Having found the solution to a problem your potential market faces, you need to ensure that your idea, be it a product or service, matches with your target audience. This can be investigated with the concept of a minimum viable product (MVP). As potential users look at your marketplace through different lenses, it can provide you with the much-needed perspectives to bring your marketplace up by several notches.
What MVP is all about
MVP, short for minimum viable product, is the bare and minimal version of a product or service released to early adopters to gain a deeper insight into what the market thinks of it.
The most basic requirement for an MVP is for it to be better than solutions that are currently available. Should the MVP meet with little validation, the feedback gathered from early adopters can better inform you so you can decide whether to scrape the idea altogether or to fine-tune it. The MVP is a core element in determining if your marketplace is on the right path.
Devote resources to the right areas
For starters, there is always a limited amount of resources, thus calling for the need to prioritise carefully the areas that are most deserving of your attention and investment. Imagine the futile efforts that go into developing your marketplace if there is no MVP to test the market response with early adopters. With perceptive information from potential users, all that wasted time and energy could be channelled more productively into areas that will enhance the quality of your final product or platform.
Minimise cost and risk as you roll out your MVP gradually while undergoing iteration Photo credit: Speckyboy.
Minimum, but more than basic
Apparently, many entrepreneurs find MVP to be the simplest version of their product or service; and because of that, they do not place much emphasis on it. That’s where they are wrong.
In order to know exactly how well your final product or platform will go down with the market, it is a prerequisite for your MVP to be as representative of the finished product as it can be. How else are you going to validate your final product if its MVP fails to provide a solution as promised?
While an MVP is akin to a working prototype that requires minimal effort to develop, it still needs to cater to its target audience. If not, the very purpose of building it is redundant.
The word “minimal” refers to the effort in developing the trial product or service, but not the quality or performance of the product or platform. It still has to be better than existing solutions.
Validate demand in the marketplace with your MVP
The end goal in releasing an MVP to early adopters — who are generally more game to experiment with new products than the rest of the market — is to gauge the potential demand when the marketplace is launched.
Defining the Key Performance Indicators (KPIs)
In order to get the most out of the iterative process following the launch of your MVP, there needs to be some deliberation on what key performance indicators to look out for. This will be of tremendous use in narrowing down the most vital aspects of your MVP’s performance.
First and foremost, determine which metrics would be the most telling of the assumptions that you seek to validate prior to introducing the MVP. Be cautious of using vanity metrics that seem relevant on surface but does not add value to your iteration process.
An instance of this is the traffic to your marketplace site. While inflated figures of views to your site can be flattering, views do not necessarily translate into business on your site. Therefore, analytics serve a greater purpose when your indicators measure what are actionable. It lends structure to the whole KPI system as the metrics measure what impacts the viability and demand of the marketplace.
What every marketplace should aim for in determining KPIs that are of relevance is scientific techniques like A/B testing. It allows for different sets of results to be collected based on the customer’s response to separate versions of your marketplace. Given that it is a quantitative form of measurement, one can be more sure of the causal relationship between an aspect of the marketplace and the resulting change in the performance metric used.
The more tangible the metric, the greater the validation of the product’s performance. This makes for a better MVP and final product as the direction to steer towards becomes clearer in the iteration process.
Bear in mind that minimum here doesn’t mean serving your early adopters the most basic prototype you can come up with. If you do exactly that, you risk losing an opportunity to gain real insights that are beneficial to your iteration process, which is integral to arriving at the best version of your product or marketplace. Finding the right KPI matters too; one that is tangible and seeks to validate your assumptions prior to creating the MVP will do the trick.
Now that you know roughly what MVP is all about, hop over to the next chapter for a step-by-step guide to choosing the right MVP model.