The MVP Approach: A Guide to Minimum Viable Product Development for Startups
Here, we will discuss the “MVP” approach. A method that allows your company to maximize its ability to meet your client’s needs without investing too much into the early stages of product development.
In the current digital age, innovation and speed are two significant factors that entrepreneurs and consumers consider when they take a new product within their grasp. They constantly seek the next new thing while ensuring that it produces the utmost customer satisfaction, accessibility, and reliability.
As an entrepreneur venturing into new industries or businesses, it is imperative to consider factors that will benefit your product in both the short term and the long term. Product development can be a challenging feat, which mainly targets your capability as an entrepreneur to fully meet the demands of your target audience.
What is MVP?
MVP stands for “Minimum Viable Product,” a product development term that refers to the technique where entrepreneurs or businesses release a product with essential or sufficient features to early adopters. After this, the business takes the feedback provided by the users to further improve their product where it was deemed lacking.
This product development technique allows entrepreneurs to provide a faster time-to-market of their product while attracting early adopters to identify their needs to help produce a product-market fit during its early stages.
In simpler terms, you get to provide a product with minimal but must-have features that drive your value propositions much quicker, placing you ahead of your competitors. Once your early adopters receive your product, the feedback you receive is your ticket to identify technical issues (bugs, UX inconsistencies, etc.), add features or functions lacking, and improve your overall product further.
The Importance of MVP in Product Development
When deciding to dive into your next product development project, there are many things to consider. It requires you to start with project discovery phase. That means to identify and analyze how your consumers behave – their purchasing behavior and demands – to ensure that you are able to fully cater to their needs and provide a product or service that fills a gap in the market.
Product Growth Matches Customer Demands
Taking advantage of this technique allows you to get an early look into the needs and wants of your market. There are several methods to obtain insight into what your customers want by engaging them in surveys, interviews, product reviews, etc. Doing so can help you improve the features of your product as well as your business value.
In some ways, MVP is like a market study or analysis that helps you gain information about the potential of your product in the current market landscape. While at the same time, you are able to advertise, promote, and gain a reputation as early adopters or users test your product. A successful MVP approach generally meets the following criteria:
- Determine long-term product potential
- Building a strategy to unlock the said potential
Crafting an MVP approach around these ideals can help you ensure that the product you provide best fits the current market and consumer demands you are venturing into.
Proper Company and Product Scaling
Moreover, studies have shown positive data on the performance of startups who scale properly over time in comparison to those who scale rapidly in a short amount of time. With the use of MVP, you can effectively control the rate of how your product scales while ensuring to keep your product up-to-date with consumer demands.
According to a study by Failory, over 70% of startups tend to fail within the first five years.
Along with this, CB Insights provided common reasons why startups fail:
- around 42% fail due to misinformation on market demand,
- while 29% run out of money before they become fully established.
This is where MVP comes into the picture. By implementing the MVP approach into your product development practices, you can ensure that your product scales effectively without risking high-cost demands and premature scaling.
Why Do Startups Invest in MVP?
Now that we have discussed MVP and its importance for business, it is time to look into why other startups invest in this kind of product development technique.
The MVP approach provides numerous benefits for product development. It has the ability to make your process more efficient and cost-effective while placing your product out in the market earlier to attract investors and potential business partners.
The Benefits of the MVP Approach
Here, we will showcase the benefits of the MVP approach and how such can help increase your chances of securing a successful and well-rounded product.
#1: Cost-Effective Development
Let’s face it. As a startup, managing the financial aspects of your company is the highest priority for many. Your capital, revenue, and cash flow determine how much you can invest in new developments, techniques, and management to help with your business.
It is best to keep in mind that the more complicated your product is, the more costly it can be. This is one reason why many startups and micro, small, and medium-sized enterprises (MSMEs) prefer to implement the MVP approach. By providing only the primary and basic features in your product in its early stages, you are significantly cutting costs toward research and development for your product.
Moreover, in the event that an MVP becomes an unsuccessful venture, the price of the mistake can be significantly reduced by simply reusing or revamping the current version with the help of customer and user feedback you get from your initial launch.
#2: Faster Time-to-Market
As the saying goes, time is money. This ideology usually applies in the business world. The faster you are able to bring your product to your market, the sooner you can reach and interact with potential clients. Having the capability to release your product early places your business ahead of your competitors in the market.
MVP development has a shorter production time in comparison to other methods of product development. Generally, MVP development takes about 3 - 4 months to create a viable product ready to be used by early adopters and users.
#3: Focus on Core Functions
Given that MVP development focuses on providing the most basic features in your product, it allows you to also focus your resources on crafting and incorporating your product's core functions and critical selling points upon your initial launch. Moreover, it allows you to test your business concept at minimal costs.
Entrepreneurs tend to insert redundant functionality before the product even reaches the market. Adding functionality features on top of each other can easily derail you from your goal, making your product redundant. Focusing on your core functions can help you keep from straying away from such goals.
#4: Develop Early Relationships with Clients
Establishing a good relationship with your clients is essential to achieving a successful business venture. Providing an early version of your product allows you to gain insight and feedback from your clients at an early stage, which gives you more time to improve or even revamp your product once you have sufficient statistics on your consumer demands.
Early adopters can spread the word or even promote your product while providing priceless product reviews. Through this, you can take advantage of their demands to pave the way for a consumer-centric product for your next product updates. This allows you to fully address and cater to your customer’s needs and boost their overall customer experience as soon as you develop your final product.
#5: A Better Understanding of Your Consumer Market
In relation to establishing a good relationship with your clients, incorporating MVP gives you a chance to better understand your clients' needs. By collecting relevant data and client feedback, you can understand your consumer’s needs straight from their perspective compared to business analytics and experienced advisers.
Moreover, MVP allows us to verify our hypothesis if our product or service provides a solution to a consumer’s problem. Otherwise, it allows us to modify or pivot our views towards the needs demanded by the market.
#6: Open to Flexible Updates
Another benefit of incorporating MVP practices into your product development is the ability to provide more responsive and customer-centric updates. It allows you to fully commit to your customers and meet their needs and suggestions on the functions of your product.
#7: A More Robust Building Block for Development
Creating a fully polished and large-scale product can be costly and take years to develop. It is important to keep in mind that even most of the popular and widely used applications today began as MVPs, which gradually grew by addressing consumer needs and meeting industry standards to ensure that their product uses up-to-date technology. Slowly adding relevant and timely functionalities provides a more robust and solid building block for your product.
The Types of MVP for Startups
Different products call for different approaches when it comes to MVP development. There are two main types of MVP approaches you should be aware of to help you effectively create an MVP that caters to your business goals and values.
The two types of MVP approaches are as follows:
- Low Fidelity MVPs
- High-Fidelity MVPs
As you create your own MVP, you should first identify what kind of MVP you are after. And this depends on the goals and targets you wish to achieve when creating your MVP. To help you identify which MVP best suit your product, we will break down the differences and aspects between each type of MVP.
Low-fidelity MVPs are usually connected to early-stage solutions, which provide entrepreneurs a grasp of what their clients need early on. Moreover, it is meant to test and see if there are enough quantity of customers who is willing to buy or engage with the product. Such also require little-to-no software development efforts at all. It is an excellent option for first-time entrepreneurs or those with limited capital.
There are several types of low-fidelity MVPs that you can use when considering implementing the MVP approach to your product development:
- Customer interviews. This allows you to learn more about your product and the problem you’re trying to solve within your market. Factors such as price, product, promotion, and purchase behavior are major aspects that provide you with a well-rounded understanding of your consumer’s needs.
- Blogs. This method allows you to validate your ideas within your target market without exerting too much effort. Being cost-effective and efficient, blogs are a great way to communicate with potential customers while generating a reputation for your product.
- Forums. Forums can be effective channels that help you grasp a better understanding of your customer’s problems regarding a certain issue related to the product or service you are planning to launch. This allows you to gain knowledge about the needs of your potential market directly.
- Landing Page. Also known as a webpage, a landing page can be used as a platform to promote the features and benefits of your product while validating your value proposition to your customers.
- Explainer Video. This is a short, concise video explaining the features and benefits of your products along with reasons as to why people should buy them.
- Paper Prototypes. This method is another great way to provide your users a first-hand experience of your product before it exists. This also gives them the opportunity to provide feedback on the current features, which you can then use to improve your initial MVP.
- The ‘Fake Door’. This MVP is another way to gain valuable statistics on how many individuals are willing to buy or engage with your product. This works by getting potential customers to register for your product or service in advance before it is available.
In contrast to low-fidelity MVPs, high-fidelity MVPs provide developers an insight into whether the product solves a given problem or fills a gap that is needed within the market. In other words, it is more specified to the functions within your product that caters to the client's needs. High-fidelity MVPs generally revolve around the actual testing or prototyping of your MVP.
Here are several examples of high-fidelity MVPs that you can make use of:
- Digital Prototypes. In the word itself, digital prototypes are mock-ups of your MVP, allowing users to run through your product while saving both time and money. This method enables developers to spot and resolve any technical or functionality issues earlier before investing in front-end design and development.
- The “Wizard of Oz” MVP. This provides your potential customers an impression that you have a real working product and they’re experiencing the real thing. Despite requiring significant time and effort, this method is an effective way to validate if you have a desirable product or service before proceeding to build it. It helps you determine the amount of interest in your product while maintaining a low technical cost.
- The “Concierge” MVP. This method can be used when you are unsure whether your solution fills a gap in the market. In a sense, it is selling a “concierge service” to see if a similar product would work. It involves manually assisting users in accomplishing their goals as a means of validating if they need your service or not.
- The “Piecemeal” MVP. This type of MVP is a middle ground between the Wizard of Oz and the Concierge MVP. Here, you use existing tools and services (such as a prototype of your product) to deliver a functioning product to your services.
- Crowdfunding. Crowdfunding is a way to generate money to help create your product by providing a value proposition to customers and enticing them to invest in your product. In a sense, crowdfunding is like pre-ordering your product before it is made.
- Single Featured MVP. This form of MVP lets you test one singular feature, which is usually the selling point of your product. A single featured MVP prevents your users from being distracted by other features you provide, allowing you to gather enough understanding of the specific problem you are trying to solve within your market.
Both MVP types are used in different cases, depending on your desired end goal for your MVP development. Using low-fidelity MVPs is usually connected to market research and analysis, allowing you to determine if your product can gather an audience and interest in the current market.
Read also: How to Start a Crowdfunding Website Like Kickstarter: the Main Features.
High-fidelity MVPs are usually targeted towards entrepreneurs who want to test the effectiveness of their product in terms of functionality, service, and features while at the same time validating its relevance and interest in the market.
MVP Product Development Process
In this section, we will discuss the process put into MVP product development to guide you through its steps and help ensure you create a well-rounded MVP. Every step is a crucial contributor to developing a successful MVP.
#1: Conduct Market Research
Market research plays a major role in creating a successful MVP. There will be times when your ideas or solutions become irrelevant or redundant in the current landscape of your industry.
Failing to conduct proper market research and analysis is one of the ways to subject your venture to failure. Studies revealed that 35% of startups fail by developing an irrelevant product in their current market.
By conducting thorough market research, such as understanding consumer needs and behavior, you can tweak or realign your idea to match the current needs of your target market.
CB insights provided statistics on other factors such as:
- 38% - running out of cash flow,
- 20% over competition,
- 15% pricing/cost issues,
- and 14% lack of resources/team misalignment.
This are a few of the many other factors that make an unsuccessful startup.
#2: Revolve Around Value Proposition
Here, it is essential to ask yourself and your team about your product value proposition. Here are several examples of questions you can dive into to further improve and clarify your value proposition:
- What value does the new product offer to its users?
- How will the product benefit them?
- Why would they buy the product?
- What problem do we want to solve?
- How this problem is solved right now?
- How will our product help customers solve this problem better?
It is vital to ensure that your value proposition is clear and achievable for your clients.
#3: Provide a Map of User Flow
This refers to the flow of how your users navigate your product once it is launched. It is essential to design an app that is easy and convenient for users. In this stage, it is best to get into the ind of your audience and visualize how they will use and navigate your product or application from start to finish.
By having a map of your user flow, you can identify features and functionalities that may be lacking in your initial draft or idea of your product. This ensures that nothing is overlooked while placing user satisfaction as a primary goal.
#4: Focus on Core Functions
In relation to creating a user flow, focusing on your core functions (otherwise known as MVP features) is key to ensuring that you are providing a well-rounded MVP while ensuring that your key selling points and features are showcased in your product.
You can also categorize these functions based on priority: high, medium, and low priority, and arrange them in your product backlog. This will guide you in the future on when to roll out certain features once you gain feedback on your product.
#5: Building your MVP
Once you have surpassed the previous steps, you can now proceed with creating your MVP and prepping your launch. You now have sufficient information bout your market and have determined the kind of features to provide to your users.
It is important to keep in mind that MVP is not a lower quality compared to the final product. The goal is to use MVPs as a catalyst to provide a complete product that fills a gap in the market and consumer demands.
#6: Build. Measure. Learn.
This part of the process ensures that you continue to build your product, measure its effectiveness and relevance with up-to-date metrics, and learn from product reviews and mistakes spotted by early adopters to help improve your final product.
Everything is a process, and by taking into account your market needs, customer demands, and the latest technological advancements, you can create a product that fills a gap in the market and provides a solution to your consumers' problems.
Measuring Success After Building MVP: Key Performance Indicators
After building and launching your MVP, you must keep track of your product and measure its effectiveness by following Key Performance Indicators (KPIs) to help you determine the success of your MVP. Generally, the MVP KPI criteria come in two forms, which you can follow when measuring your the success of your MVP:
- Feedback. This form is where you consider customer input and their take on the effectiveness of the product. Much like the qualitative side of your measuring your product. Here, you can identify how your product can be improved to make it more user-friendly.
- Metrics. Using metrics KPI indicates the quantitative side of your post-launch analysis. These metrics can help you with getting a better grasp of what your customers think.
Feedback and Customer Input KPI
As mentioned, this is where you determine what your customer has to say about your product. Its positives and negatives. Where it is complete and where it is lacking. These inputs play a major role in identifying what your customers need from your product and how you can further improve the functionality and features of your product.
This KPI criterion involves the numbers or the quantitative metrics of your MVP and its performance. Numerous indicators provide different interpretations of how your MVP is performing.
- Number of downloads or subscriptions. This indicates the level of interest in your product and how its value proposition addresses the problem you aim to solve.
- Percentage of active users. The number of active users allows you to get an insight into the effectiveness and relevance of your product among your target audience.
- Percentage of paying users. Many paying users may suggest that your MVP is a success. The more you have paying customers, the more likely they will continue to use your product and invest in future developments.
- Average Revenue Per User (ARPU). This metric indicates the profitability of your product.
- In-store positioning. Whether in a physical or online store, knowing where your product is placed gives you an idea of the popularity and accessibility of your product.
- Churn. This is the percentage of the people who stopped using your product.
- User ratings. Similar to customer feedback and input, this provides you with an average rating of how your product is performing in comparison to products similar to yours.
Successful Projects that Launched as MVP
If you think that MVPs are only for startups or companies that lack funding, you can realign your beliefs. Some of the most widely-used and popular applications first began as an MVP, which was slowly developed to become the product that they are today.
Amazon is of the most popular and established online shopping platforms today. It started out as an online catalog that only sold books, challenging the brick-and-mortar age of fellow competitor Barnes and Nobles.
Launched in 1994, their straightforward and easy web design based on the MVP approach helped them achieve and establish their organization in the retail market. Now, Amazon focuses on other disciplines such as e-commerce, cloud computing, digital streaming, and artificial intelligence while continuing to sell an extensive catalog of books online.
As one of the leading social media networks known worldwide, Facebook initially started out as an MVP product whose aim was to connect students of schools and colleges via messaging. Now known as Meta, Facebook is now a multinational technology conglomerate that parents other papular social media platforms such as Instagram and WhatsApp.
At present, Facebook has roughly 2.93 billion active users worldwide.
Before launching Dropbox in 2008, CEO and co-founder Drew Houston decided to create an effective Explainer Video MVP to explain in detail how the application works. This proved to be a success in reaching the right audience as it received a large number of views and comments on Youtube.
At present, Dropbox is widely used for commercial, professional, and personal use when it comes to cloud storage, file synchronization, personal cloud, and client software.
Launched in 2008, Airbnb began as airbedandbreakfast.com. It started out as a single website MVP that only provided feasible renting spaces as its sole feature. Over the years, founders Brian Chesky and Joe Gebbia took customer input and feedback and built their website to the AirBNB we know today.
What to Do Next?
The MVP approach is an effective product development strategy that can help increase your chances of achieving a successful business venture by having the right mix of product features, functionality, customer experience, and product scaling.
As you continue to build your MVP and measure its success, it is best to keep in mind the best practices of the MVP approach and apply the Build. Measure. Learn. Prospect to guide you as you improve your product until you achieve your final result.
Read also: Jobs-To-Be-Done (JTBD) Methodology: Definition and Overview.
Minimum Marketable Product (MMP)
As you finish your MVP, it is time to move on to the following stages after developing your MVP. There are two stages you must take into account to make a fully rounded product. As mentioned several times in this article, your MVP only provides the most basic features along with the key selling features of your product. In short, MVP is not your final product but just a starting point to getting to your final product.
This is where you move on to the Minimum Marketable Product (MMP). This stage of product development is the part that addresses your consumer's needs and where you can begin to sell or further promote your product to a larger market, ideally beyond that of your early adopters.
In simpler terms, MMP is a product that has the simplest features but is more aesthetically developed for your product’s launch to the public market. The said features are the benefits or functionalities you promoted or promised to your early adopters during your MVP development phase.
How to Develop Your MMP?
Now that we have briefly explained what MMP is in contrast to MVP, it's time to discuss how you can develop your MMP to ready your launch to a larger market.
#1: Hire a UX/UI Team
Here, you will need to hire a user experience (UX) and user interface (UI) development team to handle the improvements you need to make towards your products' look and feel. You can focus your resources on developing the front-end of your product to ensure that, while it is functional, it is also aesthetically pleasing.
#2: Eliminate/Add Features
After your MVP, you will receive feedback from your early developers. This part is where you listen and ensure to provide the needs and wants of your early adopters and transcend them onto your product. This is the time to add or remove any features that are needed or irrelevant to your product.
#3: Enhance Usability
Ensuring you deliver high-quality UX to your customers is vital to securing a successful product launch. Now that you have gathered data and feedback on your MVP, you can further improve your product by implementing such feedback and improving your product's usability in the areas where it is lacking. It could vary from your buttons and app reaction/response speed to the overall user flow from start to finish when navigating your product.
This process is essential to product development as it keeps you on track and helps you continue to achieve a well-rounded, customer-centric product.
Implementing the MVP approach to your product development needs can help you significantly through numerous factors such as understanding consumer and market needs, providing practical solutions to ongoing gaps or problems in the industry, and developing a well-rounded, consumer-centric product that enables your users to continuously patron your brand in the long run.
These factors are crucial in building your brand and reputation within your industry. As your frontman, your product is the face and the mind that keeps your organization running, so considering the MVP approach can help you continuously grow and improve your product and build it to become the best version of itself.
Building an MVP product can be challenging. If you need help in crafting a well-rounded MVP, TechMagic provides a full suite of product development services that can help you ensure that your product fully caters to the news of your potential customers and current market.
Frequently Asked Questions about the MVP Approach
What is MVP development?
Minimum Viable Product (MVP) development is a product development term that refers to the technique where entrepreneurs or businesses release a product with essential or sufficient features to early adopters.
Why is quick MVP development so important?
Ensuring that your MVP is brought to market quickly allows you to have more time to consider your consumer input and effectively apply this feedback to improve your product.
How much does MVP development cost?
How do you find an affordable MVP development company?
There are numerous fintech startups and companies that provide cheap and cost-effective MVP development processes. They can easily be found through online search engines such as Google and Bing.
What does MVP mean in lean startup?
According to Eric Reis, an MVP in lean startups is the version of a new product that allows a team to collect the maximum amount of validated learning about customers with the least effort.