor interest, you can utilise different minimum viable products to suit your needs and reap maximum advantage. It’s all about doing the most with the least – not doing anything too flashy before you’ve validated assumptions with the market.
Building an MVP is a consistent process of measuring success through user interaction and feedback. Every step of the way should centre around ensuring you’re fulfilling your target audience’s needs – otherwise, your intentions are redundant.
Developing an amazing MVP is exciting, but where the magic really happens is how your users interact with your idea. Present your MVP to as many people as possible, collect feedback from users and start improving your product that way. This is a repetitive process, but will ultimately refine your product to something so much more potent than what you started with.
How to Measure Success of MVP
If your MVP is centred around a landing page with a call-to-action button (e.g. a mailing list or sign up option), there’s an available opportunity for you to gauge user interest. This can be converted to revenue based on measuring interest in your product.
Your success/failure is contingent on the user, so why not just ask them? Interview potential customers and by bringing them a list of problems or risks (in your MVP, not the business model) that you can identify and ask them what they think.
Application Usage Metrics
There are other measurement metrics used to track the qualitative success of your MVP (more so related to applications). Here are a few common metrics:
- Client Acquisition Cost (CAC) – this is essentially how much it costs to get a paying customer.
- Average Revenue Per User (ARPU) – tells you how much money each user is making you; usually, for MVPs, multiple streams of revenue won’t be relevant.
- Client Lifetime Value (CLV) – this will tell you how much time a user spends on your app before uninstalling or stop using it.
Your main focus to measure ‘success’ of your MVP should still centre around user satisfaction. Your best research will still be ensuring users have the most effective experience in solving their problems with your idea.