How to build an MVP for my SaaS product?
Today, most venture businesses and start-ups work under SaaS (software-as-a-service) business model, where the service is provided on a subscription basis. For most industries, such a model has become increasingly attractive. As a result, it’s getting harder and harder for SaaS startups to get noticed and to find customers. Therefore, the failure rate for SaaS startups is pretty high.
According to research by CB Insights, in 42% of cases, the reason for a startup failure is actually lack of market demand. In almost half of the cases, entrepreneurs spend tons of time and effort just to realize that their hypothesis was wrong, and no one is interested in their product.
Is there any way to prevent this scenario?
Starting with a Minimum Viable Product (or MVP) is the best way for SaaS startup owners to validate the product idea..
Let’s take a closer look at an MVP concept.
What is an MVP
Minimal Viable Product is actually created to check the viability of the product idea and its relevance to the needs of potential users. Unlike an end product, an MVP has just the core functionality needed to satisfy the basic requirements. This functionality, however, is sufficient for the target audience to provide their feedback and share insights on how to improve the product further.
Based on the feedback gathered from the users, startup owners can make an informed decision on whether it is worth developing the project further, what changes should be made to the strategy, and what should be left as it is.
Why start with an MVP
Large companies have already proved the usefulness of an MVP development. For example, Daniel Eck and Martin Laurentson (Spotify founders) launched a small service in 2006 with just one function - music streaming. Having studied the data from the closed beta testing of their app, they managed to develop their product in such a way that allowed them to partner with major record labels and raise funding for their project. Currently Spotify is valued at $19 billion, and it has 155 million active users.
Airbnb, Foursquare, and Groupon are among other successful companies that have followed this path. However, despite these inspiring examples, lots of startup founders dive deep into a risky venture that hasn't been tested with real users.
And here is the thing: Minimum Viable Product is not aimed on testing technologies. Rather than that, it is designed to define whether the audience needs such a product, and if the hypotheses underlying the business model are correct.
Let’s outline the key MVP benefits for SaaS startup owners.
Saving time, effort and other resources
Starting with an MVP prevents useless spending of programming resources for coding the capabilities that, according to users’ reviews, may turn out to be unwanted.
Testing a product idea fast
The main goal of an MVP is to minimize the time and effort spent on testing the market's reaction to an idea.
Based on the feedback received from real users, you can obtain insights on how to adjust your business model and the basic characteristics of the future product, outline development directions and plan an upgrade roadmap. Positive results at the MVP stage give the green light for the development of a full version of the product.
Finding early adopters
An MVP development allows startup founders to collect a base of potential customers and find early adopters for their product.
MVP development stages
Now, how do you create an MVP for your SaaS product?
It’s quite difficult to compose the universal instructions on how to create an MVP, since the order of action varies depending on many factors - a product type, market situation, team capabilities, and many more. Nevertheless, based on our experience, we can outline the following sequence of steps you need to take to validate your idea and turn it into a product.
1. Define the problem
Following a customer-centric approach, you need to ask yourself: why does a user need my product? Once you get an answer to this question, you will get an idea of the product's objective and its value to the users.
2. Define the audience and select its core
Focusing on the needs of a very broad audience when designing an MVP is not the best strategy to follow. Narrowing down the target audience allows for more accurate targeting. To achieve this, you need to define your customer persona (including age, education level, income, habits, interests and hobbies).
3. Research your competitors
Even if you are sure that you come up with something truly new, there are companies that are already active in the area you’ve chosen. Be sure to find out what their market share is, why customers come to them, and what makes them unique. These details will help you adjust your MVP.
4. Conduct a SWOT analysis
SWOT analysis is a strategic planning technique which involves the analysis of factors affecting the object under study. During SWOT analysis, you need to define the following:
Strengths and weaknesses are usually related to internal factors, while opportunities and threats are connected to external ones.
5. Create a customer journey map
After having conducted a fundamental analysis of a business idea, it's time to look at the future product from the user's perspective. The best way to do this is to build a customer journey map - the order of actions that a user takes to achieve his goal (say, to purchase a product or to find and rent a parking lot).
This path should be short, simple and convenient. A detailed description of all the client's actions will help you understand which information is missing or what details will help with the product presentation.
6. Highlight the main features to implement
Perhaps your final product will solve several problems at once. But the variety of features on the testing phase can only confuse consumers. Therefore, we recommend you to highlight the major functions that solve the main problem of the potential users. No need to include too many functions - one, two, or three will be enough to form the basis of an MVP.
Sort all the other features by importance - you will add them after launching the product, collecting feedback and analyzing the test results.
7. Choose the right methodology and develop an MVP
Having defined the scope of work, you can finally start developing an MVP. Let's find out what project management techniques apply to building it.
The common practice is to use one of the iterative development approaches for MVP development (Lean, Scrum, Kanban, extreme programming). The choice of a specific methodology depends on the preferences of the development team and the specifics of the particular project.
8. Test the product
MVP requires regular testing throughout development. Alpha testing is done internally by testers, but beta testing will require outside help. It's good if these are people from among the future users.
Analyze the feedback and determine what features need to be added or replaced to make the product better.
If you have collected enough feedback, you can update the product, then test it again and get feedback. The duration and number of test-revision cycles entirely depend on the product and on how quickly it will be possible to create a complete solution.
So, if you have come up with an idea for a great service or application that solves a user problem, don't rush to invest in developing a fully functional product. Based on experience of successful companies, it will be much more efficient to answer the question: "Do users need this product?". An MVP will help you with this.