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Three Ways to Make Your Product an “MVP”

Mine customer insight to provide a minimum viable product (MVP) that covers the bases

Because CBM believes in the test, fail, test, succeed model, any discussion about coming up with a “Minimum Viable Product” to meet customer needs tends to perk up my ears. CBM’s Business Model Framework is built on the same premise: Learn how to start your company by selling your product (an MVP) and make profits as soon as possible.  Maybe it’s not the complete vision you had when you wanted to start a company. But if you go about it the right way, identifying your MVP gives you a one-way ticket to the heart of your customer.

minimum-viable-productThe point is to prove you have a product that will attract investors; help you build a solid sales and marketing approach; and engage the right customers at the right time—i.e., when they are ready (or almost ready) to buy your product or service.

This blog by Christopher Bank has a lot of good insight in the form of questions you should ask yourself when you are testing your product proposition. Minimum viable product strategies describe a process that gains the most information about your proposed product and your customers’ response to it, with the lowest risk. In a great article by Eric Ries he says identifying the “core utility”—or the minimum set of features that your customer is willing to pay for—is key to MVP success. Here are some other ideas from Mr. Bank and Mr. Ries—and a little bit from me—about how to define MVP for yourselves:

  1. Customer Insight

During the MVP process, startup companies interview customers and ask them to rank their product on which features solve the most problems. That’s a good start, however, it needs to be followed up with a home-base of sorts—a great landing page that captures who is visiting it, and why. Bank’s suggestion is to offer a set of products and features in the classic A/B mode—and see what customers prefer. He takes that one step further by asking start ups to offer A/B pricing options, too.

There used to be an ironclad rule—don’t put your pricing on your website but instead, make your customer pick up the phone so you have a better chance of sealing the deal. But because you are formulating your MVP, you are not truly selling anything—yet. Granted you want to start soon, but the A/B test is a better way to accomplish this.

  1. Explainer Video

I should preface these remarks with the fact: I love short, easy demo videos when product testing. Less than 4 minutes is ideal. Bank tells us about the DropBox explainer video phenomenon which won the company 70,000 subscribers overnight. Ries discusses how important it is to find out nobody wants your product as soon as possible. A video explainer can do that.

I worked on a project for a pharma field sales force that offered them a pop-up alert on their laptops whenever there was a new piece of approved information they could use when they were detailing physicians. Almost every salesperson disabled that pop-up within two weeks. Why? Because we didn’t bother to show them how to easily turn it off, disable sound, or gather each notification in email for an easy read at the end of the day. If we had used an explainer video, they would have been much less annoyed and told us to not even bother with the pop-up functionality.

  1. Brand Purpose

Usually, I skip blogs’ commentary section. I find that many people either don’t pose thoughtful (useful) questions or they try to sell the blogger something—either their ideas or actual goods and services. However, scrolling down on Ries’ blog, I found a gem by Chris Holz: “There is a distinction between product and offering. Those that focus solely on their product miss the potential found in communicating an offering that includes the product and other elements that customers place value on and increase willingness to pay.”

That’s a great point. I would change the classic, “Always Be Closing” (ABC) mantra to read, Always Be Communicating. Holz makes a great point that I think fits with both the CBM Business Planning Framework and the lean startup philosophy: You can (and should) build a brand for your MVP from the get-go—by communicating the reason your company exists as you ask your customer which problems they need solved by your product. Hopefully, the two answers are the same.

If you are changing your brand purpose as you are iterating your MVP, then maybe you need to be sure that your true purpose is solid. If not, you might have something to sell, but if you end up selling an iterative product, your customers might get confused or frustrated when you make changes. They won’t feel that way if you’ve effectively communicated the “why” before the “what” of your business. And they just might follow you to profitability.

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Use SWOT to Unlock Your Why Before Your Customer Will Buy

Run a SWOT to unlock your brand promise and build better customer relationships

When you are planning how to reach out to the marketplace, there are some newer marketing theories that can be the key to building meaningful relationships with your customers. Yes, I said marketing theories. These are the rare theories that can be tested and put into practice immediately. For me, the most impactful of these was shared by Simon Sinek during a Ted Talk. He said: “Your consumers don’t buy what you do –they buy why you do it.”

This amazing quote came to my attention through a really cool blog by Michael Brenner. In it, he offers several insights about how to plan to reach your customers—to deliver your company’s core belief to them rather than just your product or service. He tells us brands are three times more successful when they promote their raison d’etre – and how to personalize your marketing efforts to potentials using your “brand purpose.”

How would I do it? I would use CBM’s SWOT analysis tool to identify my company’s Strengths Weaknesses Opportunities and Threats. After delineating these, I’d look for ways to deliver them to my audiences. Start a conversation. Build a relationship. Let me break it down:

  • Worth it to My Reader My core belief for my communications company is—everyone needs to hear my story (content) because I don’t waste their time with stuff they don’t want to hear. Whether it’s a technological white paper on manufacturing IT or a media pitch for a pair of cool headphones, I have done my research. I know who I am talking to. My strength, then, is making sure my content is targeted and meaty enough for the people I get it in front of- so that it won’t waste their time. That’s the S in my SWOT.
  • Too Cute By Far My weakness is my ability to write fun, fearless copy. Yup—I often refuse to make it dull or clog it up with business speak to please a review board at a client company. In all fairness and in their defense, they are in the serious business of selling their products or services through the content I write. The problem with that is this: Sometimes, their audience expects the material to be cut-and-dry, with dry being the operative word. I learned that not everyone has to be amused while swallowing good, important information. I got myself a good editor at an hourly rate and told her about this issue of mine—we even have a code-edit for when she spots me being too “cute” for certain clients. That tells me to tone down a phrase and make it more business-like for my serious clients. I can usually edit myself with these kinds of clients because I am an excellent writer—and I still don’t bore people because I use juicy verbs and shun the passive voice. Weakness transformed!
  • Opportunity, Don’t Knock It The opportunities in the way I present my core belief—you need this, you should read this, you’ll be happy you did — have given me an edge in certain kinds of content—blogging is one and social media is another. My colorful use of language shows my clients that I can excel in these arenas—even business-to-business blogs and social networks are people-to-people, aren’t they? If I continue to sell my blogging and network posts and broaden my reach to new prospects, I can realize a great jump in profits—people need lots of blogs and tweets/shares these days — they’re among the most in-demand content I write.
  • Why Am I Not Scared? The Threat to my r’aison d’etre? The economic realities that my clients face as small businesses serving medium-to-large companies. Their marketing officers are suffering from “next big thing” fatigue—they are expected to jump on every social media or newest flavor of content bandwagon and then show an ROI on these untested tactics. The threat to my core belief—you need this, you should read this—is that it doesn’t get to the person who’s ready to hear it—or they can’t find it—or the company that hired me to write it doesn’t know where to put it. Or worse—we can’t prove that it worked. This threat is met square on by me—by being up-to-date on cost-effective content strategies and educating my clients on these. By becoming an ROI-KPI detective about these approaches to ensure that they can explain them to their bosses. And by really, truly knowing their customer wants and needs before I put one finger on the keyboard. See, that wasn’t so scary.

You can probably see yourself in some of my strengths, weaknesses, opportunities and threats. Run a SWOT on the why of what you do before you sell your what. It’s key to building a lasting relationship with your customers.

The Dangers of Premature Funding – Why You Should Think Twice Before Taking the Money

As you can read on this site, many of our smart bloggers preach the doctrine of lean start-up. Steve Blank wrote a great article on this subject for Harvard Business Review titled Why the Lean Start-Up Changes Everything. The article points out that 75 percent of startups fail, regardless of how much time, effort and funding are involved. The lean approach, the way Blank teaches it, is to test fast, fail fast and learn whatever lessons are necessary to get you to the next level. And this can often be done with far less money than you think.

I’ve been involved with a number of startups ranging from the pure bootstrap -where my partners and I were camped in borrowed office space, sitting on chairs we brought from home – to the VC funded model, where we launched with tens of millions of dollars of other people’s money (OPM). And while the outside money was comforting, it always comes with a price. Other people will have a say in how you run your company and sometimes, in whether you even get to run your own company.

Based on these experiences, as well as what I have learned from my clients and entrepreneur friends, my recommendation is to take the least amount of money possible in the early stages of your venture, for these reasons:

  1. You will spend your own money wisely. Ventures that get big infusions of cash often spend the money in ways that do not advance the needs of the business. A recent example of this is the spectacular failure of the Israeli electric car company Better Place, which took in almost $1 Billion in funding but crashed in a big way. By contrast, if it is your money, you tend to monitor every penny and make sure all expenses are productive and necessary.
  2. You won’t change your business model too often. I’ve been in a situation where a large investor forced us to change our business model instead of staying a course that I believe would have been ultimately successful. Money often comes with some loss of control and this can be a trade-off you later regret. On the flip side, there are investors who add a great deal of non-monetary support so you need to take the cost vs. benefits into account.
  3. You will set habits that serve you well as you grow. By starting frugally, you will develop a pattern of maximizing every dollar. This will help you tremendously whether or not you take funding from outside sources in the future.
  4. When you do ask for money, your valuation will be higher. This is the same principle of how the people who least need a loan from the bank are able to get the money on the best terms and interest rate. We saw this with one of our ventures where the company gave up half its equity in return for a couple hundred thousand in angel funding. The company was ultimately very successful – and while the principals could have self-funded – because they chose not to do so, their share of the upside and control were severely diminished.

For another great perspective on the “lean” model, read the article from Fast Company titled How we founded a startup with Only $600 – and why we wouldn’t do it any other way.” The author, Anna Redmond, talks about how the average startup raises $200-$300K and yet, many of these supposedly well-funded startups don’t make it. In fact, only 30 percent of startups are fully bootstrapped, where the founder supplies all the funding. A good portion of these startups not only survive, but end up accepting outside capital not for survival, but for business acceleration. And as I pointed out above, when you take money in this type of scenario, the valuation and business terms are much better for the founders.