You feel that a Minimum Viable Product (MVP) is the right approach. You just need to choose from a plethora of MVP development services. Success guaranteed. Or is it?
In a recent Mixergy podcast, Andrew Warner hosted Adam Robinson. Adam is a successful entrepreneur and a popular figure on LinkedIn.
He mentioned a fascinating thing about the early days of his product, Retention.com. The product struggled to compete with big players like Mailchimp, with ARR (Annual Recurring Revenue) stuck below $3M. Then, he added a feature for identifying visitors’ email addresses. And something magical happened.
Something magical happened.
People started signing up for this feature, ignoring all the others. Though Adam had known about product-market fit, this was the first time he saw it happen in real-time.
What MVP Development Services Omit
For this article, we reviewed the MVP development service offerings of 25 providers. What we didn’t find in almost any of them was the answer to a fundamental question:
How will you know if your MVP is on the right track?
In most of the offers, the story ends with the MVP launch. They lived happily ever after. But we know that’s not the case.
While there isn’t exact data on how many MVPs fail, we can deduce approximate numbers. A Gartner report suggests that 40%-80% of new products, including MVPs, fail to meet expectations or gain traction after launch.
CB Insights lists various reasons for startup failure. Many startups cite more than one reason. If we focus on product-related factors (such as no market need, a flawed business model, or a poor product), these reasons account for well over 50%.
The top 12 reasons startups fail, according to CB Insights.
Therefore, it’s crucial to spot early signs of whether your MVP is validating your idea or pointing to potential failure. In the same way as Adam knew he was onto something.
But before we dive into how to do that, let’s recap what’s covered by MVP development services.
MVP Development Services: Who Are They For?
Of course, not every MVP is created by vendors that provide MVP development services. Many MVPs are built by startup or enterprise internal teams.
If you’re looking for external MVP development service, you likely fall into one of these three groups:
You’re a bootstrapped startup wanting to develop an MVP but lack the internal team or expertise. You have the freedom to find a vendor.
As an entrepreneur funding your idea yourself, you’re seeking the best investment.
You’re an established company introducing a new product. You lack internal MVP development resources and need an external vendor.
The Place of an MVP in the Product Life Cycle
Regardless of which group you belong to, it’s important to understand the bigger picture. Most MVP development services cover only the initial phase of the product life cycle.
MVP Development Services in Product Life Cycle
It’s natural to focus on what lies ahead. But we shouldn’t forget that the true success or failure of your MVP — and potentially the entire product idea — will manifest elsewhere.
The truth about your product begins to unfold after introducing the MVP to the market.
Zooming in, we need to determine early on if we’re on a winning trajectory. Ignoring signs of failure can burn through a lot of cash if you stay on the wrong path for too long.
While the red path seemed somewhat promising, leaving it sooner could have saved us a lot of money.
Components of an MVP Development Services Offer
Now that we know the place of an MVP within the product life cycle, let’s look at a typical MVP development services offer. It includes the following components.
Benefits
After explaining what an MVP is, companies start listing the benefits of embarking on the MVP journey with them. The most common are:
Validating your idea – this is one of the most common arguments. It assumes that developing and later failing with a non-validated idea can cost you a lot of money. It’s less often mentioned that validating your idea through an MVP can be costly too.
Faster time to market – from the definition of an MVP, we know it’s a product with the minimum features. Developing less should allow you to move faster. This doesn’t automatically protect you from the common pitfalls of software development, though.
Build investor trust – having something tangible in hand can convince investors to back your idea. Early-stage MVPs or products are often where seed funding happens, ranging from $500k to $2M.
Early feedback from users – by introducing your product early, you can gather valuable insights. Keep in mind that these users are often early adopters, who tend to be more tolerant than the majority you’ll need for long-term success.
Services
What you’ll find under this label is a further level of categorization of MVP development services. This is where most differences between companies emerge. One company might segment its services by stages like Market Analysis or MVP Improvement. Another may offer different types of MVPs, such as Single Feature MVP or Pilot MVP Development.
Process
We could merge the various labels that companies use for the stages of the MVP development process into these phases:
Specify Your Minimum Viable Product (MVP) Feature Set
Create Your MVP Prototype
Apply the Principles of Great UX Design
Test Your MVP with Customers
Iterate and Pivot to Improve Product-Market Fit
One of the key skills in MVP development is feature selection. We need features that meet the needs of our target audience and differentiate our product from competitors. This is what the planning phase is for.
Olsen also explains that you can test your hypothesis before building the actual MVP with MVP tests. More on that later.
Technologies
When choosing technologies to build your MVP, it’s important to balance development speed with the quality of the codebase. After all, the codebase is your intellectual property.
Few vendors list no-code and low-code as alternatives to established technologies. You can use no-code platforms for MVP development, but weigh the pros and cons first.
The learning curve for some no-code tools is so steep that building an MVP on your own is often out of the question. Scalability and transferability of the codebase require expert consideration.
Deliverables
The deliverables of MVP development services typically include:
Feature prioritization outcomes like product roadmap
UX/UI designs, clickable prototypes, proof of concept
Source code
Marketing and product analytics
Industries
The principles of MVP development are applicable across industries. However, it can still be beneficial if the company has a proven track record of projects within your specific domain.
FAQ
It’s no surprise that one of the most frequent questions in these sections is about the price and timeline of MVP development.
From the companies that provide specific numbers, you will learn it can take anywhere from a few weeks to a few months. Costs range from tens to hundreds of thousands of dollars.
The Missing Components of MVP Development Services
As we mentioned, most MVP development services place little emphasis on explaining what happens after the MVP launch.
One harsh fact is that there’s a high chance your MVP will fail. Mentioning this upfront probably isn’t the best strategy for selling MVP development services. But we believe such transparency is necessary.
Such transparency is necessary.
It forces you to consider alternatives like MVP tests before diving headfirst into development. And when you do proceed, it helps you prepare by understanding MVP success indicators.
MVP Tests
MVP tests offer a chance to confirm your hypothesis before building an MVP. Not only can this save you money if something isn’t right with your idea. Some findings can also inform the actual MVP development.
In The Lean Product Playbook, Dan Olsen divides MVP tests into product versus marketing tests.
Marketing MVP tests check how compelling the product description is. There isn’t an actual product for users to interact with.
Product MVP tests involve users interacting with a product in some form, like a prototype.
Olsen further categorizes MVP tests as either qualitative or quantitative.
Quantitative tests assess how many users take certain actions or prefer specific options. To yield statistically significant results, you need to work with a large sample.
Qualitative tests focus on answering “why” a user behaves a certain way. They are conducted with individual users.
Based on this categorization, Olsen breaks down MVP tests into four groups:
Qualitative Marketing Tests
These tests evaluate marketing materials like landing pages or explainer videos.
For example, you can do a five-second test. Show the user your landing page for five seconds and then ask them what they remembered from it.
Quantitative Marketing Tests
You measure the engagement rate of visitors with your marketing materials in the following tests:
Landing page / Smoke test
Explainer video
Ad campaign
Marketing A/B tests
Crowdfunding campaigns
Qualitative Product Tests
Qualitative product tests are done with artifacts that mimic your MVP, such as:
Wireframes
Mockups
Prototypes
Concierge MVP
Live product
Quantitative Product Tests
Quantitative product tests are different from the other three categories. We need a live MVP with a reasonable amount of usage. These tests lead us into the topic discussed in the next chapter: MVP success indicators.
Fake door/404 page
Product analytics
AB tests
MVP Success Indicators
We can determine whether our MVP is on the right track or failing by observing several key indicators, such as:
Customer Feedback and Engagement
Activation and Retention Metrics
Unit Economics
Market Response and Growth Rate
Customer Willingness to Pay
Customer Feedback and Engagement
One of the most obvious indicators is early users’ feedback and engagement. If they grasp the value of your product and engage with it, that’s a strong signal. It’s important to remember that these users are early adopters, so they may not represent the mainstream market.
What to track
User retention rates: Are users coming back after their initial interaction?
Qualitative feedback: Are users expressing excitement or frustration?
Feature requests: This can show that users see potential in your product.
Activation and Retention Metrics
These two metrics come from Dave McClure’s AARRR Pirate Metrics framework. Tracking how users activate the product and whether they continue using it over time shows whether you’re solving a real problem. Poor activation or retention is a red flag.
What to track
Activation rate: The percentage of users who complete the onboarding steps.
Retention: How many users return after their first use over time.
Unit Economics
Understanding the economics of your product early helps you assess if your business model is viable. If unit economics don’t work out at a small scale, they hardly improve at larger scales without a significant change.
What to track
Customer acquisition cost (CAC)
Customer lifetime value (CLV)
Conversion rates
Market Response and Growth Rate
Growth rate indicates whether there is real market demand. Even if your organic growth rate is slow, if it’s constant, it will work wonders due to compound growth. You should only be concerned if your growth heavily relies on paid ads. In such cases, look at other metrics like customer acquisition cost.
What to Track
Organic user growth (e.g., from referrals or word-of-mouth)
Growth velocity: Is there an increasing number of users over time?
Customer Willingness to Pay
True validation comes when customers are willing to pay for your product. Don’t consider free trials and free-tier users as a good sign of your growth or business potential. If you’re struggling to convert them to paid plans, this could signal that the perceived value isn’t there.
What to Track
Conversion rates from free to paid plans
Customer satisfaction in terms of pricing
Marketing vs. Product Analytics Tools
By tracking these metrics and responding to early signs of failure or success, you can improve your MVP or decide to pivot.
But where do you find these metrics? Don’t look for them in Google Analytics. Google Analytics is a marketing analytics tool that measures user activity before conversion. To track post-purchase activity, you need product analytics tools. Learn more about the difference between marketing and product analytics tools.
Conclusion
A Minimum Viable Product has proven to be one of the most effective approaches for launching and validating product ideas. If you don’t have an internal team, you need to look for external MVP development services. While these services are often well presented, they can give the impression that everything will be sunshine and rainbows after the MVP launch.
An MVP is just a milestone on the path to a (not-always) successful product. To reduce risks, we must better understand the success and failure indicators post-launch.
If you’re researching MVP development services and need help consulting your idea, drop us a line.
