Understanding Minimum Viable Products for Small Businesses
Exploring the Pros and Cons of MVPs: Pathways to Success or Failure
Is the MVP or Minimum Viable Product strategy a good product scaling strategy for a small business owner? This is another hot topic where I’ve seen so many failures and successes that I want to spend some time on it and share my thoughts and a couple of tips.
But let’s start from the beginning and not assume you all know what an MVP is, in the context of managing a product.
The concept of the Minimum Viable Product (MVP) was popularized by Eric Ries in his book The Lean Startup. A good book I highly recommend. Eric Ries is a well-known entrepreneur who has been a leading advocate for the “Lean Startup Methodology”, which focuses on iterative product development combined with rapid pivoting and experimentation, mostly based on customer feedback.
The MVP concept suggests creating a product with the minimum set of features or capabilities required to test the market and gather feedback from real users, allowing businesses to learn, iterate, and make informed decisions about further product development. The MVP concept has gained adoption in the product development communities, and it has become one of the most popular approaches for building products efficiently.
There are multiple types of MVPs. This makes sense because our businesses and products or services are not all the same, or in the same industry or market. I have heard some crazy MVP types from colleagues and ex-colleagues, however, the classic ones are:
Concierge MVP: This type of MVP involves manually providing a service or product to customers, without full automation, to validate demand and gather feedback. It allows businesses to test their value proposition and customer experience with minimal investment in technology or product development.
Example: I come to your company and offer a service to your employees. I will pick up their dirty clothes from any location and drop them clean at any location. Nothing is automated, all the process and work is manual and requires potentially more people to deliver it. Once I prove that it is a viable business model, I can start investing in efficiencies.
Wizard of Oz MVP: In this type of MVP, the product appears to be fully functional to users, but behind the scenes, some or all of the processes are manually handled by the team. It allows businesses to create the illusion of a complete product while testing its viability and feasibility.
Example: Elizabeth Holmes Theranos… Should I provide more detail? Another example is a website that offers print-on-demand t-shirts. It makes the customer think that behind the scenes the process is fully automated, however, the business owner invested more in the website user experience and is printing and shipping manually the t-shirts.
Landing Page MVP involves creating a simple landing page or website with a value proposition and call-to-action to gauge user interest and collect leads or pre-orders. It helps businesses validate demand and gather customer feedback without fully developing the product.
Example: This is also known by some people as the “What-if” MVP. I develop a website (An SEO campaign might be required if you don’t have a brand or followers) to basically tell you “What if I create a small engine for your skateboard controlled by a small handheld device so that you can improve your mobility in the city? Would you pay $230 for it?” Nowadays there are great crowdfunding websites that basically leverage this MVP model for you, like Kickstarter and Indiegogo.
Piecemeal MVP: This type of MVP involves building a minimal version of the product or its core feature to test its functionality, user experience, and gather feedback. It focuses on creating a small, functional product to test with real users.
Example: This is the most popular MVP in software tech, which is what in my opinion made the Lean Startup model so popular. All of the major Apps and popular websites, tax and accountancy software available via SaaS were created using Piecemeal MVP. The real question we will explore for a small business using this MVP is “What is the real MINIMUM viable product”?
Pre-sales MVP: This involves selling the product before it is fully developed or manufactured to validate demand and generate revenue. It helps businesses assess market demand and gather feedback before investing in full product development.
Example: Also a very popular MVP type, used regularly in combination with Piecemeal MVP. The difference here is that IN THEORY, you have a product started, which is usually something you can DEMO or showcase. I personally don’t think this is a pre-revenue generating strategy, especially for small businesses, however, it is a great way to spark interest and get people talking.
I am really excited (and anxious) to get to answer this question: Is the MVP strategy good for a small business owner?
But before answering that question, I want to quickly share the potential benefits of the lean MVP approach:
Cost-effective: By starting with an MVP, you can minimize the cost and time required to develop a product. This approach allows you to focus on building only the essential features that customers need first, and keep the wants/nice-to-haves for after. This is great for small business owners, who usually start with a smaller budget.
Faster time to revenue: Since the MVP approach involves building a product with minimal features, you can get your product to market faster than if you were to build a fully-featured product, and as a result, start getting some dollars in. This can help you to gain early traction and feedback from customers, which can help you to refine and improve your product over time.
Reduced risk: The MVP approach allows you to test your product in the market with minimal investment. This helps to reduce the risk of investing a large amount of time and money into building a product that may not be successful. This is in my opinion the most important factor to consider for a small business, and I will explain why below.
Customer validation: By launching an MVP, you can quickly validate your product with real customers and get feedback on what they like and don't like about your product. This feedback can be used to make improvements and refine your product before launching a more fully-featured version.
Flexibility: The MVP approach allows you to be flexible and adapt to changing customer needs and market conditions. By launching a minimal product, you can quickly iterate and make changes to your product based on customer feedback and market trends.
So, Is the MVP strategy good for a small business owner?
Based on my experience, it depends. I know this answer sucks, however, I can help you analyze this question better for your specific case by understanding the risks associated with MVPs.
Generally speaking, the major risk of using the MVP model is releasing a product that is too minimal and/or does not meet the needs of your target customer, leading to a lack of interest and sales. If you are a small business owner with an unknown brand (most likely), releasing a bare-bones MVP will never do the trick unless you are in a unique, never seen niche. Nike can create and sell white cotton socks and be incredibly successful, you and me, can’t. If you want to compete with Nike in the socks market, your MVP will need to be measured to that level of brand competition.
A good question to ask could be: What would my target customer need from cotton white socks that Nike doesn’t provide? If you can’t find a good answer to this question, you have a potentially bad or riskier product idea in your hands.
Another risk is spending too much time and resources on the wrong features or functionalities, without getting valuable feedback from users, which is the whole point of the MVP strategy. This is in my opinion the biggest risk for small business owners. I’ve seen people assuming too much, building features or functionality based on what they like, instead of what the target customer needs. This is why it is so important to really know who is your potential customer. I wrote 3 issues last month on this, and you can find them HERE.
A great example, which became very famous among start-up enthusiasts, was Juicero. Do you remember? The Juicero fruit and vegetable press was a wifi-connected device that sat on your kitchen counter and made delicious fruit and vegetable juice on-demand. It used proprietary single-serving packets of pre-juiced fruits and vegetables sold exclusively by the company by subscription. The only issue was that… you could press the packets with your hand and obtain the same juice without paying for the $699 juicer. I believe it lasted a quarter in the market.
What went wrong? What went wrong was that when people discovered that they could press the juice out of the packets with their hands, they started questioning the need for the hardware. Also, everyone realized that a $99 juice press machine from Target, Walmart, or Amazon provided similar juice.
Maybe, if they would have iterated with an ideal number of potential target customers, they would have discovered soon that their product was not solving any real problem. At least not for that price tag.
Finally, the MVP model may not work for all types of products or markets, and some businesses may struggle to balance the need for speed and agility with the need for quality and reliability.
Let’s review another simple example of MVP applications for a small business owner. This time, I am sharing an experience of my own.
In 2016 I decided to launch a new Amazon FBA product: Thank You cards. I thought this would be a great opportunity after I discussed with my own sister her reasoning for mailing thank you cards instead of building an email list of the attendees and using one of the many online services available. Her answer was that she felt the online service would be extremely impersonal and cold, and she wanted to sign each card with her husband.
So I did what most Amazon sellers do, contacted a manufacturer through Alibaba, and created a design on Canvas.com that was elegant and nice, but generic enough to attract potential customers from weddings, birthdays, funerals, etc. Then, shipped them directly to the Amazon FBA service and started to fight for rankings by agreeing with friends and family to buy and write good reviews. This was my version of a piecemeal MVP. I ordered 500 boxes of 50 cards each, and after 1 month there were still 300 in inventory. I was averaging 2 to 5 sales per day with ads. I barely recovered my initial investment of $250.
So, what did I learn from the piecemeal MVP strategy, and how I made improvements?
Customer feedback on Amazon was NOT HELPING AT ALL to inform the next product enhancements. The reason for this is that the reviews were too shallow: “nice product”, “Horrible materials”, “the box was delivered late”, etc. No Amazon review was insightful enough to motivate a product enhancement. I couldn’t understand why.
Sales were slow and costly, due to the ads I needed to pay. But, who was I selling to? Everyone and anyone. You quickly learn that a wide net of target customers leads you to a generic description and keywords that weren’t resonating with a specific target customer. Wrong!!
I went back to my sister and brother-in-law with a box of cards in my hands and asked them for an honest opinion. As I suspected, they said the cards were nice, however, after reviewing my Amazon listing they told me the hard truth, which was, they would never buy from me. Why? Because my description was not sparking any emotional reactions. It was their wedding! The listing had to spark an emotional reaction! Never forget: trying to sell to everyone is like selling to no one.
What changes did I make to improve sales? Multiple.
For one, I created 2 personas: Anna Lovelace, which impersonates my newlywed sister, and Brian Adams, who impersonates a new target customer for me: a middle age adult that just lost one of his parents.
So, following the advice and discussions with my sister (and parents and aunts), I decided to narrow my target customers and create a more focused product for weddings and funerals. I kept the current card selling on Amazon but heavily modified the listing for a laser-focused wedding thank you card, and created a new card design, packaging, and listing laser-focused on funeral thank you cards.
Additional improvements I made from good, actionable feedback.
Believe it or not, people keep these cards. So I improved the material of the card, making it thicker.
I changed the cardstock material and started to use the best quality for pen handwriting.
To this day, these two products still sell on Amazon with good returns. Am I getting rich from these two? No. Are they a great complement to my multi-income strategy? Yes.
I hope you liked this week’s issue. Using any of the MVP techniques appropriately can provide you with many benefits, however, use it wisely to prevent the pitfalls.
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