Last week we spoke about the 5 most common mistakes founders make when developing their MVP and clarified how to avoid them. If you missed it, you can check it here. Today it’s time to look at the benefits building a minimum viable product brings to the table.
Benefit #1: Low risk with high ROI
You’re most likely aware that developing a complex system like Netflix, for instance, takes lots of time and development hours, which also means loads of money. Going with the ‘I-need-every-single-feature-to-be-ready-before-release’ approach is asking for problems and eventually a painful and hella expensive failure.
To avoid such an outcome, it’s best to allocate limited resources into building a core MVP product, testing it, using it to start generating sales, growing user base or securing additional investments that will allow you to boost your startup’s growth.
If you go with agile methodology you may be able to release a first version of your product even within a month, so you can carefully start generating ROI with a relatively low risk of wasting money on something you’ll end up throwing away while being flexible with the direction your product will go.
Benefit #2: An MVP saves you time and money
Saving time and money is one of the prime goals of developing an MVP. Building an overly complicated product when you have no real data to back your internal ‘people will love it’ thoughts is rather stupid.
Take Facebook. It started as a niche product for one specific university and look at where it is now. Google. Started as an almost blank white page with a search field. Product Hunt initially was just a group. The examples are endless. If you want to read more on big companies that started with a simple MVP, you can check one of my previous articles.
Even our own open-source Admin.js tool, which started as a simple admin panel for our internal purposes, is now being downloaded nearly 10k times a week and is used by multiple high profile companies. Which goes to show that listening to the market can do wonders, especially in the beginning.
Benefit #3: Opportunity to acquire early adopters
Early adopters are an extremely valuable type of customer. First, they can become a precious source of feedback that will allow you to produce a product better adjusted to the market realities. Second, if managed correctly, they are capable of becoming your ambassadors that will boost your user base growth if you focus on building high-quality relations with them.
To some extent you should value them as if they were your first employees as they will be those who believed in your product before all others. Use them at various stages of feature testing, ask for opinions, show your appreciation.
Benefit #4: Solid starting point for securing investments
Finding an investor who would want to invest in your product if you have no previous successes might be difficult. Finding an investor who would want to invest in just an idea of a random, in his eyes, founder... good luck with that.
Having a real product with a real user base which doesn’t have to be tens of thousands of users, is a strong argument when negotiating with angel investors or venture capitals.
Ultimately, stakeholders want to get a return on their investment. Having an MVP that shows that the market needs such a solution and that the only thing your startup lacks at the moment is funds to boost your development speed and customer acquisition is a sign that the ROI is there to grab, so they’ll be more inclined to help you out.
Benefit #5: Verifying market demand and pricing strategies
As we’ve already discussed, an MVP is a marvellous tool for market demand verification. Receiving data that confirms or dismisses your belief in the existence of a niche for your startup can be a make or break factor in this endeavour. By not injecting large sums into the development of a composite system and relying on agile MVP stages, you can see whether your product has a good future, needs additional tweaking or requires a creation of a new concept altogether.
Another great way of utilizing an MVP is for testing pricing strategies. There are plenty of those that are proven to work, but it doesn’t mean they will work for you. You can be lucky enough to select a good one from the get-go, or you can miss and announce your idea as a flawed one, while in reality, you just selected a wrong way of pricing it.
Test and react based on gathered data, not blind assumptions.
Benefit #6: Testing UX/UI and usability
And last but not least. According to Localytics’ study, 25% of users abandon an app after just one launch. They also suggest that usually the main reason for such behaviour is an unfortunate side effect of failing to lead users to value fast enough after they opened an app for the first time.
The MVP stage of your product development offers you an opportunity to gather insight on how your users interact with your product, how intuitive is the onboarding process and what are the most problematic areas of your UX/UI design.
Fixing your app’s user flow, layout, introduction sequence or colour scheme could be crucial for the overall success of your startup. Many times, you’ll find yourself doing a number of iterations before finding the right solution, and it’s better to iterate before your product is way too deep development-wise.
MVP has proven to be one of the most useful, time and money saving approaches to developing your new product or startup. The benefits it brings to the table with a relatively low risk and potentially high ROI makes it a perfect tool not only for just founded businesses but also for already established companies that are looking to bring new products to the market.
If you are still not convinced about the necessity of building an MVP, I’m happy to share more experiences with you. Just drop me a line at email@example.com.
Next week, we’ll talk about the Fake Door MVP approach. If you haven’t heard about it yet, make sure to join me next time. Cheers!