What does MVP Development mean for Existing Companies?
In a market that's crowded with companies regularly releasing new products on a yearly basis, standing out from the crowd can become a real challenge. It's why existing companies need to implement MVP (minimum viable product) development into their production strategy.
Companies that develop MVPs are more likely to gain a head start on their competition and will more likely deliver a successful product designed in a more cost-efficient manner. The following is a closer look at what MVPs are and why their development is integral to the success of companies that are building apps or websites, especially in this day and age.
What is a Minimum Viable Product?
The biggest risk in releasing a new product is that it might fail. There are many ways in which a product can fail; for example, it may have issues that weren't discovered during the design, production, or testing phases, or it may not be deemed useful or necessary by the consumer.
An MVP helps to reduce the risk of failure. An MVP is a product released in the early stages of development. This allows you to reduce the time it takes to launch your product using a smaller budget, giving you the time and opportunity to collect feedback from early adopters. You can then use this feedback to add to the product's features, identify and eliminate issues with the product, and improve the product overall. By implementing MVP development, you won't risk wasting time and resources only to launch a final product that fails.
Origins of the Term
The term "minimum viable product" was first created by Frank Robinson, who defined the term back in 2001 to describe the process in which the development of a product and customer development proceeded on parallel tracks. The concept was then popularized by Eric Ries, a writer and startup consultant.
Characteristics of a Viable Product
There are three main characteristics of an MVP. They include the following:
The MVP must provide initial value - Although the product is not finished, it must have enough value for it to be useful to your target audience. Otherwise, they will not have a reason to use it.
The MVP must demonstrate potential - Besides the initial value that it offers to early adopters, the product must be able to demonstrate the potential of its future benefits to retain early adopters.
The MVP provides a feedback loop - You must be able to collect feedback from early adopters who are using your MVP. The quick release of an MVP is only useful if you are able to collect feedback that can help you improve the product and capitalize on its potential.
Why is it Necessary?
At first glance, you might wonder how putting out an unfinished product could in any way be advantageous over waiting until the product is completely finished to release it into the market. However, MVP development is an absolute must for the following reasons:
Saves Time and Resources
If you forego MVP development, you stand the risk of pouring time and resources into a product that fails after you launch it. With an MVP, you introduce it to market within a much shorter timeline and continue to put resources into its development as you collect feedback. This feedback allows you to make much better use of your time and resources--and even if the product ends up a failure, you can determine that it's a failure much earlier on in the development cycle before you've wasted your whole budget.
Checks The Appeal to Potential Users
You won’t know if your product appeals to your users until you launch it. By releasing an MVP, you can begin to judge how it's performing in the early stages of development to see if it has any appeal for your audience. If it does poorly, you can either halt development or identify why it's not appealing to users and adjust your development strategy. This isn't possible if you wait until the product is done before releasing it--once a finished product is released, that's that. If it doesn't have appeal, there's nothing you can do.
Find trends that Will be Optimal for Full Product Development
Using your feedback loop, you can identify how early adopters are using your product and focus on those features. For example, you may have designed the product to serve a certain function; however, you may find that early adopters are using it to serve a different function. Identifying such trends will allow you to optimize your product's development to incorporate how adopters are using your product. Essentially, you can better tailor your product to how people want to use it.
Attract Investors Early
By releasing an MVP, you can attract the interest of investors who are able to see the real-life use of your product first-hand as well the interest generated by early adopters. If they can see the potential of your product on the market, they may be more willing to invest, which could allow you to expand your development budget. Without MVP development, investors can only invest based purely on potential and are less likely to take such a risk.
Exposes Any False Assumptions
Bad press can kill a product when it launches, even if it's the result of false assumptions about your product. If you launch an MVP, you'll have time to expose any false assumptions before the finalized product is released.
Even though there are many proven advantages to releasing an MVP onto the market, there are still a number of misconceptions about MVP development that could prevent you from effectively executing an MVP strategy. We’ll explore the two major misconceptions about MVP development that may thwart your success:
Goal of Developing
Although the idea behind an MVP is that it doesn't have to be a finalized product (meaning that it may not have all of the features or functionality that you intend it to have), it also shouldn't just have the most limited functionality possible. After all, one of the reasons you're releasing an MVP is so that you can collect feedback about its use and learn about its business viability. If it's too limited in its capabilities, you won’t learn much about it.
Focus on Learning Vs. Earning
Although an MVP helps you test the market, pay attention to how your audience is using your product. Just because it does relatively well doesn't mean the product is meeting the needs of your users. Focus on learning how your audience is using your MVP and how they want to be able to use your product vs. what you designed the product for. Audience feedback is more important than how well your MVP is selling as it will provide you with much more useful information about your product and its market potential.
The biggest benefit of MVP development is the opportunity to gain insight into your audience's potential interest in your product without having to fully develop that product. Here are a few ways in which releasing an MVP can be beneficial in this manner:
Early Testing Opportunity
Not only can you learn how your audience uses your MVP, but you can also discover potential bugs or flaws within your product's design. Early adopters are testing your product for you. This allows you to address problems as you continue developing the product and iron out any issues before the product is finalized.
User Intelligence and Feedback
In addition to bugs and flaws in the design of your MVP, your users can provide feedback about how certain features work, whether your product is user-friendly, any difficulties they have with your product, and ideas for improving your product that you can implement during its further development.
Allows Market Validation
There's nothing worse than releasing a finalized product on the market only to realize there's no demand for it. By releasing an MVP, you can obtain market validation, allowing you to continue development with confidence. Not only will it let you know if there is a demand for your product, but it gives you the chance to showcase how your product is unique compared to the competition. If it fails on the market, you'll have the opportunity to figure out why it failed and address the problem before moving on with further development.
Takes Less time to Develop
An MVP doesn't have to be a finalized product, which means you won't spend nearly as much time developing your MVP for delivery as you would a final product. You can get it into the hands of your customers much quicker. You'll receive a lot more feedback and insight into your MVP at a faster rate, which you can address and implement to finish your product with fewer delays than had you not implemented MVP development.
Budget - Friendly
Instead of using your entire budget to release a finalized product, you only need to use part of your budget to get your MVP ready for the market. You'll have a significant amount of your budget left to continue development and you'll be able to use that budget more effectively once you see how your MVP performs on the market and you begin receiving feedback from users.
When implementing an MVP, remember that it's not the first step of your development process, it's the first result of your development process. This means that even though an MVP requires less of your total budget than your final product will, you’ll still invest a significant amount of your budget towards developing an MVP. We’ve listed below a few of the costs to expect.
Initial Budget Cost
You will need to establish a budget for your MVP. Your initial budget will depend a lot on who builds your MVP for you. Will you build your MVP in-house? Will you hire freelancers for the project? Or will you outsource your MVP's development to a software development company? How you choose to develop your MVP will affect how much it costs as well as how long it takes.
Cost of Design
How complex the design of the MVP is will play a big part in its cost as well. The most effective way to estimate what the cost of design is going to be is by determining what will go into the user interface. There are numerous steps that go into the user design, including the preparation of the user design, the creation of the wireframe (the skeleton of your app or website), the creation of the mockup (the prototype), and--finally--the interaction with the mockup.
More Features & Complexities = Higher Cost
The more features you decide to include in the MVP, the more expensive it will be to design. One of the benefits of an MVP is that you don't need to include all of the final features. In fact, that's how you are able to limit how much of your budget you use on the MVP. To determine what features you should include in your MVP, make a list of all of the features you would like the final product to have. Then sort them in categories like "must-have features" and "nice-to-have features."
Evaluate your feature categories by projecting what you want your users to be able to achieve using your product. If missing features make it difficult for the MVP to achieve its function, it likely will not do very well upon its initial release. However, adding features that won’t enhance the main function of the MVP may be unnecessary and could add to the complexity as well as the cost of the design.
Once you've determined what features and functionality your MVP will need to have, set and identify the estimated technology stack. There are tailored solutions available that make it easy to coordinate your technology stack; however, you should consider the use of native or hybrid solutions to help avoid future challenges. Note that hybrid apps tend to be easier to develop and faster to deploy.
More Time to Build = More costs
The cost of building your MVP on an hourly basis will vary greatly based on all of the factors previously mentioned (cost of design, features, complexity, and technology stack). One thing is certain--the longer it takes to build, the more it will cost. You will want to take this into account when evaluating the costs of the other factors involved in the design costs of your MVP. Shorter development time doesn't just help keep your MVP development costs low, it also allows you to get quicker feedback from your audience so that you can begin making improvements as soon as possible. It also reduces the risk of your idea being stolen or being beaten to the market by a competitor with a similar product.
Deciding to Build an MVP
If you're planning a new product design, an MVP will be very beneficial; however, you won't want to just release an MVP without putting some thought into it first. Producing an MVP without any planning will likely have very little impact.Take these steps when deciding to build an MVP:
Identify and Understand the Business Needs
The purpose of your product is the absolute first thing that you need to figure out: what purpose will your product serve? and why do you think it needs to exist? If you don't know, your product won't fulfill a specific customer need, which means that not only do you not know the purpose your product serves, but you won't know who it serves. In identifying and understanding business needs, you'll need to do the following:
Identify the long-term goal of the project:
It's a simple question, but one that you need to answer. The long-term goal of the project is what you want your product to achieve once it's released in its final form.
Determine a success criteria:
The success criteria should include more than just one metric. For example, hitting a certain number of active monthly users. Establishing success criteria provides measurable goals that allow you to track and judge the performance of your product.
Sometimes, an idea that you believe will fulfill an important need doesn't actually fit into the market needs. Do your research into your target audience to determine whether your product idea will actually fulfill a need. Look at what your competition is offering and engage with your target audience through social media and through surveys. This will give you a clearer idea of whether your product idea will be successful or what you need to do to ensure that it does meet the needs of your target audience.
Decide what Features to Build
Before beginning MVP development, create a list of all of the features you want the final product to have. Using your market research and evaluating the benefits of each feature, determine which features are a priority and should be included in the MVP. Here are some step to help you identify what features should be prioritized:
Use opportunity statements in deciding:
An opportunity statement is a detailed description of the problem you're attempting to solve or address with your product. Look at your product's opportunity statement and evaluate how each feature functions to address or solve that problem to help prioritize them.
Consider the design and user flow:
Convenience of use for your customers is a top priority in its design. Consider the design and user flow, meaning the process that your users will go through when using the product. You'll want to break down the user flow into process stages, defining the steps that the user has to take to reach the main objective. Once you've broken down the design and user flow of your product, you can better evaluate what features need to be implemented to help maintain or improve the user flow and what features may not be necessary, at least not for your MVP.
Use the prioritization matrix:
A prioritization matrix consists of four quadrants. The top half is labeled high impact and the bottom half is labeled low impact, while the left side is labeled low urgency and the right side is labeled high urgency. Using your opportunity statements and user flow considerations, place the features you want to include in your product into the quadrants that fit them best to identify which features you should prioritize for your MVP.
The MVP Process
Once you've determined that your product fulfills a customer need and has a place in the current market, it's time to build your MVP, launch it, and begin establishing the feedback loop. The feedback loop is one of the most important parts of the MVP process in which you release your MVP, obtain feedback from early adopters, make improvements, and continue the cycle up until you release your final product.
Identify The Requirements of The Product
Before the development of your MVP begins, outline what you want your MVP to do. Your MVP may not have the same function as the final product, after all, which means identifying its initial function and feature list will be extremely important.
Develop a Usable Product
Although the MVP may not have the same function or features as your final product will have, it's important that it be usable. You won't be able to glean any valuable feedback from users if your MVP isn't usable.
Learn From and Monitor Users’ Feedback
Once you launch your MVP, begin monitoring the feedback of your users. Track how they use your MVP, what features they like, what issues they have, what features they want that your MVP is lacking, and what features your MVP has that they don't think are needed. This information will be invaluable to the improvement of your product.
Build Small Functional Sets of Modules
Instead of building a small part of your product at every stage that results in a fully working product at the end of all iterations, you should consider building a small functional set of modules to test and deploy in each iteration. This allows you to get more accurate feedback concerning the features you add to your product in every iteration.
Test and Deploy
Although your users are in essence testing your product, you'll want to make sure that you perform internal testing before deploying it. You won't want to release a broken product that's filled with bugs. This will only result in feedback concerning issues with its use and not feedback concerning the actual features and intended function.
Once you've launched your MVP, track its performance and measure its success to determine exactly how viable the product is. Some of the different ways to measure the success of your MVP follow:
Word of Mouth / Traffic
While measuring the traffic to your site or app is a good way to gauge interest in the product, so is word of mouth. Pay attention to what's being said about your MVP across the social media landscape (something you can easily do with any number of search tools).
How your customers are engaging with your MVP will tell you a lot about what features provide the most value to them and what features they are ignoring or don't know how to use. Engagement provides helpful information about the MVP's current value as well as the future value of the product.
Sign-ups provide a good idea of how much interest there is in your product and a rough estimate on how much revenue you can expect to earn when you launch your MVP.
When you launch your MVP, give customers every opportunity to provide feedback, whether this is by emailing them surveys or asking questions on social media. It's one of the easiest ways to evaluate what your customers think about your product.
Percentage of Active Users
You want your product to be useful to your customers. One way to identify whether your customers are getting use out of your product is by tracking the percentage of active users at any given time. If the percentage of active users is low or dropping off over time, then you know you have a problem. If it's high or increasing, then you can assume your MVP has value and that customers are discovering that value as they continue using it.
Number of Paying Users
Tracking the total number of paying users as well as how many new paying users you gain over certain periods of time will give you a good idea of whether your MVP is gaining traction or losing steam on the market.
Client Lifetime Value
The Client Lifetime Value (CLV) refers to how much time a user spent with your app before they stopped using it or they uninstalled it. It's determined by subtracting the acquisition cost (how much it cost to obtain a paying customer) from the profit you made from a user during the course of their usage.
Churn is the term used to indicate how many people have either uninstalled your software or have stopped using it altogether. It's usually measured in percentage of users or number of users per week or month. The lower your churn rate is, the more likely it is that your MVP is succeeding.
Things You Should Do
Here are a few extra tips for implementing a successful MVP strategy:
Make sure that the MVP's basic purpose and functionality are showcased. If it's not, early adopters are going to have a difficult time figuring out what needs the product is supposed to fulfill or what future potential it has.
To ensure that your MVP has value, perform market research by looking into what your customers' needs are and what kind of existing services your competition is offering.
User experience is key to your MVP's success. Design a good user experience by outlining the steps users will have to take and the tasks they will have to perform using your product to achieve its purpose.
Track user behavior to determine how customers are using your MVP. This will help you determine what features are useful to them and what features are not, in addition to identifying potential problem areas.
Make sure you have a plan as far as monetization goes. While you won't want to monetize your MVP in its initial stages, you will eventually want to implement a monetization model once you begin improving your MVP and adding new features.
Although you'll want to get your MVP onto the market quickly, don't allow minimal development to deprive your product of its unique selling points. If it's functionality is so limited that your MVP is not unique from any other similar product on the market, you'll have a hard time convincing your audience to use it.
Things You Should Not Do
There are plenty of mistakes that could hinder the effectiveness of MVP development. Be sure to avoid doing these:
Do not add functionality to your MVP that isn't necessary. You're trying to showcase the main functionality of your product. Adding unnecessary functionality may confuse and distract users from what your MVP's purpose is supposed to be.
One of the advantages of MVP development is that you can get your product out on the market quickly so that you can begin collecting feedback. If you keep delaying market entry because you keep adding new features, then you're basically defeating the purpose of an MVP.
Part of the MVP process is determining the viability of your product. Don't ignore what you learn about its overall viability. Not only do you want to avoid straying from what makes your product viable if you've determined that it is viable, but you also don't want to keep developing an MVP that may have proven not to be viable.
If you've launched your MVP and the feedback and results aren't favorable, don't try to push forward. There's obviously an issue with your MVP, whether it's the lack of demand or a problem with the function of the product itself. If this is the case, don't be afraid to go back to the drawing board. One of the benefits of an MVP is that you can test its use without depleting your budget.
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