One of the main mistakes entrepreneurs make is extrapolating their personal needs to an entire population without validating that such a need is common to a larger demographic group of people. Another mistake entrepreneurs make is building a solution without validating that it would satisfy a market’s need. They identify a problem and assume that what they are building is the ideal solution. In a previous article, we taught you a quick way to validate your customer’s needs. Today we gonna show you how to quickly prototype and test your solution with your prospect users. How do you do that? You create something called a Minimum Viable Product (or MVP).
Minimum Viable Product (MVP)
As author of Running Lean, Ash Maurya, describes “a Minimum Viable Product is the smallest thing you can build that delivers customer value (and as a bonus captures some of that value back i.e. gets you paid)”. The MVP has just enough features to satisfy early customers, and to provide feedback.
According to professor Steve Blank “new ventures rapidly assemble minimum viable products and immediately elicit customer feedback. Then, using customers’ input to revise their assumptions, they start the cycle over again, testing redesigned offerings and making further small adjustments (iterations) or more substantive ones (pivots) to ideas that aren’t working.”
Types of MVP
There are different opinions on what characterizes an MVP, from a very low-fidelity MVPs such as a pitch deck, demos or teasers, to higher fidelity MVPs, such as a concierge MVP and the first release of a product. Let’s have a quick look at the three of them and how they relate to each other:
A low-fidelity MVP only validates a concept, you can create a pitch deck with your value proposition and if possible with mockups of your product and show it to the people you interviewed in the previous phase. You could go further and also create a landing page presenting your product, its value proposition and the problems it will solve. You could use Facebook or Linkedin Ads to cheaply test it with your real target market and start collecting leads. For example, approach all the people you interviewed during the problem validation phase, show the idea behind your platform and how the main features can solve the problems they mentioned. After that, create a landing page with the reviewed value proposition, an explanation of the main features and promote it to your target market using Facebook Audiences and Ads. By doing that, you can at the same time test the interest for your solution with a larger audience and collect leads (for example, names, emails and addresses).
Another type of MVP is the concierge MVP, it has this name, because it simplifies the product by replacing complicated automated components with humans (concierges), saving a lot of development time and money. In this case you still can test your product and if the features you are proposing will actually solve the problem, but you don’t need to develop the actual product. If the whole process works, you’ve validated the main features of your product without writing a single line of code. It’s time to develop the product, or a high-fidelity MVP.
A high-fidelity MVP is an actual product, or a version 1.0 of your product, containing the main/minimum features of your product tested during the concierge MVP. You would usually launch this first version in a controlled way, with a limited number of beta testers or early adopters. From that point, and with the feedbacks collected from your early adopters, you could improve the current features, kill unnecessary ones and develop new ones for a V.2 .
The importance of value
No matter how excited your users appear to be about your product, it ultimately comes down to 1) the value you’re able to deliver to your customers or users and 2) the value you can extract from the market. A product’s value can be measured in two ways:
1-) Utility: The intensity of use and the frequency at which a product is used, are both factors that define utility. You want to create a sticky product, meaning it is part of a user’s daily, weekly and sometimes monthly routine.
2-) Money: All products that last are fundamentally tied to commercial viability. In other words, you want to make money, even if it’s not the end user who pays the bill.
- Twitter, a social network and ad platform, is a very good example of product that has a high utility, but doesn’t manage to capture monetary value from its market, as it has been unable to generate positive cash flow since it’s creation.
- Facebook, another social network and advertising tool, on the other hand, has high utility for it’s users and is able to translate time on page to ad views and ad revenue, creating positive cash flows and profits.
When launching a product, keep in mind the importance of the business model that will help you deliver and capture value. But know as well that some of the most successful products have been able to survive on usage alone.
By now you have an understanding of your customer segments and the ideal value proposition you can provide. You have also some clearer ideas about features that will help them solve their problems, but you shouldn’t stop here. It’s important to understand how the factors influencing the distribution of your product, its price, how you’re going to support customers, the resources, activities and partners you will need for bringing this product to its target market and how much it will all cost. In the end, all these elements must work like a fine tuned machine that results in profits.
In our next article, we’ll teach how to how to start creating a product that will deliver everything you promised. To get notified when our next article is out, please sign up to our newsletter.