How to Find Product-Market Fit by Starting With an MVP

With the success of many IT behemoths who began with MVP (Minimum Viable Product) like - Uber, Facebook, Instacart, and more, business leaders have been intrigued to switch to the MVP development process. This helps them to test the worth of their product without the constant outflow of time or money. It also de-risks full-scale production by garnering user feedback, which when implemented leads to products with enhanced features and functionality.

Introduction to MVPs

MVP is a basic version of a product that consists of minimum features and core functionality, solving an important problem for the end-users. This means that the prototype developed should have features that define the value proposition.

Once the MVP is launched, feedback from early users is awaited. Based on the feedback, the company adds features to the product and enhances its viability. The MVP approach further allows:

• Speed to market, leading to a competitive advantage

• Enables early testing of the idea with actual users to check whether the product is able to solve their problems efficiently or not

• Helps in working effectively towards the development of a full product with the integration of user feedback and suggestions

  
  

How Does an MVP Work?

Let’s assume that an entrepreneur is getting a final product developed. On average, it will take 7- 8 months for development with an estimated cost of $200,000. The entrepreneur then decides to get the MVP version of the product developed with fewer functionalities. The development time for the MVP creation is estimated to be only a month or 6 weeks with a smaller budget of $15,000.

As a result, a market-ready product is developed and the early adopters can give their feedback. At this stage, there is a possibility that the MVP might appeal to the users. If it doesn’t,

continue testing and updating the MVP till the goal is achieved.

Additionally, results from the MVP test will help determine if the product should be built or not. If the initial problem is solved or the goal is achieved then it is reasonable to move forward with full product development.

Advantages of MVP

The creation of an MVP is done with the intent to attract early adopters, enabling faster time to market, and achieve a product-market fit from early on. Other advantages of MVP include:

• Product testing
• Reputation building
• Gradual product improvement
• Cost-efficiency
• Faster release

Product Testing

The essence of an MVP is testing. It seeks to test whether the idea will work in the market environment while adding value with the least possible cost. This reduces the risk involved with the full-scale production and allows for a gradual, market-tested expansion. Results from MVP testing aim to indicate if a product is meeting the goal and is solving a problem in a way that is reasonable to move forward with the full product development.

Reputation Building

A highly functional MVP helps in attracting new customers (early adopters) that otherwise would have taken considerable time to hear about the product and the company. By building an MVP and adding features as per user feedback, it will be easier to sell the product as a prototype that is solving problems and will help the brand build its reputation.

Gradual Product Improvement

MVP software development provides space for evolution. The product is improved gradually and there are several versions where the core components of the product can adopt and adapt to innovations easily. User feedback is pivotal as all product improvement is based on it.

Cost-efficiency

The most significant advantage of an MVP is its cost-effectiveness. This is because less money is being put into the idea before the actual knowledge of what the audience wants. The focus is on building a product with minimum core features to solve the problem. This, in turn, reduces the time needed to develop the product and keeps the costs low.

Faster Release

MVP software development has a streamlined process because only the most viable features and functionality are added. The product is released in a shorter amount of time providing users access to the product for its viability assessment.

Steps to Building your MVP

MVP development aims to test the hypothesis to prove the viability of the product. It helps the team in getting closer to the end goal in a shorter period of time as the value is incorporated from the beginning. Considering the advantages of having an MVP developed, here are the steps to developing an MVP:

• Outline the problem you plan to solve
• Know your competitors
• Define your goals and user flow
• List necessary features
• Develop, test, and learn

Step 1: Outline the Problem You Plan to Solve

When developing a minimum viable product, the first step is to evaluate the business idea. You can ask the following questions:

• What problems can my platform solve?
• Will it be useful for the end-consumer, and how?
• Why would they use the solution?

Answering these questions helps in finding the main goal of the product, i.e. to cater to the requirements of the customers. A product that solves a problem has a better chance of succeeding with customers.

Step 2: Know Your Competitors

Competitor analysis is crucial to maintaining the uniqueness of the product. At times entrepreneurs ignore this step in good faith thinking that their product is unique. But before bringing a product to the market, thorough competitor analysis is important.

To help with the competitor analysis, various tools are available in the market, this includes monitoring the monthly traffic, ranking of the website or application, geographical location of users, and much more. Similarweb offers such services where you just need to copy-paste a link to the site and information regarding global rank, country rank, category rank, and much more is provided.

Moreover, analyzing customer feedback about your competitors’ products can help build an exceptional MVP for your product. Once the problem to be solved is determined, then we can move forward to the next segment of defining the goals and the user flow.

Step 3: Define Your Goals and User Flow

When defining the user flow of the product it is important to focus on the primary goal. Let’s take into consideration the example of Airbnb. The primary goal of AirBnB was to provide rental accommodation. The MVP consisted of a basic landing page with housing pictures that allowed users to book an accommodation. It got three clients and what started as a startup, now has a yearly revenue of $2.6 billion dollars.

Moving forward, to define the user flow, we should define process stages, i.e. to explain the steps needed to reach the product’s primary goal. During this stage, the focus should be to incorporate core functionality that allows tasks, such as - “book now” or “search.” Once the process stages are defined, the features for all stages can also be established.

Step 4: List Necessary Features

Once the steps that the user should follow while using the app are defined, a list of features for each stage can be created. Once the list is created, prioritize the features. A few of them might be nice to have but not necessary. To prioritize, you can ask yourself the following questions:

• What is the single most important action that you want the users to take? (This will be the main feature)
• What other features do you want to offer?
• Which features are must-have and nice to have? Here you can use the ‘story mapping technique.’ A matrix with a horizontal row showing main process stages (user flow) and under each stage a number of features dedicated to this stage.
• Once features to all stages are added, a downward vertical arrow can be drawn from ‘high priority’ at the top of the column to ‘low priority’ at the bottom.
• Then, arrange features according to their priority.
• Once the features have been prioritized, define their scope for the first version of the product.

Step 5: Develop, Test, and Learn

After the scope of work is defined, we can proceed with the development stage. When the development of the product is completed, it needs to be tested. The quality assurance engineers test the product for any functional defects. Alpha and beta testing are conducted.

• Alpha testing - is the final stage of testing to check if the product is ready for release outside the company.
• Beta testing - includes the release of software to a limited number of real users.

As soon the product passes alpha testing, it is ready for beta testing. The period of beta testing varies, it can usually take 1-2 weeks to get sufficient feedback. Based on the feedback from beta testing, you can start improving your product again, then test and then learn, continuing with the cycle until a robust product has been found as the best fit for the market.

Steps to Move from an MVP to a Full-product

After the successful development of an MVP and market adoption, it is time to build a full product that will suit the buyer persona. To smoothly transition from MVP to a full product, follow the steps mentioned below:

• Gather and analyze feedback
• Be scalable
• Think about pricing
• Invest in marketing
• Continuously analyze and test

Gather and Analyze Feedback

The aim of MVP is to collect feedback from customers. This is why MVP primarily focuses on the inclusion of minimum features in a product that is to be presented to its target audience.

From the gathered data after MVP testing, polish the product with enhanced features and functionalities. Track user behavior, various interactions, and dropoff at every touchpoint to improve, add or omit features from an MVP to the product. Soliciting feedback from the users even if it is not positive is the way ahead from MVP development into product development.

Be Scalable

After the launch of a successful MVP, most startups fail because they do not consider scalability. As you move from MVP to full-scale development, it is important to safeguard against failure. What if the MVP was a success, but 1,00,000 people wanted the product overnight? Do you have the resources, infrastructure, and inventory to handle the load? In case of product development, it is important to sensibly scale fast, without going too overboard with features. For digital product development, primarily it’s about addressing SOPs, support staff contingencies, payment APIs, and more.

Think About Pricing

Thinking about the product’s pricing is crucial as it defines the cost for your customers to use the product. Setting a price that is too high or low can cause serious problems for your business growth as it could limit sales and cash flow.

A good MVP likely addresses the main pain points that the product is designed to solve, but buyers cannot buy-in on the assumption that their purchase will be upgraded to a full version as you graduate from MVP to the product.

To fairly price the product, MVP price assumptions should be tested to track the traffic and conversions. Check the price at which the traffic drops. Conducting this analysis could help in identifying the price point that the market can bear once the finished product is ready for its launch.

Invest in Marketing

Investing in marketing once the MVP is released can be profitable as it is not only useful in tracking consumer response to the basic version of the product but it is also the perfect time to plan the marketing strategy when the upgrade from MVP to product will take place. The data collected from MVP tracking can also be useful to generate leads. By using email marketing, stable and qualified leads (that have already shown interest in MVP) can be reached once the final product is ready for launch.

Continuously Analyze and Test

Analyzing and testing are pivotal even after a successful transition from MVP to a fully- developed product. It helps with measuring the KPI indicators. Everything that has been tracked during the MVP launch, i.e. traffic, conversions, customer feedback, social engagement, and more, still needs to be tracked to improve the product and user journey for greater customer satisfaction. Additionally, performance tracking also helps with cost-per-conversion.