Their main drawback was that they were based on intuition rather than data. Intuition often leads us astray when making decisions about what products should exist and which ones shouldn’t. We need more evidence-based decision making if we want to make sure we’re building something useful and valuable.

Luckily, we have a better way to approach this today: Design thinking. This methodology was first developed by IDEO in the late 1970s and has been used successfully across industries such as consumer electronics, healthcare, automotive, fashion, food & beverage, retail, education, and more. The goal of design thinking is to develop something valuable and understand why users want what they do. By doing so, you can build products that meet customer expectations while simultaneously improving your company’s bottom line.

Design thinking is a powerful tool for startups and small businesses because it allows them to develop new ideas and test their hypotheses quickly. In this article, I will explain how design thinking can lead to better MVPs.

Benefits of Design Thinking Approach in Developing MVP

1) Faster Time to Market

When developing an idea into a working prototype, there are two ways to go about it:

1) Start from scratch

2) Use an existing framework/toolkit.

If you choose option 2, then you’ll likely end up spending weeks trying to figure out how to integrate all the pieces. Design thinking eliminates the need to integrate anything at all! You simply create a set of user personas, conduct interviews, observe customers using your product, and iterate until you find something that works well. Once you’ve found something that works, you can move onto the next step to further refine your solution.

2) More Valuable Products

Listening to your target audience is the key to discovering who they are, what problems they face, and their preferred solutions. When designing a product, you must first ask yourself, “what does my ideal customer look like?” Then, once you know that, you can begin to answer questions like “how could I help him solve his challenge?“ It may seem evident at first glance, but most companies fail to realize the importance of listening to a potential customer.

3) Less Waste

One thing that makes design thinking unique compared to other methods is its focus on understanding human behaviour instead of just solving technical issues. It is not uncommon for designers to spend a lot of time figuring out how to implement new features without considering whether those features matter to anyone. For example, let’s say you were tasked with creating a feature that allowed people to share photos online. How can we best provide this information? How might someone use this feature? Would sharing photos online improve or hinder their experience? It’s hard to answer these types of questions without talking to real people. But since interviewing people isn’t always feasible, design thinking provides another alternative – observing actual usage patterns.

4) Increased Customer Loyalty & Retention

As mentioned above, design thinking focuses heavily on learning more about your target market by talking directly to them or by observing them. By doing so, you gain valuable insights that allow you to understand better why certain products succeed. From these findings, you can make decisions regarding future iterations based on feedback received from previous versions. This means that when you release new versions of your app, you won’t need to worry as much about losing current customers because they already had a chance to try out your latest iteration.

How Design thinking Leads to Better MVPs

A minimum viable product (MVP) is essentially a minimum product version that solves a specific problem. Since it doesn’t include everything needed to launch a full-fledged product, it forces developers to prioritize which parts of the application should receive priority attention. This allows them to build only the functionality required for users to achieve their goals while still providing enough value to justify continued development. In short, if you’re looking to develop a high-quality product in less than six months, design thinking will save you tons of time and money.

Identifying the target audience is the first step in any design thinking project. You need to know who you’re trying to reach before you start designing anything. Once you’ve identified the problem or opportunity, you’ll then move onto defining the solution. Next comes ideating — brainstorming all possible ways to address the issue at hand. Finally, there’s prototyping — creating low-cost prototypes that allow you to validate whether your idea solves the problem.

Your goal here is to get user feedback on your initial concept. If you don’t receive positive responses, you may need to change your prototype until you find one that works well enough to continue moving forward.

When developing your MVP, you should keep these three points in mind:

1) Understand the Problem – Before starting any design work, you must define the problem you wish to solve. What is the pain point that you are attempting to address? How would someone use your product if it didn’t exist yet? Why did they choose to buy your competitor’s version instead? These questions will help you get a deeper understanding of your customer and guide you through every stage of your design thinking journey.

2) Define Potential Solutions – After identifying the problem, you now need to determine which core features you’d like to include in your MVP. Do you plan to add social media sharing capabilities? Maybe an analytics dashboard? Or perhaps even some sort of gamification mechanics? Whatever feature you decide on, ensure that each element serves its purpose within the context of solving the original problem.

3) Prototype It! – Prototyping is where most designers spend 80%+ of their time. Don’t let yourself fall into this trap. Instead, focus on building out just 1–2 screens worth of functionality. Use wireframes, mockups, paper prototypes, etc., whatever method best suits your needs. Just remember to test early and often throughout development. The critical thing to note about this step is that you shouldn’t be afraid to fail. As long as you learn from your mistakes, you won’t end up wasting too much time and resources.

Once you have a working MVP, you can begin testing with real customers.

In summary, design thinking helps us understand our problems better by asking ourselves what we want to accomplish and why. We then go ahead and create solutions based on those answers. Design thinking also gives us the freedom to iterate over multiple ideas without worrying about spending thousands of dollars upfront. Lastly, design thinking provides us with a framework to evaluate potential products to avoid making costly mistakes along the way. If you follow the steps discussed in this article, you’ll end up with a much stronger MVP than you started with. And once you launch, you’ll see how quickly your user base grows because of it.

The post How Design Thinking Leads to Better MVPs first appeared on Merkat Intellekt.

What is MVP, Briefly

The Minimum Viable Product is a term coined by Eric Ries in his book The Lean Startup. A MVP is a strategy that enables startups to quickly develop new ideas into marketable products without spending too much money upfront. Many companies have used this approach, including Amazon, Google, Facebook, Twitter, Netflix, Spotify, Uber, Airbnb, Dropbox, and Kickstarter.

The Goals of Your MVP

The most common way to measure success is by looking at how many people in your target market have tried out the MVP. You need to see whether there’s enough interest to justify further investment beyond the MVP. If there isn’t, then you’ve got to rework on your idea and refine it further. But even when there is sufficient demand, you still don’t necessarily get a return on your efforts unless you can prove that the MVP works. That means gathering some kind of evidence that shows users find the MVP helpful.

Essentially, you have to measure two things:

1. The attractiveness of your offering to a viable pool of people / early-evangelists
2. How valuable is your MVP in solving a problem for your target user

Acquisition Rate

One metric that can help answer both questions above is the acquisition rate. AR measures the number of potential buyers who come across your offer within a given period. For example, if you run a website where people can sign up for free software trials, you could calculate AR based on the number of visitors per day. Another related metric is bounce rate, which tells you how often someone leaves your site immediately after visiting it.

Customer Acquisition Cost

Another metric that helps determine whether your MVP was worthwhile is Customer Acquisition Cost. CAC refers to the total amount spent acquiring one customer over the lifetime of the business (LTV). So, if you spend $10k to acquire 10 customers, but only 1 of those customers becomes profitable, then your cost per customer would be $1000. However, if you spend $100k to acquire 100 customers, but 50 become profitable, your average cost per customer drops down to $50.

Conversion Rate

Another metric that helps determine whether your MVP is worthwhile is conversion rate. CR measures the percentage of visitors who convert into paying customers. For example, you might be offering a trial plan for your web app, product or service. It is easy to determine how effective your MVP is by looking at how many people become paying customers after the trial period.

Return on Investment (ROI)

Return On Investment is another metric that helps determine whether an MVP is thriving financially. It compares the value created by the MVP against its costs. A simple formula looks like this: Value Created – Costs Return On Investment.

So, let’s say you launch an MVP that generates $5K in revenue during the first month after launching. Let’s also assume that you spent $20K developing the MVP. Then ROI can be determined based on the value created. Now, we need to know what “value created” represents. Well, here are three ways to do so:

• Value Created 1: Revenue generated by the MVP
  • This is probably the easiest method because it doesn’t require any additional data collection. Simply look at the numbers reported by your payment gateway(s).
• Value Created 2: Number of new subscribers acquired through the MVP
  • Instead of focusing solely on revenue, you might consider the number of new subscribers acquired through your MVP.
  • Once again, you should report monthly subscriber counts for each market segment (countries, regions, etc.). You can find more information about using GA’s audience insights tool here.
• Value Created 3: Average order size
  • To calculate the average order size, divide the number of users by the number of active accounts. For example, if you had 1000 active accounts and 500 ordered something, the average order size would be $500. If you could track these values, they would give you a great idea of which market segments generate the most sales.

Referral Rate

The last metric we’d recommend tracking is the referral rate. Referrals refer to the number of unique referrals made by existing customers. As mentioned above, referring customers is a meaningful way to grow your user base. Tracking referral rates lets you see where your best-performing markets are.

Learning Metrics

In addition to the metrics mentioned above, other essential learning metrics help us understand our progress towards building a sustainable company beyond a successful MVP. These include things such as retention rates, churn rates, and user satisfaction scores.

Retention Rates

The retention rate indicates the proportion of existing users who continue to use your application/service. Retention rates help to understand the value created by our application/service. It requires a sound strategy in place to retain an existing user.

Churn Rates

During any given timeframe, churn is the number of users leaving your system. High churn rates indicate poor quality of experience. They could mean – too many bugs! Or, perhaps, not enough functionality to entice the user. Either way, it’s a big red flag and you must focus all your efforts on addressing the overall quality of your application/service before increasing your marketing budget.

User Satisfaction Scores

Finally, the User Satisfaction Score measures customer happiness. Customer Happiness is calculated based on ease of use, performance, reliability, security, and support. The higher the score, the happier the customer. A straightforward way to measure customer happiness is to get user feedback by asking your current customers what they think of your service.

Conclusion

As you can see, there are several different types of metrics available to evaluate your Minimum Viable Product and improve your learning about your target customers. Each has strengths and weaknesses. However, no matter which ones you choose, make sure that you keep them consistent across projects.

We’ve intentionally left out metrics like customer lifetime value (CLV), average revenue per user (ARPU) and revenue per account because they’re better suited for the post-MVP stage.

The post MVP Metrics: Measuring the Success of Your Minimum Viable Product first appeared on Merkat Intellekt.