Starting an online business model has never been easier as over 4.57 billion internet visitors are actively looking for what to buy online to meet their needs, It is also noteworthy that over half of the American workforce is working remotely. What this means is that the market demand for online solutions has never been greater than it is now.
Without much effort, you’ll need access to various tools, including but not limited to marketing, sales, and research products, to help you grow your business faster than ever, hence the need to create more.
But there’s a problem.
90% of online business ideas and startups end in failure. The majority of new startups fail within the first few years, and some do not even enjoy the attention of customers before folding up. You can succeed, though, by adopting the minimum viable product strategy. You start by increasing the likelihood that your product will succeed.
By validating and discovering as much as possible about your target customers, you can develop a product roadmap and avoid issues that could lead to your company folding up soon.
In this article, we will define the concept of a minimum viable product, outline its methods, and provide instances of businesses that have adopted them and succeeded.
Let’s begin.
Minimum Viable Product Definition
Wikipedia defines an MVP as a version or example of a product with just enough basic features to be usable by early customers, who can then provide useful feedback for future development of the complete product.
In 2001, Frank Robinson, co-founder and president of SyncDev, coined the term “Minimum Viable Product (MVP).”
Minimum viable products (MVPs) are basic versions of a product designed for the sole purpose of attracting early adopters with the least effort while learning about their needs. In most cases, an MVP is mentioned in connection with the lean startup approach and can also be used in this context.
Lean startup methodology – a method used to found a new company or introduce a model product on behalf of an existing company
Frank Robinson’s Definition
PROBLEM: Teams often brag, “We added 800 new features.” Some even consider feature count a badge of honor. Unfortunately, adding these doesn’t necessarily improve the business case. It may take longer, make the product less usable, and carry more risk.
SOLUTION: The MVP is the right-sized product for your company and your customer. It is big enough to cause adoption, satisfaction, and sales, but not so big as to be bloated and risky. Technically, it is the product with maximum ROI divided by risk. The MVP is determined by revenue-weighting major features across your most relevant customers, not aggregating all requests for all from all customers.”
—Frank Robinson, “How it Works: Minimum Viable Product”
Minimum viable products are basically released to help gather customer feedback for further product development. This customer feedback is important for product developers and the entire team working to make the final product.
The aim is to answer these questions:
- What needs do the target customers have?
- How do you think the market reacts to new products?
- How do they want these needs to be met?
- What other products have they tried to use to meet these needs?
- What extra features do they want to see in the existing products?
Having answers to these questions could help your product team decide what to prioritize, which to discard, and which to put on the to-do list. Check out the guide about customer lifetime value.
As part of a strategy and process, an MVP can be incorporated into the development of a product for a particular market and target audience. A prototype is an essential work product in the iterative process of generating ideas, prototyping, presenting, collecting data, and analyzing them. An iteration should be completed in the shortest amount of time possible.
A product/market fit is iterated until the product is deemed viable or until it fails to meet the expectations of the market.
There are five advantages to starting with a minimum viable product. Starting with a minimum viable product is beneficial in five ways.
Five Benefits of A Minimum Viable Product (MVP)
A funder or co-founder with an entrepreneurial spirit may take the MVP approach for these five reasons;
1. Fast launch
Working through the entire product development process is time-consuming and exhausting. You may have to go through up to eight stages.
- Ideation (Business Idea): This is the period when you come up with a business idea. Here, you should ensure your product idea is feasible and has a market.
- Research: At this point, you begin to gather facts about what it would take to build the idea to an MVP, perform a product hypothesis, gather marketing information, and check out other companies doing the same thing you want to do. If your product becomes successful, these companies will become your competitors.
- Planning: This stage involves preparing a blueprint of what you’ll need to bring your business idea to life. Every multinational you see on the Forbes list today was once nothing but a business idea. It took the right kind of planning to bring them to life and gather as many customers as possible to keep the business running.
- Validation: This is when you test business hypotheses to ensure your product idea meets the needs of your target audience. With this validated learning process, you can ensure you are on the right track with the maximum amount of information.
- prototype: It gets interesting here as you prepare samples, live demos, and other forms of prototypes that will eventually make up your minimum marketable product.
- Sourcing: Now it’s time to go all out and invite your early users and new customers. It is their valuable feedback that would be used to build a full-blown product or even a new product.
- Pricing: Based on the feedback from your early adopters and the competition, you can now decide on your pricing plan. Be careful not to sell too cheap so you do not run at a loss, and also try as much as you can not to be too expensive so you do not lose customers to a competitor who has a cheaper alternative.
- released I hear someone say our minimum viable product is ready?!
The time between conception and the point at which you release your product to the market is shortened with a minimum viable product. The lean startup method enables teams to move quickly and make the product available for sale before interest dwindles or a competitor fills the void.
2. It is less costly
It is expensive to create products from scratch. As a startup, obtaining venture capital funds is a herculean task. It’s difficult to attract angel investors or hustle on crowdfunding platforms. Raising venture capital can take up to two years.
Many budding entrepreneurs’ dreams have died because they were unable to obtain startup funding. Fortunately, developing a minimum viable product (MVP) product is inexpensive.
Can you guess the reason for this?
It enables startup companies to quickly launch a low-budget basic product with only the minimum feature set. Putting together core features does not necessitate a large financial investment, as does creating a full-fledged product. Find, what is gross revenue.
3. Little or no risk
It is overwhelming to launch a new product. You are unsure whether or not potential customers will like it. Is this a scenario you’ve seen before?
A happy product team creates a beautiful product. They expect it to dominate the market. However, despite all of the bells and whistles, the product fails upon release. Precious money and resources are squandered.
However, an MVP shields you from this risk.
User feedback allows you to validate the product’s potential and market fit. Armed with this, you can launch your actual product with low risk because you know what people want.
4. Verification
Marketing and sales teams frequently question themselves about their tactics because they are unable to sell a specific product.
Why?
It’s unpopular. A Harvard Business School professor estimates that 95% of new products fail. Allow that to sink in.
The MVP process solves this issue. The product development team can learn whether or not people like the product by soliciting direct user feedback. It can be used to test your concept.
The product team can quickly get user feedback with the aid of an MVP. You quickly and efficiently determine product-market fit. After that, you can launch with confidence because your product has been validated.
5. More focused marketing messages
Thanks to the MVP tactic, teams have access to a sizable, recent, and unfiltered pool of knowledge gleaned from customer feedback. It can be used by the sales and marketing teams to create razor-sharp marketing messages.
- Identify value propositions.
- Buyer personas with specifics.
- Campaign copy that is relevant.
- Product descriptions that are captivating.
- Persuasive sales presentations
Qualities of a Minimum Viable Product (MVP)
What components of an MVP are commonplace, then? Consider four of them in more detail.
1. Suggestions and modifications
Customer feedback is an essential component of the lean startup business model. Early buyers acknowledge offering as much feedback to the product owner as possible from the beginning. This data is used by the product owner to improve the quality of products and make them accessible to others.
2. Simple, yet valuable
It’s easy to think of an MVP as a crude, hurried, and barely usable product.
It has only enough functions to allow basic functionality. However, it adds value by resolving a serious and frustrating issue for the end users.
Even though it is an incomplete and imperfect first version, potential customers will still pay for it because it is valuable and solves a pain point.
3. Pre-launch
An MVP is unobtrusively introduced, as opposed to a full launch with all the fanfare. There are several components to the launch.
A limited audience: businesses handpick the initial buyers based on specific eligibility requirements. Additionally, they set a cap on numbers in order to streamline the product development process and collect targeted feedback.
Limited resources: the cost of product launches. Launching an MVP saves money so the company won’t waste money creating a fully developed product if the market rejects the MVP. Furthermore, a small budget allows new businesses to create and test products even if they have little or insufficient funding.
A simple landing page: in order for people to buy a product, they must first see an offer. You make that offer on a custom landing page with an MVP product. A landing page, for those who are unfamiliar, is a standalone, distraction-free web page that maximizes conversions. Find the guide about go-to-market strategy.
4. Reasonable and appealing pricing
Due to their lack of validation, MVP products are priced as follows:
Discounted: Marketing teams lower the initial price to entice potential customers. The price is therefore advantageous to buyers. It becomes straightforward to choose to try the new product.
Factored: It stands to reason that a product’s price will increase as it gains enough features and specifications. Is it not obvious? The fact that companies lock users into the low initial price for life is a key pricing feature of MVPs. They get extra functionalities for free.
Payment plans: MVP payment terms are staggered to attract as many customers as possible. Can’t afford to pay the entire amount up front? No problem. You can always pay in manageable monthly installments or find a smaller payment plan. Customers value flexible payment terms, so they can plan their finances.
A Step-By-Step Guide To Developing An MVP
You can use a variety of frameworks to verify your product hypothesis and identify your MVP.
In this section, we’ll discuss the five-step method created by Patrick Vlaskovits and described in his book, The Entrepreneur’s Guide to Customer Development.
The following steps make up the process:
Step 1: Draw a map of your ecosystem
Your company ecosystem map is a visual representation that depicts all of the customers who will use your product. The product may be used by people from many demographics. It could be compared to a target audience or user persona.
Draw a circle or box to represent each stakeholder, including users, clients, partners, media outlets, clients’ clients, and other organizations.
Secondly, determine the benefit—that is, what your customers gain from utilizing your product. It should be noted that value might also be indirect. For example, money received by your customers’ customers.
Thirdly, determine who pays whom.
Finally, show how your product is delivered—the sales and marketing channels utilized to reach end consumers.
Vlaskovtis cites the example of “Hopped-Up PB,” a peanut butter merchant. The peanut butter is expected to be sold directly to consumers via their website as well as through health food retailers.
Hopped Up PB’s ecosystem map looks like this:
Step 2: Define the value proposition for each stakeholder
What high-level benefit does each ecosystem stakeholder receive, and what are they willing to give up in return? What are your users’ major pain points, and where can you provide the most value? ClearBridge’s Chris Ciligot refers to this as a “pain and gain” map.
Examples of individual value propositions include;
- Users benefit from increased profits.
- Businesses are exposed to a large, focused demographic.
- Validated learning for the customer.
- Intermediaries will save costs and lower the cost of acquiring new clients.
- Potential customers have more time to focus and spend with their families.
Step 3: Posit a final MVP
Final MVPs, according to Vlaskovits, test hypotheses for the business model, whereas intermediate MVPs evaluate high-risk business model components.
In this step, you must specify what the user “pays” for utilizing the MVP and what you measure to assess the MVP’s viability—in other words, your success criteria. Find, the pain points customers face.
Step 4: Identify the biggest risks
To validate essential assumptions, explain and rank the business model’s risks from high to low. The goal of this activity is to identify potential obstacles and failure points early on. This reduces the chance of failure and substantial cash losses before developing a full-fledged product.
Vlaskovits suggests making a table of all the risks, noting the type of risk, who to test (which stakeholder), any dependencies, and how to test it.
Step 5: Create your value path
You’ll map out the value path—the Customer Discovery journey—in the process’ last stage to get from where you are right now to your finished MVP. Make a list of the fundamental presumptions you need to test for each risk from the table you produced in the earlier steps. The assumptions you have will probably need to be put to the test through a combination of customer development interviews and prototype/product features.
The value route for our hypothetical peanut butter product may resemble this:
Frequently Asked Questions About MVPs
What does the term MVP mean in business?
MVP means Minimum Viable Product and refers primarily to defining a workable and saleable version of your business idea with the least amount of features. The concept comes from Eric Reis’ book – The Lean Startup MVP Approach, and the basic principles. December 14, 2017.
A Minimum Viable Product (MVP) is a development technique in which an existing product can be introduced in the market with a basic feature but enough to attract customers. The product can be launched only after receiving a satisfactory response from initial customers.
Is customer feedback the main goal of MVP?
The MVP concept is designed to minimize the time and effort wasted in testing a company product before they begin development, validate the product idea hypothesis using simulated information in real time, reduce release time, and offer valuable early users products quickly. Many developers also use the MVP to get ideas for next-generation tools and products.