The minimum viable product (aka MVP) model assist teams in gathering valuable information like the customers’ needs and their behaviours to enable the further development of the final product. It also helps business owners to find out whether the product is feasible since it will eventually go into a market full of uncertainty. It allows them to learn more about their potential customers.
Now that we have established the importance of developing an MVP. How do you test the validity of the MVP for your product?
There are several ways to test the validity of a minimum viable product. Below are some of the effective means;
- Crowdfunding: By taking part in a crowdfunding exercise, you get to find out if the application has a good chance of succeeding in the market. That is not all. This approach also allows you to meet interested investors, who can try out your products and share their opinions. These are people who might be willing to take a chance on your product and invest their money in it because they see potential in it. Crowdfunding is additionally a decent way to sign up early adopters and get their responses. Examples of crowdfunding sites include Kickstarter, Wefunder, FundRazr and Indiegogo. The money gathered is used to develop the final product that will be sent out to the market.
- Blogs: You might be wondering how a blog can help you test your minimum viable product. Well, it serves as a suitable way to sell the MVP to your target audience. You can display the features and functionalities of your product on your blog. You can even communicate with your prospective users via emails and get their feedback. This enables you to build trust and form a closer bond with them. You also find out who your customers are going to be.
- Customer Interviews: This approach allows you to gather real and honest feedback to validate your MVP. It involves interacting with your target customers face-to-face. In-person interviews help to reduce the chances of getting fake reviews. There is a high possibility that people might lie or sugar-coat about their opinions online. Customers can also be asked to complete a survey on the product. In the end, their responses provide significant bits of knowledge.
- Videos: Explainer videos demonstrate the basic functions of a product and provide answers to frequently asked questions. This allows the developer to prove whether the viewer understands what the product is about, how it works, and why he or she needs it. A popular example of a startup that used this approach is Dropbox. They were able to pique the interest of a huge number of people, who were willing to test the product that wasn’t even ready at the time. The number of signups for Dropbox rose from 5,000 to 75,000 instantly, confirming that it was successful.
- Landing pages: These are the web pages that the potential customers are directed to after clicking after an ad. It offers useful information about your product and business. It also shows if the customers are interested in your product based on their interaction with the page. Startups can track analytics while building a landing page via Google Analytics, KISSmetrics, etc. This can help you to test out the product in the market. It also allows people to advertise the features of the product.
- Manual-First (Aka “Wizard of Oz”) MVP/Flintstoning MVP: In this approach, the idea is to fake it till you make it. This is an alternative to an explainer video. This strategy is a fake method whereby startups pretend that they have a fully automated system while it is still being built manually by human hands. The model is recommended in the startup community because it determines if the startup has a feasible business model. It allows for interaction with customers in the initial stages of market validation. It allows you to observe a customer using the product first hand and see if the product will be useful to them. A typical business that employed this approach is Aardvark, a Q&A service. Aardvark routed questions to other users who were experts (via Instant Messaging routing). Subsequently, features such as algorithm and matching functionality were incorporated into the product. Another example is Zappos. Determined to find out if people would actually buy shoes without trying them on, the founder, Nick Swinmurn snapped a photo at a store and posted it on the Internet. The amazing thing is that people actually made purchases. Zappos, which is worth billions, was recently acquired by Amazon for $880 million.
- Hallway Testing: This approach helps to determine the usability of a product. It involves asking random people to look at an interface you wish to test to gather their feedback. The tests are often impromptu. People are also assigned some tasks to see how well the minimal viable product does. This will point out any improvements and edits that need to be made to the product.
- A/B Testing: This MVP testing technique helps to ascertain if one version of a page is more effective than the other. It can be done on a web page with two different versions which are shown randomly to the users to find out how they react to them. Analytics tools such as Google Analytics, Unbounce, etc, demonstrate how users respond to the designs.
- Concierge MVP: This model is just like the Wizard of Oz MVP model. The difference is that the Wizard of Oz hides the operation behind the system while Concierge MVP is somewhat open. Concierge services are more concerned about delivering the value of the product to confirm if the customers need it.
- Piecemeal MVP: This approach involves building a working prototype of a product using existing tools or services. It means putting two unrelated apps or software together. An aggregator like Groupon built a startup using this model. Groupon works as an affiliate and earns a little commission when someone makes a purchase.
Metrics for measuring the success of your MVP
After validating your MVP, the next step is to measure its success. Many entrepreneurs are thrown right off the track after their MVP has been built. It is important to note that the MVP is the first version of a product and when it has been released to the market, your business idea stops being a hypothesis. You can now improve the product based on the feedback. However, how do you determine whether the stage is finished and you’re prepared to move on?
There are different ways to measure the success of the MVP stage. Albeit, It still boils down to the expectations and goals of the business owner. Some metrics that can be used to measure the success of the MVP include:
- Word of mouth: if the early adopters tell their friends about your product without you necessarily requesting it, then you are doing something right and you are almost ready to take off. Getting traction is important during the development of your product. It comes easily for some and it is harder for others. Another alternative option is to interview potential users.
- New user signups: Sign-ups can be used to check user interest, and they can be converted to revenue. For example, only 140 people signed up to Twitter after its initial launch in the market in early 2006.
- User engagement: The nature of the product or market decide how the engagement is going to be measured. This enables you to gauge the future value of the product as well as the current value. It also helps to improve customer experience based on the responses.
- Percentage of active users: 77% of users stop using an app three days after installing it, says an article published by Silicon Valley analyst, Andrew Chen. Try to go through your active users’ ratings and closely study their behaviour. The number of downloads and launch rates can be used to measure the success of a minimum viable product. It is important to know how many daily active users and monthly active users.
- Churn rate: This shows you the number of people who have uninstalled your app or stopped using it in a given period. The formula for this metric is Churn = number of users at the beginning of the week or month/Number of churn per week or month.
- Better user appraisals depending on the reaction: the number of times your application is downloaded and launched indicates shows whether the customers are interested in your product. It is advisable to make sure that the application is light to make it downloadable.
- Customer Lifetime Value (CLV): this is how much time a customer spends on the application before discontinuing or uninstalling it. The formula is Customer Lifetime Value = (Profit from a customer* the app usage duration) – +cost of Acquisition.
- The monthly average revenue per user: This means the average revenue from in-app purchases divided by the number of active users. It is also essential to check on the applications that gain the most revenue. ARPU = total revenue for the month/ number of active users.
- Percentage of paying users: This is the number of people paying to use an application According to data from content strategist and consultant, Maddy Osman, 39 per cent of LinkedIn’s 575 million worldwide users subscribes to LinkedIn Premium.
How We Do It At ParallelScore
At ParallelScore, we have noticed that there are common misconceptions that prevent teams from fully embracing the concept of a minimum viable product. Clients focus more on the features and less on the solution when developing an MVP. It is more about the features and their current budget to them. However, over the years, we have realized that most customers are buying the solutions of your product and not the features. As time goes on, the product will adopt the necessary features that will provide extra value to the customer. Read Also: How To Build A Minimum Viable Product (Step-By-Step Guide) Another misconception is that the MVP brings in customers and money. The MVP helps to validate the product idea. If it attracts users then be merry but don’t get your hopes up because there are still iterations to be made. Did you know that it is possible to deliver an MVP without writing a single line of code? I bet you didn’t. ParallelScore helps to provide solutions that can validate whether customers derive value from your products. We understand that MVPs are simply miniature experiments that can help us get the desired result.
What are the MVP models used at ParallelScore?
We are inspired by the video approach adopted by the team at Dropbox. The motive behind the MVP was to validate if people would find the designed features interesting enough to use. Thus, we use the same experimental toolkit to validate business ideas at the lowest cost and make sure they are feasible. Trust us, you don’t want to build a product that nobody wants or needs. That is why we are prepared to validate your assumptions and help you build custom business solutions that people will be willing to use. To drive our MVP Process, here are five strategies that we employ:
- Community-based MVP / Building in front of a community: In this approach, we gather people who are experiencing the same problems and challenges then we try to identify the potential solutions that could work to fix them. For example; we use WhatsApp groups or other community applications to bring people together. Most of the time, the audience are vocal about the problems they have and are eager to support a solution. This is helpful because if done correctly, there’s automatic access to a captive set of first users. The group help us to curate and prioritize what exactly is important. We measure the success of this MVP through word of mouth.
- Concierge Service: Concierge services are more focused on delivering the value of the solution to validate whether customers have a need for your product’s offerings. It allows you to find out if the product is useful or not. It offers physical contact with customers and you get to see their reactions first hand. This approach provides the opportunity to learn very early in the process. A good example of Concierge service is providing reports to customers based on their data needs. Although it might take a long time to put it together. If the product is purchased, it validates that customers find value in your report.
- Piecemeal MVP: An upgrade from concierge, piecemeal MVP takes multiple off the shelf products and delivers value. This is especially helpful for delivering value at scale as part of the validation. Basically, it collects the necessary components and pieces them together thereby giving way to new functionality and user experience. This method is mostly used in logistics/ process innovation validation.
- Explainer Video: Teams use videos to test the value proposition of their product upfront and the feature set that gets the most traction. It also allows them to present their ideas to potential customers and users. It is effective but it requires time to create quality videos. It also stops you from shelling out thousands of dollars irrationally. The number of signups can determine the success of this MVP.
- Landing Page: Similar to an explainer video, the landing page contains the product’s description, value proposition, and aesthetics. It used to validate if the customer is interested and it normally leads to the signup stage. The email addresses of interested customers are stored. With that, you can follow up and do interviews with them. The founder of Buffer, Joel Gascoigne used a landing page to test the idea of his product. Joel achieved 120 signups and went on to speak to 50 of these people directly. Now, the app accrues over $1 million per month in recurring revenue.
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