Do you know that without an MVP you risk losing $50,000 creating the wrong product? That’s what the SaaS startup Groove went through. Lowering risks, saving money, time, and resources are the key reasons why you cannot ignore MVP development. Uber, Zappos, Facebook, Spotify, Instagram, Snapchat, Airbnb, Dropbox were developed as MVPs first. Keep reading to learn about common mistakes in MVP development and see real-life best practices.
Top 5 reasons why MVPs fail to succeed
MVP software development for startups is a wise approach. And you’ll succeed if you manage to avoid the common mistakes of upstart tech companies. According to CB Insights, 70% of startups fail with around $1.3M in total funding closed. And here are the top five reasons.
Based on the common mistakes of startups, to avoid failure you need to investigate and ensure that:
- The market needs your product;
- There are potential customers for it;
- The product has the right functionality, marketing strategy, etc;
- You have enough money to release the starting set of features;
- You can cover unexpected expenses that might (and will) show up;
- You have found the right service vendor for your ideas - a software team that treats your success as its own.
The MVP development process is divided into small iterations. During each iteration, your product gets the value-added functionality. Thus, you have a deployable software product after each iteration.
Experts say that it’s not an MVP until you can sell it. And for that, your product must solve the problems of a potential customer. Choosing the right features for the MVP is the key to driving deep user engagement and becoming a profitable product.
Choosing the Right MVP Features by Researching
As you’ve seen, 42% of startups fail due to the lack of market demand. To create a profitable product, define and prioritize features for your MVP. So the first step to take is researching.
It is common for startup owners to overlook the research of customer needs, market, demographics, and other indices.
Start with the question: What will the product bring to customers?
Your product has to solve at least one of the end customer’s problems. Your customer must be willing to pay for your product.
Try to get actionable feedback from the users ASAP.
To do this quickly, you need to put a real prototype - paper or digital - in the hands of users to learn what the next steps should be.
Another question to ask yourself: Why is this product special?
You’ll get answers after an early competitor analysis of a similar product on the market. More or less similar competitors will be out there even if the product is unique.
If all the features are already on the market - what is the point of making a clone?
How Google failed due to ignoring the research
Remember Google Glass? The futuristic gadget to communicate online via natural language voice commands in a smartphone-like hands-free format. Few people remember the glasses and nobody uses them.
Only after investing, Google found out that their product solved 0 problems of their target audience. The product has failed, although Google gained quite a bit of technological know-how as a consolation prize.
Aside from the occasional use in a few medical practices, the Glass never gained the intended popularity. Even worse, the dissatisfied “explorers” (the first few people who bought the first version of the product) eagerly shared their experience with thousands of their social media followers.
A summary of what you need to do before entering the market with your MVP:
- Investigate the problems of your target audience;
- Make your product resolve at least one problem of the audience;
- Conduct competitor research to make sure your product has unique features.
We know how to turn ideas into MVPs that bring money and engage users. Let's talk!
Choosing the Right MVP Features by Pareto principle
Entering the market, your product needs a minimal set of functions that users will consider useful.
Choosing the right features and the right way of implementing them is effective if you follow the Pareto Principle (aka 80/20 rule).
You have to build 80% of all the basic functions for 20% of your budget.
Read this article on how we use this law and dodge Murphy’s law at our software company.
There are many ways to assess which functions are needed, which are nice-to-have, and which are an absolute no-no for the first release. Let’s consider the best 2 techniques of selecting the right MVP features.
Value vs. Complexity Technique
One of the best practices, as ProductPlan states, is the Value vs. Complexity Quadrant.
The estimation of effort and value is up to the product owner and business analyst. They need to assess every feature of the future product considering its business value and the complexity of its implementation.
The right features to include in the MVP development have high business value and low complexity, i.e. efforts and resources needed to implement them.
The features with high value but a high level of effort shall be left for future product scaling. While the features with low business value and high effort lead to failure.
Make a final list of the MVP functionality according to the Pareto principle, 80% of features for 20% of the effort.
Features prioritization in a real MVP example: food delivery app
The owner of a small prosperous chain of pizzerias decides to build an app that allows ordering food online. They start with an MVP.
The MVP features that have come to the owner intuitively are:
- The personal cabinet where a user can place orders quickly without having to reenter the information.
- Menu with descriptions of various pizzas, sauces, drinks, etc.
- Delivery tracking that would let people see the current location of their order on the map.
- Chat with customer service to help address any concerns regarding the order.
- In-app payments.
- A social network for pizza lovers.
- Integration with the ERP system used to process orders.
The business owner gets together with the newly hired development team. They go over the project idea picking the features based on the Value vs Complexity Quadrant.
- The personal cabinet is quite simple. However, it doesn’t provide much business value either. Priority: Low value, low effort - bottom left.
- The menu is of paramount importance and is relatively simple. Priority: high value, low effort - upper left.
- Delivery tracking is hard to make good and it is not something that her typical customers want that much. Priority: Low value, high effort - bottom right.
- Chat with customer service is pretty straightforward to develop and can be helpful. Priority: Low value, low effort - bottom left.
- In-app payments can be implemented by integrating existing third-party solutions like Stripe or Braintree. They are also important for the good overall user experience. Priority: high value, low effort - upper left.
- A social network would be time-consuming to build and the business value it presents is unclear at best. Priority: Low value, high effort - bottom right.
- Integrating the ERP would be complicated, but it is important to quickly process and deliver the orders. Priority: high value, high effort - upper right.
They’ve got three “must-have” features for an MVP: menu, in-app payments, and the ERP integration.
Weighted Scoring Technique
Weighted scoring is another best practice for the right feature prioritization.
You figure out a scoring method for the value of features, give every function a numerical value, and count the total score.
The higher the score of the feature, the more you need it. Those with the highest scores should be included in the MVP selection.
Applying the weighted scoring method, the pizzerias’ owner and their team would get the following result for the same features.
|Chat with customer service||3|
|Integration with the ERP system||5|
The budget allows them to implement the three points that give the most business value: menu, in-app payments, and integration with the ERP.
MVP Development Scenarios
Successful MVP scenario
W2 (Wi on the first graph) is the amount of money the product owner has for a software team at the beginning of the development.
W1 (Wo on the initial graph) is the amount of money left when the product enters the market.
T1 is the time of the first release
T2 is the time when money returns to W2 level
T+ (needs to be added at the end of stress time) is the time when the product starts to bring a profit
The perfect scenario of a product launch looks like this.
The idea of the pizzerias’ business owner was viable. They did marketing research. So did the software development team. The MVP is now out there, gathering feedback and earning its first money.
Only a few people use the app at first, to the dismay of the business owner (stress time on the graph).
Doubts make them not sure about the decision to make an app. But soon the app starts showing a profit, usually, the stress time passes as well.
The greater the number of popular and frequently used features implemented, the faster the cash will start to return to the product owner. Hence, stress time will be reduced.
The goal of a competent software team is to make a product that minimizes the time between T1 and T2. The time before T1 should also not take an eternity as it is important to get on the market quickly and within budget.
Busted MVP scenario
Sometimes though, startups fail. And the reasons are infinite.
For example, the product owner might stop believing in the product and end the operation long before the money ends.
Also, if business requirements were defined wrongly in the beginning, there will be no green line or arrival of cash flow.
Choosing the wrong features and the wrong team are also in the Top 3 reasons for the failure of startups, remember?
The graph shows a scenario when the startup ran out of cash.
After studying the market, selecting the right features for the MVP, make sure the software team you’ve chosen to work with is competent.
It is not just about WHICH functions you select for the MVP - it’s also about HOW these functions will be implemented.
By the way, experienced analysts in our software team not only implement the business requirements of a client but also come down to the in-depth analysis creating a perfect scenario.
How to build an MVP for SaaS: Success stories from Top Enterpreneurs
The key problem in SaaS development is creating a successful business model that can scale. Before custom application development for their startups, which later became multimillion-dollar SaaS companies, these founders and top software developers used MVP for SaaS.
MVP for SaaS success story: Fake demo method
The former startup Sendwithus is now a SaaS company. They developed the Email Marketing Automation platform in 2013 and raised $2.6 million a year later. Brad Van Vugt, a Co-founder at Sendwithus, shared his experience of pre-launch activities.
Step 1. Investigate the target market and audience.
The survey of the target market permits measuring and validating big product ideas.
For that, you can use a “fake demo” as Sendwithus did. They built a website that seemingly offered many features and measured which features customers were most interested in.
"We then peppered these features throughout the UI as buttons, links, checkboxes – whatever made sense. We made the UI look like it supported all these features. Interacting with any of these “dead end” features would open a dialog that prompted the user to sign up for early beta access. This would hopefully give us a clear picture of what our users were doing inside the experiment. We spent the next 24 hours getting as many people as possible to view and interact with the experiment."
The goal is to gather information about what a great product might look like. How?
1) interacting with any of the features should open a dialog that prompts the user to sign up for early beta access;
2) connect Google Analytics to track every mouse click.
Step 2. Analyze results.
After getting data from such a demo, you can make conclusions about the most expected features.
Regarding Sendwithus, as a bonus, after the experiment, they received a list of 92 potential early adopters ready to go.
Step 3. Start creating an MVP based on the results.
Next, you and your team need to brainstorm all the features your customers want.
The pictures below show how it looked like in the case of Sendwithus. Potential customers wanted an API to send and A/B Test transactional email templates.
The $50,000 cost of skipping MVP for SaaS (the real example)
Skipping an MVP development usually means missing out researching, choosing, and trying out the right product features. Alex Turnbull, the non-tech founder of Groove SaaS startup, lost money, time, and resources to learn the lesson.
He shared his experience of pre-launch activities without MVP.
"When we started building Groove, we spent $50,000 creating the wrong product. We built based on our own wishlist of features, based on what we thought people would want. What I learned: Swallow your pride, and test your assumptions vigorously. Whatever you think you know, there’s a great chance that you’re wrong, so test fast before betting the house on a single strategy."
Groove SaaS startup was launched in 2011. Passed five years, they reported over $5 million annual revenue. This Customer Service Platform is now developed and maintained by a remote team.
The company started from pre-launch activities with not-public beta using free access (pic1).
There was some initial success. So the founder decided to transform the landing pages to marketing sites. They spent 5 months creating a great marketing site before public launch without validation (pics 2, 3).
Immediately after launching, it failed. The marketing site almost did not convert users to subscribers.
To save the project, they put up a three-page site (landing, pricing, and sign up) that was hyper-focused on the benefits of this platform, and nothing else. The site took three days to build (figure 4). Conversions tripled overnight.
The feedback they received from the first customers let them realize the mistake.
The design was awesome but the product was more than users need. And it was getting more complicated each time the team “enhanced” it.
This disproved the initial hypothesis about the features they thought users wanted and learned what the users actually wanted. Simple ticketing and knowledge base software.
So armed with that data, they stripped down the product to its core. The simplification of the user experience was a major turning point.
MVP for SaaS Use Case: How to lose 1,5 years developing a platform
Y Combinator-Rejected startup Buffer, founded in 2010, got more than $10m annual recurring revenue in 2016. This Social Media Management platform is now a SaaS company with a distributed team. Joel Gascoigne, a Co-founder and CEO at Buffer shared his experience of pre-launch activities.
Buffer used landing pages to gather emails from potential customers in order to start a discussion with them.
"I had lost 1.5 years of my life to not validating ideas before building them. The landing page - and more importantly the conversations resulting from people signing up through it - proved to be great validation."
Step 1. Gather information from your potential customer.
Surveying your customers in the form of “problem and solution” is a good approach. Buffer did the following:
1) create a simple website with 2-3 landing pages to gather emails without specifying plans and pricing,
2) get the traffic to the landing page;
3) communicate with every subscriber;
4) create a three-page landing website to gather emails with specified plans and pricing;
5) get the traffic to the landing page;
6) communicate with every subscriber;
Step 2. Start creating a product based on the survey.
The benefit of this method is that you can also work on your product in parallel with learning about your customers and about how clearly your landing page is getting across the idea of your product.
Put up a landing page for your product. Make it look like the product exists, and then when people try and sign up, show them a page letting them know that you’re not quite ready for them yet.
With a few tweaks, you’re very likely to launch the actual product with the same landing page. Your first landing page can be very simple.
"This is how I launched Buffer and it worked pretty well. Treat the emails as people who are happy for you to get in touch with them to discuss your product idea further in order to validate that it would solve a real problem for them and that they might actually pay."
MVP Development Services: How to validate and monetize your idea
Remember that V stands for Viable in MVP, so do not enter the market if you have some half-baked useless product your target audience doesn’t need in the end.
For that, it’d be wise to find a reliable software development company with IT experts possessing the skillset needed to turn your idea into a profitable product.
Belitsoft is a custom software development company that provides top MVP development services. 360+ IT specialists deliver clean and scalable code. You can select your own development team to rely on. And you get professional help on every stage of the MVP development from ideation to a ready-to-go product.
The stages of MVP development with a professional software development team
- Professional consulting and analysis. Come with your idea to a software vendor to estimate your project. Business analysis for MVP includes creating a product concept, deciding on MVP functionality, cost-benefit analysis, performance, and security requirements.
- Assembling a dedicated team. Based on the project requirements, the software company handpicks a dedicated development team with a skill-set matched to your MVP. At Belitsoft, your project may involve project managers, business analysts, software developers, QA engineers, and IT consultants.
- MVP software development. The development team focuses on the development of a minimal set of crucial features to meet your target audience in a short period. This stage includes MVP coding, UX/UI design. Technologies we use: .NET, Java, Node.js, PHP, Laravel, Ruby on Rails, iOS, Android, and many others.
- MVP software testing. The well-versed QA team tests the MVP version of your software product. In particular, we apply Stress Testing and Load Testing to ensure that your software can process large volumes of data and transactions. As a result, you get a working MVP with supporting documentation.
We follow the “build-measure-learn” feedback loop. We focus on solving real business problems, build software fast, and learn how it is accepted by the market. It will save you money for future software modification. You get an MVP your customers want, need, and are ready to pay for.
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