What is the lean startup methodology?

By: Benjamin Bressington

There are plenty of companies who can build you an app or any other software-related product. Nonetheless, the challenge is to build a digital product or develop a business idea that really meets the market needs and requirements. A tried and tested solution to that challenge is the lean startup methodology, a set of tools and processes that align your development efforts with customer needs by involving the people who will actually use your product. This article acts as an introduction to the lean startup methodology, its features and benefits, and its suitability for use in any digital setup.

Table of contents

1. What is lean startup methodology?

2. The (central) importance of feedback

3. The benefits of using the lean startup methodology

4. Minimum viable products (MVP)

5. Lean startup methodology Q&A

6. Summary

In digital product development terms, the lean startup methodology gets you from point A to point B in the shortest possible time, using the shortest possible route, all the while checking that point B is really the most suitable destination. And if it isn’t, the lean startup methodology will help you identify a new and better point B.

At Boldare, with 17 years (and counting) of digital product development under our belts, we remain committed to using the lean startup methodology for the websites, apps, platforms, and any other digital product that we create. With a strong focus on the user and client needs and, most importantly, developing products that meet those needs, the lean startup methodology enables us to work rapidly, testing ideas and hypotheses at the earliest possible stage and then pivoting each project were necessary to home in on the perfect product.

What is lean startup methodology?

First of all, the lean startup methodology is not just for startups. Yes, it was designed and developed with new, innovative, entrepreneurial digital businesses in mind but its applications have long since transcended that particular business niche.

The methodology was first presented in Eric Ries’ 2008 book, “The Lean Startup” and has been one of the most widely used and popular such methodologies for the last decade or so. The key is adopting a specific user-centered mindset and approach to the development of digital products. This lean approach is based on five principles:

Entrepreneurs are everywhere – The lean startup methodology is entrepreneurial by nature but it’s not just for the stereotypical lone wolf new business owner. In fact, in a lean startup, ‘entrepreneur’ is more of an attitude than a specific role. You’re looking to create something new and put it into the hands of those who will find it useful; you can do that as a ‘lone wolf’ or as a member of a team inside a large corporation.
Entrepreneurship is management – Like many other endeavors, entrepreneurship is hardly an off-the-shelf, cookie-cutter process. Instead, it responds to circumstances, feedback, changing priorities… and as such, it requires management.
Validated learning – Do you build your dream, release it into the wild (i.e. the market) and expect it to succeed? Or, do you test each of your key, innovative ideas, with your target customers, and then listen to their feedback to make the final design better? The lean startup methodology is about experimentation… and paying attention to what the results of your experiments tell you.
Innovation accounting – If you want to know you’re making progress, you need to measure it and for that, you need the right metrics. Lean startup avoids traditional performance measures such as ROI or market share, instead of focusing on creating relevant metrics under three main headings: customer focus (i.e. how you engage with customers and users), ‘leap of faith’ assumptions (i.e. checking your project and product assumptions against the reality in order to clarify the product’s market fit.
The Build-Measure-Learn cycle – This simple cycle lies at the heart of the lean startup methodology and is the basic approach to testing your assumptions and honing your product: You build the minimum possible product to test a specific idea (it may be a version with just a single feature or function) and test it with potential customers; you measure and analyze the feedback and data you get back from the test; you apply the conclusions and learning to the next version of the product. And repeat.

This leads us to the importance of feedback…

The (central) importance of feedback

The lean startup methodology is synonymous with feedback – whatever method you’re using, if there’s no feedback, it’s not lean startup.

The idea behind the experimentation and testing of ideas and features early with customers is efficiency – to avoid the waste that comes with building a full product only to find that it doesn’t meet the needs of the people you designed it for. Frequent rounds of testing and feedback feed into the design process – build-measure-learn, remember? – and end up mapping out a more direct route to a successful product (even if it’s not exactly what you thought you’d be building when you started out). That can’t happen without user and customer feedback.

The benefits of using the lean startup methodology

At Boldare, we are convinced (or to put it another way, we have been convinced by our experience building hundreds of digital products) that the lean startup methodology leads to a better product, quicker. But what about the other benefits of working within this method?

Less uncertainty – Creating a new digital product is often a step into the unknown. You don’t have past performance data to guide you. You have a new idea and want to make it real. The temptation may be to just dive in and do it; accept the initial lack of certainty. But the lean startup methodology gives you a framework to create certainty: clear goals, specific hypotheses, targeted testing, and feedback… By reviewing at each stage (after each round of feedback) you can be sure of the next step.
More efficiency – The lean startup methodology makes digital product development less of a gamble. The structured process, together with the testing and feedback, means you’re not just ‘putting everything on red’ and spinning the wheel. Instead, you are quickly but carefully testing each major element of your future product, ensuring that each step or phase is both necessary and working before you move on. This is a smart use of your time and resources. Furthermore, by involving potential customers from the go, you’re also building audience expectations and interest in your upcoming product,
A successful business? - It’s possible that the biggest benefit of the lean startup methodology is a successful business. We’ve all read the terrible statistics around the success rate of startups (e.g. around 50% of new US companies fail within five years, and 70% within ten years. Source: statisticbrain.com). By creating structure, increasing efficiency, and reducing waste, the lean startup methodology can be a survival tactic.

Minimum viable products (MVP)

As mentioned, a principle of the lean startup methodology is testing features with users; in fact, it is an absolutely user-centered process in that without user feedback, the process doesn’t (can’t) work. What exactly is it you’re putting in users’ hands for testing? Usually, a minimum viable product: an MVP.

The minimum viable product is just what it sounds like: a bare minimum version of your product with just the feature or features that you’re looking to test with users. Creating and testing the full product is expensive and time-consuming. And if that full product needs refining (it will!) then you have more changes to make, requiring yet more time and effort. What’s more, often some of the features you would have done differently in the first place if only you’d had earlier feedback. Testing an MVP with just the features you’re focused on in that moment can virtually eliminate wasted effort from your digital product development – even if you’ve designed an MVP with features you end up not using at all, the testing process has given you valuable information, allowing you to pivot the process in the right direction.

Remember, you’re creating a new product and though you might think you have a pretty good idea, you cannot really know what the final version will look like until you begin work. The lean startup methodology enables you to arrive at that final version as efficiently as possible.

Lean startup methodology Q&A

1. What is a lean startup?

A lean startup methodology is an approach to creating digital products, allowing you to efficiently test and develop features and business ideas by working directly with the product or business’s intended end-users.

2. Can a lean startup operate inside a large company?

Absolutely. The word “startup” doesn’t have to refer to a small or new business focused on innovation (the classic startup). Lean startup is more of a design framework and philosophy and can be implemented within a larger organization.

Is a lean startup only for startups?

Nope. Although the methodology was originally inspired by and designed for startups, any size of organization or company can use lean startup methods and techniques.

Is a lean startup only for big companies?

No, it’s far more flexible and adaptable than that. The lean startup methodology was conceived with small, entrepreneurial, new businesses with a focus on innovation and design. Size is not important, the process is.

Does “lean” mean cheap or quick? Or neither?

Whether your digital product development project is “cheap” or “quick” depends at least partly on what it is you’re developing. Large, complex products are unlikely to be cheap and quick, whatever process methodology you use. However, it’s practically guaranteed that using the lean startup methodology will mean your project is cheaper and quicker than if you don’t.

Summary

Over the last decade and more, the lean startup methodology has driven a break with past thinking. If you think about the build-measure-learn cycle with its testing, feedback, and pivot elements, it’s clear that rather than answer the question, "How do I build this product?", the lean startup enables you to ask, "Should I build this product?" And if the answer is, No, you shouldn’t, the lean startup gives you a process to find and build the product you should be developing.

How Lean Startup is different from Agile and Design Thinking

More than ever, businesses are focused on digital transformation, shifting access to their products and services online. This creates a need to invest in developing digital products – apps, websites, e-commerce platforms, etc. Whether you handle the development yourself or seek out an experienced development partner, the question isn’t just what to develop but also how. This article seeks to define and disentangle the approaches commonly used in digital product development: Agile, Design Thinking, and Lean Startup.

1. Design Thinking vs Agile vs Lean Startup

2. Agile vs Design Thinking vs Lean - Mix and match?

Have you ever been to a great restaurant, looked down the menu, and been unable to make up your mind because it’s all so good? Or maybe you always order the same thing but are tempted by another dish – you’re just not sure it will satisfy you like your ‘usual’?

When you’re developing a digital product for your business but aren’t sure which methodology or approach is best, it can be a little like sitting in that restaurant, unsure what to order: Lean Startup (giving priority to testing and user feedback), Agile (creating a product in rapid, focused increments that enable easy scaling), or Design Thinking (with an emphasis on creating a diverse design team and a deep understanding of the digital product’s end-user).

Design Thinking vs Agile vs Lean Startup

Building on our previous title, “What is the lean startup methodology?”, this article compares these three approaches to innovation, including how they might be combined.

Agile

The beginning of the 21st century saw the emergence of Agile as a response to the linear, traditional ‘waterfall’ approach to managing software projects (for more on the differences, check out our article, “Agile vs. Waterfall”). Whereas waterfall is all about planning, laying out a detailed project route map, and sticking to it, Agile is, predictably, more agile with an emphasis on flexibility, client input, and breaking down the development process into bite-sized iterations.

There are a variety of Agile frameworks – e.g. Scrum, Kanban, etc. – but they all have the following characteristics:

Work is carried out in short iterations, known as sprints.

Teams are usually self-organized, cross-functional, and egalitarian.

Communication is a key feature, usually based on regular team meetings (e.g. in the scrum framework, teams have a short meeting called a ‘daily scrum’ to review progress; scrum also offers other types of meetings that help drive the process, e.g. reviews and planning meetings).
Product features or functions are released frequently.

A key element of Agile is flexibility, especially in terms of planning. The process is driven by a clear destination in the form of product vision and objectives (linked to business and user needs) but the route map to that destination can be rapidly adjusted to respond to changing circumstances. Part of this flexibility is the use of testing as a way to keep development on track, gather user feedback and input, and spot and eliminate any bugs; the result is faster development and minimized costs.

In Agile, transparency, especially in communication, is essential. This transparency depends partly on the tools used by the team (e.g. open Slack channels for communication) but also on the structure of the team itself. For example, at Boldare, we don’t have project managers. We use the agile scrum methodology and each team has a scrum master – not a manager, not a gatekeeper, but a facilitator who ensures the team is getting the most out of working in Agile.

Agile’s ultimate focus is on customer and user needs. Rather than build a whole product in one go, an agile team builds that product one function or feature at a time, checking alignment with user wants and needs at each stage. The result? A digital product that is fit for purpose and comes with built-in user commitment. To use our restaurant/menu analogy: Agile means a meal with lots of short courses, prepared quickly, and after each course, you can change your order, with no penalty.

Design Thinking

Design Thinking is a process that focuses closely on the needs of the customer or client; i.e. the business goals you need the digital product to support and the needs of your product users. Design Thinking uses a structured process to get to the heart of the client and user needs, truly understand them, and then apply innovative tools and techniques to come up with a creative (and highly appropriate) solution.

In a way, Design Thinking offers a consultancy approach to digital product design and development, codifying how a ‘designer-consultant’ would deal with a client’s project and enabling organizations and development partners of all sizes to effectively use that approach.

Though there are variations Stanford’s d.school offers a commonly-used five-step design thinking process:

1. Empathy – get to know the client and their users; what’s the context, how do they think and feel about the problem?

2. Definition – analyze the data to understand what users need, create insights into the issues underlying the problem, and define the problem's people-centered terms.

3. Ideation –challenge assumptions, storm ideas, give free rein to innovation, and design a solution to client and user needs.

4. Prototyping – create a lo-fi, workable version of the solution that addresses at least part of the problem.

5. Testing – test the prototype with users and gather feedback.

This can be a simple, linear sequence but it usually isn’t – new information and ideas often arise throughout the process and so stages are repeated, approached from different angles, and so on. The key is unlocking the team’s creativity and applying it directly to the heart of the problem or challenge.

Forrester-IBM research from a few years ago found that Design Thinking can reduce design and development time by up to 75%. What’s more, teams using Design Thinking tend to reduce development costs, improve risk management, produce better quality products, and boost profitability.

The key to Design Thinking is the customer and user focus. The process may include collaboration, questioning, creativity, empathy, experimentation, and continuous improvement but the defining feature is it is user-centered. In our restaurant/menu analogy, the wait staff, chef, and maître d’ are all keen to hear from you, not only about what you want to eat but why do you want it, what’s the occasion, what have you tried in the past, how do you hope this meal will make you feel…?

Lean Startup

The Lean Startup methodology is for more than just startups. Yes, it’s designed (and ideal) for new, entrepreneurial, innovative digital businesses but it also works for larger, more established businesses that want to address their need for a digital product. In common with Agile and Design Thinking, Lean Startup emphasizes the importance of the product’s end-user in a rigorous alternative to the classic project management approach. This alternative rests on five main principles:

Entrepreneurs are everywhere – Which is not to say that Lean Startup is only for entrepreneurs but that an entrepreneurial attitude is adopted, looking to solve a common challenge in a new and unique way.

Entrepreneurship is management - Lean Startup is about actively managing the development process; including making decisions about the process itself, and its goals and priorities in response to circumstances and feedback.
Validated learning - Each idea, each feature, each function is treated as an experiment and is tested with potential users. Then their feedback is incorporated into the development process.
Innovation accounting - The right metrics are important if you’re to accurately assess progress. In digital product development, traditional metrics (ROI, market share, etc.) are either less relevant or cannot be used. Instead, Lean Startup measures engagement with users, the project and product assumptions, and the product’s market fit.
The Build-Measure-Learn cycle – Lean Startup is based on this basic cycle: build a prototype or MVP (i.e. a minimal version of the product, just one or two features), test it with potential users and gather feedback and data, then apply the conclusions and learning to the next version of the product. Rinse and repeat.

All of which highlights the importance of feedback in the Lean Startup approach. In fact, feedback from potential users and market is so important that without it, you’re not using Lean Startup – your process may have some lean features but Lean Startup is defined by feedback.

Ultimately, the Lean Startup approach is all about quickly and efficiently testing your business idea(s) in a practical way.

In our restaurant/menu analogy, the restaurant isn’t so important for Lean Startup – it’s more like a private venue, with your own private chef who, after each course, comes over and asks not only, How was your food? but also, How can I make it better in future?

What is Product-Led Growth? Theory, Examples & Resources

If you're looking for a new way to grow your business, you may want to consider product-led growth. This approach is based on the idea that creating and selling great products is the best way to achieve long-term success. In this blog post, we'll discuss what product-led growth is, explore some examples, and provide resources so you can learn more about this strategy.

Product-Led Growth (PLG) is a business model where the product drives growth as opposed to traditional marketing methods like advertising and sales. This can be done in a number of ways, but the goal is always to create a product that people want to use and that solves a problem.

Product-Led Growth is a strategy that uses the product as a channel to drive organizational KPIs, such as revenue, engagement, and reach.

Are you ready to break down barriers, learn new frameworks, and expand your business exponentially? That's what product-led growth is all about: placing your product at the center of everything your organization does.

What is product-led growth?

Product-led growth (PLG) is a tricky one to pin down as there are so many things that make it unique. To sum it up in a few words…

Product-Led Growth is a strategy that uses the product as a channel to drive organizational KPIs, such as revenue, engagement, and reach.

Now, there’s more to it than just that.

It’s growth without dependencies

PLG means that your business grows without having to invest tens of thousands of dollars on paid advertising or have your sales team constantly calling leads. When your strategy is product-led, monetization becomes much easier as Matt Bilotti from Drift points out:

“Product-led growth is building your product in a way that allows you to monetize and grow without needing a sales and marketing organization to scale at the same rate.”

– Matt Bilotti, Product Lead, Growth & Lifecycle @ Drift

It’s truly customer-centric

What would a product be without happy customers? Clue: non-existent.

Product-led growth is all about producing delighted consumers who become your biggest fans and spread the word about your company on their own. Kelly O’Connell from ActiveCampaign sums up the reason behind it nicely:

“PLG is building a company and driving growth through a product that solves real customer problems. Understanding customers’ needs and pains, driving to build a product that solves those pains, and then aligning the company to support the product and mission.”

– Kelly O’Connell, Director of CXA Innovation and Product Strategy @ ActiveCampaign

Product-led growth companies go above and beyond to make their product the greatest in the market. They implement consumer suggestions and actively develop new features based on what their customers want—they're completely customer-centric. And the results speak for themselves:

“Your product becomes the core driver of acquisition, expansion, and retention.”

– Kelly O’Connell, Director of CXA Innovation and Product Strategy @ ActiveCampaign

Its independent product adoption

Having a product that allows your customers to self-serve and adopts independently is an important element for PLG. Erin May from User Interviews told how the key lies in in-product discoverability:

“Product-led growth is about getting more out of your product builds by making sure users can discover features and use cases that will activate them (help them first find value), keep them engaged (retained) for the long haul, and better monetized (e.g. making sure you have the right value metric, and that it can be monetized in a self-serve way).”

– Erin May, VP, Growth & Marketing @ User Interviews

It's critical to provide your users the ability to self-onboard your tool on their own in order for product-led growth to occur. Of course, assistance is always available if required. However, lowering the barrier to adoption truly speeds up that "ah-ha" moment. For Eric Peters at Hubspot, product-led growth is all about independent adoption:

“PLG is an evolution driven by consumer behavior to change prospect and customer experiences from interactions between humans to more scalable self-service interactions with technology.”

– Eric Peters, Product Manager, HubSpot Academy @ HubSpot

It has non-committal pricing

When it comes to promoting your business, the ultimate goal is always to get people interested in your goods or services. However, if you're looking for a way to generate more leads and sales, you should consider PLG. The best thing about this marketing strategy? It's free! Whether you want to start a blog, build an audience on social media, or create a minisite, there are endless opportunities for promoting your product without spending a dime.

And that's not all—PLG also has the added benefit of being non-committal. With this type of growth, you can offer free trials or freemium plans to let people experience your product before they commit to paying. Gen Furukawa from Retainable puts it this way:

“A product-led growth strategy enables users to explore the product for themselves without the restraint of features, and come to their own conclusion on the value that the product delivers. Pricing is one of the most important levers for PLG—the shift from demo and sales to free trial or freemium.”

– Gen Furukawa, CEO @ Retainable

With amazing user onboarding and fascinating product tours, organizations may offer extra premium features that make people's lives easier, cementing the customer base even more.

What does a company that is product-led look like?

How do you identify a product-led firm in the wild? There are a few characteristics that should catch your attention:

Usually, they’ll have a freemium model (“start free today!”)

Low barrier-to-entry (self-serve vs. forced sales demo)
Laser-focused on user experience (expect glowing reviews)
Expansion based upon their existing network (they have a fan base that refers others)
Habit-building (they slide right into your tech stack and become essential real quick)
They solve a real need in a lower-friction way than competitors (butter smooth)

Have you seen any that meet these criteria? Here are some quick-fire cases of product-led businesses, as well as how they have used PLG to fuel their growth:

Dropbox in 2008. Even the MVP was the best product at the time + free plan + viral invite loop

GitHub in 2013. Built forking, pull requests, and other modern must-haves on top of Linux creator Linus Torvalds’ git, a developer collaboration tool that was already widely adopted. Attracted important open source projects and grew awareness through community and Google-indexed public code repositories

Drift in 2015. Reducing barriers to entry (free plan, try without devs) + an increasingly powerful feature set to make Drift indispensable after install

Slack in 2016. Directed marketing power towards triggering a fundamental shift in the way teams viewed internal communication. The free plan made it possible for teams to adopt without getting buy-in from the C-suite; the introduction of free plan limitations and best-in-class collaboration features/integrations made it stick and grow virally within organizations

Trello in 2018. Leveraged its huge existing user base (with many business prospects on the free plan) + introduction of Business and Enterprise plans + reduction of free features (10 board limit) + expansion of premium features (automation, integrations).

Product-led vs. sales-led vs. marketing-led

There are three distinct methods at work here. So, how can you tell them apart—and how can you confidently pick one that will?

Sales-led companies have, well, sales at their core. The product is built to support the sales process and make it more efficient. Salespeople are incentivized to close deals, so they proactively reach out to potential customers that they think could benefit from the product.

Marketing-led companies use marketing efforts—like content marketing, search engine optimization, and lead generation campaigns—to bring potential customers to the top of the funnel. Then, it’s up to the sales team to close the deal.

Product-led companies put the product front and center. The focus is on building a great product that’s so intuitive and easy to use that it sells itself. Customer success teams work to onboard and train customers so they can get the most out of the product.

So, which method is right for your company?

We're huge fans of product-led leads. And we're not the only ones:

“Marketing, sales, support, and account management teams should be empowered by the product to discuss the value offered at every step of the customer journey. Marketing’s goal is to get prospects to use the product, sales work to understand the needs of prospects and educate on how the product meets those needs.”

– Kelly O’Connell, Director of CXA Innovation and Product Strategy @ ActiveCampaign

It's good advice to collaborate across departments in the effort of product-led development.

Product-led vs. sales-led

In the 1980s and 1990s, software was sold to CTOs and CIOs. They made deals on golf courses with a G&T, and large budgets for client entertainment (make that G&T a double). There were a few major players with many custom development, so relationships meant something.

The product was an enabler of the sales process.

In the new millennium, things changed dramatically with the rise of the internet and social media. Customers are more informed than ever before, and they're not afraid to do their own research—or switch brands if they're not getting what they want.

This has resulted in a power shift, and customers are now in the driver's seat.

The new sales process is about building relationships and educating potential customers on how your product can meet their needs. It's not about closing the deal—it's about helping the customer understand how your product can help them reach their goals.

Product-led companies put focus on building a great product that's easy to use and provides value from the first use. The product is the star of the show, and sales and marketing efforts are focused on getting potential customers to try it out.

The goal is to onboard and train customers so they can get the most out of the product.

The sales-led Go-To-Market (GTM) approach, as the name implies, is predicated on outbound selling, personal connections, one-to-one meetings, customized sales processes, and lengthy cycles. Because of the reasons stated above, industries such as heavy manufacturing (think aircraft) still rely on this. It also applies to companies that have a product so specialized that it demands a high degree of explanation.

However, this model is losing its efficacy in the modern world. It no longer works as well as it used to because potential customers are harder to reach and they have more information at their fingertips than ever before. They can also communicate with each other about their experiences with your product, good or bad.

A study by Forrester found that “the number of companies using a product-led go-to-market (GTM) strategy will grow from 15% in 2018 to 30% in 2023.”

Today there are still some remnants of this approach, but some key megatrends have created a shift away from this approach:

Software is easier to build than ever before; so there are many players

Information is widely and easily accessible so it's easier to evaluate true merits
The average individual is now adopting software in their personal lives and so more comfortable adopting it in their professional lives
As SaaS looks for ways to scale even more quickly, companies have to find ways to remove constraints imposed by hiring

Product-led vs. marketing-led

The marketing-led GTM approach emerged as software firms sought more efficient methods to develop. This was in the world of Web 2.0, when websites became a cheaper way to display a billboard to a user. The search became the primary method that people used to locate software; it no longer required personal connections.

Companies began providing users with key information in order to pique their interests and expand their reach beyond conventional channels. This developed into providing more product, industry, and customer information to visitors, culminating in our current content-driven marketing paradigm.

However, there are several trends pushing us away from a marketing-led growth model toward a product-led development approach:

A world of SaaS means that users can start using the software more easily than ever before; there is no time-consuming installation or setup process

Lower switching costs (because of more providers, easier installation, cheaper prices, and shorter lock-in periods) mean that users are comfortable trying software before committing
To help users try software more and more products offer a free trial or freemium version
Subscriptions mean companies are comfortable increasing revenue from customers over the lifetime rather than securing this up-front

This indicates that users' attention has moved from offline discussions to online websites, and finally to interactive goods. Products are now the advertising vehicle for getting your message and value across to a consumer. This necessitates that the product provides all of the important information that consumers require in order for them to make a decision, which is manifested as giving them value and a good experience from the product itself.

A product-led go-to-market strategy is one where the product is used to acquire, convert, and retain customers. The main focus of this strategy is on building a great product that sells itself. This means that you have to design your pricing around what maximizes value for the customer, not what maximizes revenue for the company.

A great example of a product-led go-to-market strategy is Slack. They offer a free version of their product with limited features and then upsell users to a paid version with more features. This model has been very successful for them as they now have over 12 million daily active users.

Selling B2B SaaS like B2C mobile apps

B2C applications are simple to sell, but B2B apps are more difficult. Consider a typical fitness tracker app that you may have on your phone. The advantage here for you is obvious and straightforward—download the app, get insights into your physical health as you provide it with more information, and improve your fitness and overall diet.

B2B is more difficult today than it was in the past. Historically, there has been a significant barrier to entry, a period of ramp-up, and strong executive approval needed. However, all of that is changing.

We're now seeing a shift in B2B product development, with B2C app tactics increasingly used. Google logins are completely free to acquire and allow you to invite anybody you desire to join. Product triggers, such as account restrictions or upgrade offers, are much more effective than external triggers—CS upsell consultation, automated emails, and push notifications.

All of these changes in the B to B world are being brought about by a single change: the customer is now in control, not the business. It's no longer enough to have a good product; you need to have a great product that's easy to find and use.

PLG is paving the way for a new type of SaaS.

How to Build a Product-Led Growth Strategy

Product-led growth is enticing. It may be difficult to make the case that product development is the way forward, but how can you put this into action effectively? There are a few elements involved:

Setting product-led development as a goal

Defining product-led growth roles and responsibilities
Examine potential products for possible improvements
Track analytics
Running tests
Measure, learn, repeat

However, before we get into how to implement a PLG plan at your firm. There's a major point that needs to be addressed—getting team buy-in.

Internal adoption is the first step: winning.

Executive alignment is the first step, which entails aligning the organization's objectives with those of its executives. It will be challenging to allocate time, assets, and cycles to product improvements, running experiments, and hiring talent if the management does not support this method.

Don't forget that there's a lot of pressure on project teams, who are overwhelmed with input from customers and management. Getting traction for implementation and successfully positioning PLG as the solution necessitates an understanding of team objectives and anxieties.

Once you've got everyone on board, you'll need to establish open communication between them all. Break down the divisions and start a #PLG Slack group to share ideas and progress.

Setting product-led development as a goal

Now you've got buy-in, it's time to make some PLG goals. Setting objectives demonstrates impact and allows for continuous cross-functional collaboration toward development. The OKRs framework may be used to create product-led growth targets for your next quarter. For instance:

Objective: Successfully launch feature Y

KR1: Identify key product actions that indicate the best-fit user persona through experimentation

KR2: Create friction logs for key actions and flows

KR3: Rollout new product tour to 50% of users pre-launch

KR4: Boost signup to paid conversion rate by 3%

Defining product-led growth roles and responsibilities

It will be difficult to implement any product-led growth plan if there is no clear ownership and accountability. You don't have to bring in additional personnel for this; instead, you can pick someone from within your company who could take the reins on your PLG efforts. The following individuals or teams would make great prospects for this role:

Product managers with growth or funnel conversion experience (e.g. improving trial conversions, increasing activations, creating upsell opportunities, etc.)

Designers who are analytical and have experience with experimentation

Engineers who have worked on growth or experimentation

Product Marketing or Customer Success Managers that have a good sense of UX design and/or strongly understand the market and customers

Anyone that’s had experience scaling a B2C product

The product team that is laid out in this format is lighter on engineering than a typical product team since many tools now allow for experimentation without the need for intensive engineering lifting.

Examine potential products for possible improvements

Once you've got someone to look into product-led growth, the issue arises of "Where should we start?" There are a few obvious flows that you might think about:

Trial experience/conversion to paid

Activation (especially if this happens post-payment)
Churn deflection/reduction
Upsell (more usage, or different plan/product)

We've divided up the task of determining which leaking funnel to address first into two options: one for each methodology. To assist you to decide which leaky funnel to tackle first, we recommend one of two methods:

Assess your conversion metrics against benchmarks from your industry
Assess opportunities across the whole product and prioritize based on ROI

The first strategy is hampered by a lack of appropriate or thorough benchmarks, so while some people seek for them to help them make decisions, we propose that you do not worry too much about these and simply focus on where the opportunity is greatest for you.

To assess opportunities, here are a few things you should consider doing:

1. Map out key user journeys (e.g. from sign-up to payment, or from sign-up to activation)

Identify key "aha moments" within these journeys; points of delight where a user finds value and restocks on motivation to continue

Write a detailed step-by-step friction log that identifies each action a user has to take and the associated friction with this
Look at funnel metrics (where you have them) to understand which actions cause the greatest drop-off within a journey

2. Developing hypotheses on methods to increase motivation and reduce friction. Actions are a result of a trigger when a user has sufficient motivation and ability. Therefore the goal for us is to improve motivation and ability e.g. reduce friction.

3. Translating these hypotheses to specific experiments. These might take various forms, such as:

UI change (e.g. making a button more prominent)

Explanation of copy/taxonomy (with explainer text or a tooltip)
In-product Experience (e.g. a prompt to help a user make a decision)
Flow change (different order of steps needed)

Track analytics

It's critical to have the data to make decisions in order to promote product-led growth. This necessitates a sufficient amount of instrumentation so that you can see and comprehend what your users are doing (and why).

Here are some recommendations for tooling to help with that:

Customer Data Platform, e.g. Segment: this will be the central place from where you instrument and feed data to other systems

Data Warehouse, e.g. Redshift: this will be where you hold all your data and allow your BI team to run custom queries
BI or querying tool, e.g. Looker
Data piping tool, e.g. Fivetran
Event analytics tool, e.g. Mixpanel
Event tracking tool, e.g. Iterable
Session Recording tool, e.g. FullStory
NPS/microsurveys tool, e.g. Chameleon

Running tests

It’s also important to follow best practices such as:

Be systematic with your experiments. After you’ve committed to which ones you will work on, carry them out in an arranged order—and always test one thing at a time.

Include the team in the planning process. Schedule time with your squad to ensure that all ideas and initiatives are heard.

Kill your darlings. Your favorite idea might not be the one that will drive PLG. Try and keep personal opinions out of the planning process and be brutally honest.
Set expectations with timelines. Know how long you’re going to run your experiments and allow for other factors such as low traffic.
Keep metrics at the top of your head. Always focus on what you’re doing around your key metrics, if it’s retention, always come back to what you can do to improve it even more.

Measure, learn, repeat

The postmortem, just like the actual experiment, is crucial. It's critical to document all learnings—both good and terrible—to improve as an organization. Get everyone on the team together for a session to go over the project. Try these methods for continuing to develop and enhance:

Send out a feedback form before the meeting. Ask the team what went well, what didn’t go so well, and that they learned from it all

Encourage a ‘Town Hall’ type of feedback session. Make feedback sessions open and encourage everyone to contribute.
Include remote and in-house team members. A tool like Miro can help everyone to have a say in real-time
Document everything. Find a tool that works for you, whether it’s Trello or Notion, to create a space where anybody could go into and know exactly how your experiments are going. Visibility is paramount to PLG.
Take the negatives into your next experiment. Use them to learn and make sure that you don’t make the same mistakes twice.

Make sure to celebrate the wins. Give credit where it’s due and make a big fuss over small successes—it’ll keep everyone going.

Product-Led Growth is an ongoing journey, not a destination. The focus should be on building the best product possible and using it as a tool to acquire and retain customers. It’s a marathon, not a sprint, so make sure you have the right team in place to support your efforts. And always remember: measure, learn, repeat.

Product Managers: A Product-led Growth Strategy for Product Management

If you're a product manager, it's important to have a solid product-led growth strategy in place. Product-led growth is all about using your product as a tool to drive company growth. There are a number of ways to do this, and the approach you take will vary depending on your business and products. But if you want to make sure that your product drives growth, there are some key things to keep in mind. In this blog post, we'll explore the concept of product-led growth and look at some tips for implementing it in your own business.

Many product managers are under the impression that a product-led growth strategy is only for startups. However, this is not the case. A product-led growth strategy can be used by any company, regardless of its size or stage of development.

What does Product-led growth mean?

Product-led growth is a business model that focuses on driving revenue and growth through the creation and sale of products and services. It is more efficient, reaches a larger audience, and has shown success in SaaS, B2B, and B2C firms. It's a strategy that has been used by some of the world's most successful companies, including Apple, Amazon, and Google.

In a nutshell, product-led growth is a business model in which the main source of growth is the product itself, rather than expensive and complicated marketing campaigns. When you want to attract new consumers, rather than mailing out a garish newsletter attempting to persuade them to buy something, you do it by catering to them inside your product.

It's a customer-centric, long-term approach to promoting and acquiring new consumers that have become popular among Product people.

Examples of Real-World Product-Led Growth Companies

Airtable

One SaaS solution that stands out for its personalized onboarding is Airtable.

After you create your account and join the free Pro Plan, they ask you to answer a few brief questions to provide you with the best onboarding experience possible. “What will you use Airtable for?” is one of them.

When you explain what the tool will be used for, they provide you with a Workspace brimming with databases that are relevant to your use case.

Every Airtable on the Workspace contains placeholder data, allowing you to figure out how the tool works as well as handy tooltips. At any time of day or night, anywhere in the world, you can start working with them.

Slack

Slack is a good example of a software firm that sells its product...and also offers the product. Product-led growth is becoming more popular among SaaS firms, and Slack isn't an exception.

Slack has 12 million daily active users in 2020, according to Statista. While it's impossible to know how many of those are paid, 37% of Slack's 8 million users were paying subscribers in 2018.

Think about how you first became acquainted with Slack. It's possible that you joined a new business that utilizes it as the main communication tool, or maybe you signed up for an internet networking community. There are also several online courses, particularly in the field of technology, that utilize Slack to connect their remote student body together. Many groups working on side projects also use Slack to keep everyone coordinated.

The product's success is a result of its user-friendly interface and the wide range of features it offers, such as video conferencing, that make it an essential tool for businesses and professionals.

It was once the underdog, but it has exploded in popularity. It's not only a conversation starter; it's now an industry standard. In fact, it's become so popular that many businesses have adopted it as a de-facto choice. "I'll send you the information via Slack." That is, perhaps, the greatest sign of product-led growth.

What is the secret to Slack's success, and how has it been maintained? Have you ever seen a viral ad campaign or read their latest white paper on LinkedIn? You most likely came to Slack through previous users.

Product-led SaaS permits in-product customer success.

The goal of product-led SaaS is to retain customers, even if CS enters the picture—simpler processes, user-centricity, and in-line assistance are at the forefront. There's more money to spend on important features and enhancements when CS runs on auto-pilot within the product. Releasing similar impact: stickiness, product-market fit, and product value.

Fewer campaign costs: with product-led growth, the product is the primary driver of new customer acquisition. This means that marketing campaigns are not needed to the same extent as in other business models. The result is a lower cost of customer acquisition.

Learn More and Start Growing Your Business

So you're interested in product-led growth, and you want to go deeper? There are a few things as a Product Manager that you can do to further your progress:

Make sure the perceived value and the experienced value of your products are aligned. If you promise that a free trial of your software will give users X and it actually gives them Y, your churn rates will be sky-high.

Rethink the way you think about metrics. Taking after Pinterest, prioritize features that will have the best impact on your user, not the ones that will improve certain marketing metrics. Craft your KPIs and OKRs with this in mind.
Rethink what ‘customer’ means to you. Freemium users should be handled with the same care as paying users, as they now help to build the demand that drives your growth. You need to make sure this is reflected in their journey.
Make the signup process as easy as possible. No product should have a difficult user-onboarding experience, but yours should be your pride and joy. If getting people through the doors is your biggest driver of growth, that process needs to be a priority for your teams.
Make TTV (Time To Value) a priority. This is especially important if your product is an app, which users only have to click and drag to uninstall and forget forever! You need customers to fall in love with your product hard and fast. Work with your engineers to make this their focus.

Product-led growth is a strategy that more and more businesses are turning to in order to achieve sustainable, long-term success. By understanding the theory behind product-led growth and applying it thoughtfully, your business can see great results. We’ve looked at some examples of businesses that have used product-led growth successfully; hopefully, these case studies will give you some ideas for how you can apply this strategy to your own company.

Are you ready to start growing your business through your products?

The 5 Pillars for Product Led Growth Using Product Qualified Leads

In order to achieve product-led growth, it is important to have a clear understanding of what that looks like and how to get there. Using product-qualified leads (PQLs), you can create a process that will help you identify and qualify customers who are likely to purchase your product.

Lead generation is a critical piece of any company's growth strategy. However, not all lead generation techniques are created equal. In order to generate PQLs, you need to implement a system based on five pillars: creating valuable content, developing an effective lead capture process, nurturing leads through the sales funnel, measuring progress, and optimizing results, and scaling your operation.

Picking the right tools and tactics for each step of the process is essential for success. By following these guidelines, you can build a repeatable system that generates high-quality leads and drives rapid growth.

1. Become product-led

Make sure that marketing, sales, and product teams are behind the product and its key personas. Product leadership should also place a high premium on growth in product initiatives. That implies putting development resources toward the goal of developing features with the aim of increasing customer acquisition and retention. It also implies that the product team should be involved in brainstorming methods to increase customer LTV.

With each release, you must ensure that your consumer has a wonderful product experience. It is critical for you to deliver excellent product experiences with each release in order to encourage adoption and profit from your engineering investments. In-app interactions that target relevant users based on real-time behavior and the account profile are essential for introducing new features in a contextual and relevant manner.

User feedback should also be solicited and monitored constantly so product-led organizations can course-correct when they need to.

2. Drive prospects to sign up

Deliver the product experience using a demo or a trial if prospects reach a certain qualification threshold. If your solution can meet an immediate need (for example, Dropbox for file storage and sharing), push people to sign up right away. Offer quick films that illustrate the value of your product if you don't give free trials or demos. Your finest sales tool is your product itself.

Invest in search engine optimization (SEO) to make sure people can find you when they look online for solutions to their problems. You should also create valuable content that helps people understand why your product is the best solution to their problems.

3. Establish a product-oriented sales team

Salespeople need to be armed with the pricing and packaging tools they require. Your consumers should understand why your pricing model is valuable and why they should upgrade. Set metrics for features that contribute to packaging constraints or expanded capability features in your PQL model.

In order to close more product-led growth deals, your sales team needs to be product-oriented. They should be able to articulate the product vision and value proposition so they can sell the product, not just the features. Make sure they understand what it is that makes your product unique and how it solves customer problems.

It is also important to have a product-oriented sales team so they can provide feedback to the product team. They should be able to articulate customer needs and problems so the product team can prioritize their roadmap.

The sales team should also be incentivized to sell more products, not just features. This implies that you need to have a way to measure product success so you can give the sales team the appropriate commissions.

To be effective, your salespeople must establish a rapport with customers as trusted advisers. To do so, they must truly understand buyer problems and conduct use case discussions.

4. Continuously measure and onboard users

You'll be able to learn a lot about your customers by measuring adoption and PQLs. Focus on the sections of the funnel that are most important to your business: growth acceleration or retention and cross-sell. Make sure you're getting the most out of each mile of your product by tracking new signups in order to figure out if certain product changes are increasing or decreasing conversion.

You should also focus on product engagement and adoption. Track how often users are logging in, what actions they're taking, and whether they're completing key tasks. If you see a drop-off in usage, try to figure out why and address the issue. You can also use engagement data to segment users so you can target different groups with different product messages.

It's also important to continuously onboard new users. Make sure they understand how to use your product and get the most out of it. Provide them with educational materials, such as videos, guides, and webinars. You can also offer one-on-one training sessions.

Even if prospects acknowledge the value and purpose of your product, they want to know how it will immediately help them when they first use it. They want a product that offers both simple and powerful features from a functional standpoint, and it's up to you to strike the right balance between adding more functions or enhancing the usability and productivity of existing ones.

5. Democratize data

Giving your product, sales, and marketing teams direct access to PQLs and product usage data is critical for a successful PQL model. Data access allows for faster decision-making and the detection of possibilities across departments. Data-driven debates are more productive than those based on personal opinions.

As you can see, product-led growth is a powerful way to grow your business. It’s important to have a process in place for acquiring and qualifying leads so that you can focus on selling to customers who are most likely to buy from you. Implementing the five pillars of product-led growth will help you do just that.

Using this strategy can help you focus your efforts and increase sales. We’ve outlined the five pillars of PQL growth to help get you started. Have you tried using product-qualified leads? What has been your experience?

How a Minimum Viable Product can kick-start your startup

By: Georgina Guthrie

This post was originally published on October 2, 2018, and updated most recently on March 13, 2021.

What do Airbnb, Uber, and Dropbox all have in common? Apart from being massively successful startups, they’re all associated with one term: Minimum Viable Product, or MVP for short.

In a nutshell, an MVP is a product or service with just enough features to partially satisfy early customers. It gives them a taste of what’s in store.

It’s not a finished product. But it’s the first in a series of versions that go through iterations based on hypothesis-driven development. Which is just a fancy way of saying: ‘create a minimalist version, get feedback, ramp up what works, and kill what doesn’t to make something better.’

This shortens the time it takes to develop the finished product and gives early adopters a glimpse of your product’s potential. Plus, it raises the chances of you creating something your customers need and love — without having to spend a fortune.

So what does this have to do with Airbnb, Uber, and Dropbox? It’s simple. They all had incredibly basic MVPs.

Dropbox started life as a short pitch video, created to explain the concept to investors. Before Uber’s fare sharing, music control, and rating system, it was simply an app with one function: to connect iPhone owners with drivers and allow them to pay via credit card. And before Airbnb was a $30 billion company, it was Airbed&Breakfast — a few airbeds, a wifi connection, and breakfast in the two founders’ living room.

All three companies started out following the same process. They create an assumption, test it on a tiny scale, and then develop it incrementally.

A short history lesson

Let’s take things back a bit. The term Minimum Viable Product was popularized by Eric Ries, author of The Lean Startup, and Steve Blank, a Silicon Valley entrepreneur and writer known for launching the Customer Development method.

Reis and Blank spotted that many startups had incorrect assumptions about their customers’ needs. Nevertheless, they were still investing large amounts of time and money into creating a polished product based on these assumptions. A risky strategy if ever there was one.

“There are no facts inside your building, so get outside.” – Steve Blank

No one wants a tumbleweed moment on the big launch day. So to take some of the risks out of this situation, they encouraged startups to get out there and spend more time in the field conducting experiments. These experiments involved releasing a bare-bones version of the product or service as early as possible. That’s the Minimum Viable Product that they then use to gather feedback.

This feedback is then used to either validate or invalidate assumptions. This allows the business to learn about its customers’ needs and confidently modify the product or service accordingly. The result: Something that’s far more likely to hit the nail on the head the first time.

Distilled down, an MVP loop is as simple as this:

Build > measure > learn

What about research?

If you’ve done your research properly, you shouldn’t have to go through the hassle of releasing prototypes before the big reveal, right?

While it’s true there’s no substitute for thorough research, no matter how much up-front analysis you do, you’ll always be surprised when you put your product in the hands of real users.

Often users don’t know what it is they want until they see it. To borrow the words of Stanley Kubrick — a filmmaker known for his meticulousness: “I do not always know what I want, but I do know what I don’t want.”

If you build it, they will come

Or so the saying goes. But, according to CB Insights, more than 50% of startups fail in their first four years because there’s either a lack of market need, they ignored their customers — or they ran out of cash. Creating an MVP essentially nips all that heartache and financial loss in the bud by helping you decide early on whether progression is the next logical step.

Releasing an MVP isn’t just a cost-efficient way of creating a marketable, viable product. It’s also an effective way of establishing whether or not the product should be built to begin with, using cold, hard facts.

Don’t invest huge chunks of time and effort designing and refining a product — only to finally put it in the hands of your customers and discover they don’t want it. By creating an MVP, you can gauge that initial reception and help you — and investors — decide whether to progress. This initial iteration is called a low-fidelity MVP and could be as simple as a quick survey, Dropbox’s pitch video, or a rough sketch.

Even Amazon isn’t immune to epic product failures: its Fire Phone recorded a loss of $170 m. The reason for its flop? Its USP was that it offered you a quick way to purchase Amazon products — but customers could already do that on their current smartphones. A low-fidelity MVP would have saved Amazon some serious dough.

More than just a money saver

There are some surprising benefits to MVP testing beyond just giving you customer insight and saving you some cash.

Releasing an early version of your product means you can satisfy those early customers quickly. It also helps drum up excitement, keeps your customers interested, and shows them things are moving along.

Reassure users that what you’re showing them isn’t a finished product, but merely a stepping stone. They’ll be pleased to know their input is important and be even more delighted when they see it incorporated into the next iteration.

This set of early adopters will be able to grasp a product from its early stages, not to mention be more forgiving. As agile startup godfather, Steve Blank admitted, “you’re selling the vision and delivering the minimum feature set to visionaries, not everyone.”

Caution ahead

MVPs sound like a no-brainer, right? Well, sort of. Due to the term’s vagueness and flexibility, people have applied it to pretty much everything and anything. Anything from a prototype to a fully marketable and designed product.

There’s a real challenge in defining exactly what a ‘minimum’ experience is. Ambitious product developers naturally want to add more features to give customers the best possible experience. But be warned: Feature creep could kill your MVP. The more features you add, the more money and time you sink. Before you know it, you have a marketable product that doesn’t encompass any proven customer feedback.

“If you’re not embarrassed by the first version of your product, you’ve launched too late.” – Reid Hoffman, Founder of LinkedIn

Communication is everything. Define what ‘Minimum Viable Product’ means to your team and set some boundaries. Your checklist should typically include goals such as spending as little money as possible, deciding which channels you’ll use to build brand awareness, and assigning quantitative ways to measure customer feedback. Whether you pin sticky notes up on a wall or track projects in a project management tool such as Backlog, make sure everyone’s on the same page.

As with all theories and models, this one requires some serious thought and planning. MVPs are not formulaic; all require good judgment to define. What works for one business might not necessarily work for yours. Take inspiration and guidance from the successes and failures of others, but remember to personalize your MVP around your resources and goals.

Is it a product?

Never forget that your MVP is not the final product. Maybe it performed extremely well in its functions. Maybe the users you released it to love it in its current form. It’s still not done. Don’t let temporary success blind you or the team from the final vision. Although you can learn a lot from this stage of your development process, it is still a stepping stone to your final, fleshed-out product.

Take what you’ve learned and keep going to your final vision. Only cut features if it truly makes sense after this trial run.

Final thoughts

MVPs won’t save you from learning tough lessons along the way, but they could save your startup some serious time and money.

If you decide to release an MVP, make sure your strategy is as unique as your business. And stay true to the lean, iterative process. Remember — begin life as three airbeds, two guys, and a wifi connection.

What do you think about MVPs?

Everything You Need to Know for Building MVP for Your Startup

By: Arsalan Sajid

After coming up with a startup idea, the first thing you need is a Minimum Viable Product (MVP) to see if your product will actually succeed in the market.

What is a Minimum Viable Product (MVP)?

An MVP is a development technique popularized by Eric Ries for building a basic version of a product. It envisions that the early adopters can test and provide feedback to improve the product further. Building a minimum viable product can take multiple iterations to reach completion.

Watch the video in which Eric Ries talks about the concept of building MVP.

Why Do You Need to Build MVP for Startups?

Every company starts with a basic working model and then its basic product with limited features. Even Google launched their search engine with a basic HTML page just to test how their users were reacting to it. These MVPs also let startups understand the direction to take by making them realize the problems, and coming up with efficient and effective solutions.

Minimum Viable Product vs Prototype

The misconception is that your product/service design prototype is the MVP. No, It’s Not!

The major difference between an MVP and a prototype is that the MVP is the 1st version of your actual product (with limited features) whereas a prototype is just the first draft of your actual product, and it is discarded after testing.

The diagram below will give you a clear understanding of the difference between them.

Image Source: How to Build an MVP from Spark Solutions

How to Build a Minimum Viable Product (MVP)?

This article will take you through the whole process of MVP development and will also guide you about MVP testing once you have it while highlighting the things you need to look for, while launching an MVP, gauging its success, and coming up with a launch tactic.

Types of MVP Models:

In tech, a usual MVP has any of the three models including piecemeal, concierge, and wizard of Oz. All have different ways of forming a prototype. Let’s see what their actual differences are:

Piecemeal

Piecemeal is a build an MVP model in which the product is made from multiple sources. For example, an aggregator like Groupon. Groupon takes deals from various stores and adds them to its platform. It works as an affiliate and earns a little commission when someone makes a purchase. All the deals are already available in these stores and Groupon hasn’t made any of its own deals. This MVP model is great for startups who want to start faster and with a minimal budget.

Wizard of Oz

Wizard of Oz MVP model is for those who don’t have the expertise or the time to make a perfect automated system. Wizard of Oz is basically a fake system in which startups pose as that they have a fully automated system but in reality, they are using human workers to get the tasks done. The model is praised in the startup community because it at least shows if the startup has a feasible business model. Because with a feasible model, the systems can be automated later.

Concierge MVP

Concierge MVP model is just like the Wizard of Oz build an MVP model but where Wizard of Oz hides the working behind the system, Concierge MVP is fairly open in that case. Successful implementation of concierge MVP is ‘Food on the table’ startup. The team behind the startup didn’t have any app or a web-based interface, instead, it interviewed the first few testers, asked them their food preferences, and then provides them a monthly list of recipes and grocery lists for a small subscription.

Questions to Ask Yourself While Building MVP

Here is a checklist of the essential questions you should ask yourself before you build MVP.

What problem does it solve?

Every product is built to solve a particular problem. If your product isn’t solving one, there is a problem with it and it will eventually fail. The best way to find out if a product will survive in the market is by doing multiple tests.

What is its target market?

Every product is catered toward a targeted market. For example, Snapchat was initially geared towards teens who wanted to send each other vanishing messages. This was also the unique selling point (USP) that led to its fame. So, deciding a target market from the start is crucial in a business aspect.

In fact, Quick Sprout says that 42% of the startups fail because they don’t have a target market.

Is it Scalable?

The term ‘scalability’ is a double-meaning term. Venture capitalists will ask you if your product is scalable when you go for pitching, but scalability actually depends on two factors. So, mark these on your list to ask before you build MVP.

Manufacturing cost and return.

Will you be lowering the manufacturing cost, or will that increase with scaling? Because of the cost increases than there is no need to scale the product. This also depends on the type of product you are going to launch. If it is a mobile app or an IoT device scaling, it only requires the addition of a few more servers so all the data can be handled easily. But if it is an e-commerce store, when you scale… let’s say add a new warehouse, the expense for managing that will also increase.

Here is a linear representation of both types of scaling in a startup business.

Graph depicting scalability of a service-based startup. Expense and ROI, both remain parallel.

Graph depicting the scalability of a product-based startup. The expense gradually decreases.

Source of both pictures: Fortune magazine

Does it have a well-designed UX?

There is a saying, ‘simplicity is the ultimate sophistication.’

So, keep your product simple. You don’t have to worry about UX from the start. Just make sure it is understandable, so the user can navigate easily from the start to the intended point.

A better way to go about it is to get it tested, first from your own team and then by beta testers.

Factors to Keep in Mind When You Build an MVP

Here’s a list of factors you need to pay heed to successfully build MVP.

Identify Your Success Criteria

This might look obvious, but most CEOs don’t have set success criteria.

What actually does success mean for a startup?

Define it in a countable format so that you can calculate the ROI. Make a long-term goal and not just for the MVP because once you are through the whole MVP process.

Ask yourself: why am I making the MVP? What is my business model?

If you are making an app. The success criteria should be to get at least 1000 paying users by the end of the year.

Determine the End Goal of the User

Let’s suppose you are making a photo editing app. The users want to edit the photo by using filters. Now map the user journey from A to Z to understand how the interaction will flow. This will help you know how many steps the user will take to and how you can minimize them, therefore adding more value and prioritizing tasks.

Answer All the Pain Points

The only reason you are going through all this effort is that you want to solve a problem that was bugging users and then to build a sustainable business around it.

So, clearly answer all the pain points while building the design and afterward shape your MVP around it.

Prioritize the Features of MVP

Source: Quora

An MVP is not the final product that you will be bringing to the market. So, don’t focus on adding everything to it. Just start with the essential features, without whom the product won’t work. Only try to answer the pain points and you will have a feature-rich MVP ready.

If your product looks simple but solves the problem then go for it.

What’s next after building MVP?

Now as you have created your MVP, what should you do to market your product without failing?

The answer is to test your MVP! Validate your business idea to understand that it meets the startup requirements and that it solves the purpose of its existence. To know that, gather feedback and see if it can be scaled. Because if the product cannot be scaled, it won’t be suitable for the larger customer base.

You will also have to find a market for your product so that it can transition from MVP to Minimum Marketable Product (MMP) smoothly.

MVP Testing Practices

Here are some simple ways to test your product idea in the market and get reliable data to understand how much you need to alter it further.

1. Ask for feedback

Getting feedback is essential for your startup product. It will help you understand how your customers are perceiving your product. There are two ways to get feedback, either get the feedback from a select few people of your choice – also called alpha testing. The second way is to get feedback from actual people.

Matt Warcholinski of COO at brainhub.eu provides some great ways to find people who will be willing to provide feedback. He says just go out in the streets and talk to people about your product. You can also find them on Twitter and Facebook and ask them if they will be interested in trying your product. You can also offer them future discounts on trying your product.

Further, post about your product on Product Hunt, Hackernews, and social media websites to get early traction and feedback.

2. Show your product to the visitors

You can also test your MVP idea by showing the product directly to the visitors. Do this by adding a landing page to your website. Speak your prospective customer’s language so they know what type of product it is.

Landing pages are often misused as lead generation pages, but they can be used for product testing as well because they provide the relevant data that the founders are looking to make the startup better.

Hint: Add heatmaps to your website to understand user behavior while testing the product.

3. A/B test

One major problem that startups face is that they assume the product they have created is perfect for their customers. Reason? Assumptions can be wrong.

While creating a product that provides value is great, to provide it traction, startups will have to make the brand enticing. This is only possible by testing different layouts.

4. Performance marketing

When you launch a product, the first thing you want is to get users to test it so that you know first-hand if the product is going to be a success or not. Performance marketing lets you just do that. Instead of waiting months to get your products ranked on search engines, you can directly pay search engines and social media websites to get users to test the products.

Nanxi Liu of Enplug says on his blog ReadWrite.com, that you can even use forms so the users can provide specific details about your website. Like, what the worst are things, what the best things are, and what new things should be added.

5. Fundraising sites

Do you know why crowdfunding sites like Kickstarter and Indiegogo took off? Because startups use them to test their products. Just visit any featured product on these websites and you will see that a huge crowd is ready to throw money on the products that aren’t even released yet.

If you have a hardware product and want to test its feasibility. Make an explainer video and let the crowd funders decide if your product is worth marketing.

6. Explainer video

According to Dream Grow, more than 80 percent of businesses believe that having a video can get them more ROI. With sites like Youtube, Dailymotion, and multiple others available, spreading your video is not a problem. In fact, for startups, having an explainer video on the landing page, on social media pages, and on crowdfunding sites can help boost the product testing process.

7. Pre-order pages

Pre-ordering products is a great idea to validate your startup’s product. You can set up a landing page with an explainer video on your website and promote that page through Facebook or Google to get instant feedback from users.

Oculus Rift, the virtual reality gaming glasses, was also launched through a pre-order page by Facebook. This allowed the company to understand if users were interested in the product. The pre-order pages are similar to crowdfunding, but instead of asking the crowd to just fund your product, you are asking them to buy it.

8. Build worth with blogs

Finally, whether your MVP is digital or hardware, you need to market it thoroughly through blogs. Blogs can be used in multiple ways, such as promoting the product, letting potential customers understand how it works, or providing its use cases.

Final Words

We hope this article has helped you learn more about the minimum viable product’s planning process and the factors that are necessary to make it a standout and you have also learned that MVP testing is a crucial part of the product launching process. You don’t want to spend time working on a product that isn’t fruitful, so try to use multiple MVP techniques to test if the product fits the market needs.

If your startup’s MVP is ready and you are considering launching then become a part of our Startup Program and take your startup to new heights with personalized mentorship and extended support.

What AAARRR Pirate Metrics?

By: Guido Bartolacci

Pirate metrics are a way to categorize and group together metrics depending on what aspect of the business you want to measure. The groupings are awareness, acquisition, activation, revenue, retention, and referral, or as a pirate would say “AAARRR.”

The six groupings align with the customer lifecycle stages and were created to help marketers identify where they should focus their efforts to optimize their marketing and sales efforts.

The model was originally created by Dave McClure who has a SaaS background so some groupings, like the activation category, might be less applicable for non-software products or services.

Awareness

Every interaction before you know who the person is

Awareness metrics include:

Website visits: how many people are visiting your website on a daily, weekly and monthly basis.

Click-through rate (CTR): the percentage of people who click on a hyperlink vs. the number of people who see that hyperlink.

Impressions: the number of people who could have seen your content. Impressions indicate potential reach.

Social impressions: the number of people who had your social post appears in their feed; sometimes called “reach.”

User-behavior metrics:

Time on page: the average amount of time site visitors spend on specific webpages.

Bounce rate: the number of site visitors who immediately leave your site.

Pages per session: the average number of pages viewed by visitors before they leave your site.

Percentage of new vs. returning visitors: the ratio of how many of your site visitors who are new vs. how many are returning.

You can find these metrics through search engines, Google Analytics, your CMS, individual social platforms and SEO tools like SEMrush.

Acquisition

Lead Capture to Activation

Acquisition metrics include:

Visit-to-lead conversion rate: the percentage of your site visitors who become leads.

Contacts generated: how many contacts you’ve created over a given time period.

Leads generated: how many leads you’ve created over a given time period.

MQLs, SQLs, CQLs, and opportunities generated: how many marketing qualified leads, sales qualified leads, chat qualified leads, and opportunities you’ve created over a given time period.

Social engagement rates:

Shares: how many shares do you receive on a single post or across a platform.

Likes: how many “likes” or “favorites” you receive on a single post or across a platform.

Comments: how many comments do you receive on a single post or across a platform.

Email click-through rate: the percentage of people who opened an email that clicked on a hyperlink within it.

Cost of Acquisition (CAC): the cost of acquiring a single customer.

Average deal cycle: how long it takes on average for a prospect to progress from their first interaction with you to close the deal.

You can measure these metrics through your marketing automation and CRM platforms, in addition to within function-specific platforms, like your conversational marketing tool and social media platforms.

Video may also influence acquisition metrics since it offers prospects an opportunity to engage with your content and potentially convert, but video metrics are not limited solely to the acquisition phase.

Activation

Sign-up to paying or non-paying customers; onboarding

Activation metrics are most applicable to SaaS products where someone can sign up for your product without talking to sales. These metrics include:

Product qualified leads (PQLs): how many people are using your product in a way that indicates they’re ready to upgrade or become paid customers.

Lead-to-sign-up conversion rate: how many leads are signing up to use your product.

Number of sign-ups: how many people are signing up to use your product in a given time period.

Sign-up-to-PQL conversion: how many people who signed up for your product became PQLs.

Time from sign-up to active usage: how much time passes on average between a person signing up to use your product to meeting your definition of an active user.

Activation metrics can be measured within your product and through your CRM.

Revenue

Activation to paying customer

Revenue metrics include:

Average deal size: the average dollar value of your closed deals.

Monthly recurring revenue (MRR): how much revenue you can expect to earn on a monthly basis from both new and existing business.

Annual Recurring Revenue (ARR): how much revenue you can expect to earn on a yearly basis from both new and existing business.

You can measure these metrics through your CRM and BI tools.

Retention

Customer

Retention metrics include:

Customer lifetime value (CLV): the average amount of revenue you receive per customer over the entirety of your engagement with them.

Retention rate: the percentage of customers who stay with your company over a given time period; the inverse of churn rate.

Churn rate: how many customers your business loses in a given time period.

Payback period: how long it takes to recover the cost of acquiring a customer.

Product usage: how much and to what extent a customer is using your product. High usage is an indicator of retention.

Customer satisfaction: do your customers feel like your product or service is fulfilling the purpose they purchased it for? If customers are unsatisfied, they are likely to churn.

You can measure retention metrics within your product and in your CRM.

Referral

Customer to evangelist

Referral metrics include:

NPS score: how willing your customers are to recommend your product or service to others.

Social shares: how often your customers are sharing your content with their networks on social media.

Review rates: how many reviews you receive in a given time period.

Referred business: the amount of business that comes from referrals, usually through word of mouth.

Customer satisfaction: do your customers feel like your product or service is fulfilling the purpose they purchased it for? If they are satisfied, they’re more likely to recommend your product or service to others.

You can measure reviews and social shares through review sites and social platforms. NPS scores and referred businesses should be tracked in your CRM, but that can require integration between referral channels and your CRM.

Takeaway

Dividing your metrics into the pirate metrics categories will help you gain better insight into what areas of your business need the most attention. This is how companies can adopt a growth marketing framework.

Growth marketing uses the pirate metric categories to determine where you should dedicate resources to improve business outcomes. Once the areas for improvement have been identified, growth marketers use the scientific method to conduct experiments in order to systematically optimize their strategy.

Sales Pipeline Stages Defined

By: Beth Abbott

If you don’t have sales pipeline stages defined, chances are you’re relying on lifecycle stages to understand how prospects are moving through the sales process. But, in terms of the engagements sales has with leads, those lifecycle stage categories are often too broad.

Most of a sales rep’s interactions with a prospect will be during the opportunity lifecycle stage. Depending on your company’s sales cycle, that means leads can spend weeks, months, or years in that lifecycle stage, and if you don’t have any more granular way to track what’s happening with your leads, you won’t know if that’s good or bad.

The sales pipeline provides a more zoomed-in look at the portion of the customer lifecycle that sales are involved in. Sales pipeline stages are the steps that need to be taken in order to progress a lead from MQL to the customer.

For sales pipeline stages to be useful, there are two characteristics they need to have: They need to be measurable, and they need to map back to your sales process.

Every pipeline stage needs a clear beginning and end trigger so you can track how prospects progress from one stage to the next. The more diligent you are with identifying and enforcing trigger criteria, the better analysis you’ll be able to do.

How your pipeline stage and triggers look will be unique to your company’s sales process. There’s not an out-of-the-box set of pipeline stages your company needs to use.

However, if you’re starting from scratch or looking to adjust how you’re tracking your sales process, these sales pipeline stages can serve as a baseline for any inbound sales team:

Discovery

The discovery stage is the first time a prospect with real potential to be a good-fit customer raises their hand to initiate a sales conversation. The goal of this stage is for both parties to establish if a potential partnership is a good fit.

At New Breed, we consider the trigger for this stage to be when a meeting is booked and both the prospect and the sales rep accept the invite. Then this stage lasts until the assessment/demo stage.

Assessment/Demo

The assessment/demo stage is an opportunity to share a sample of the value your product or service can provide. It is based on the specific goals and objectives communicated during the discovery call and gives reps an opportunity to provide a high-level overview of what their company does in order to establish trust.

After the next steps are communicated and agreed upon in the discovery call and a meeting is booked for an assessment or demo and accepted by all parties, then we consider the assessment/demo stage to have begun.

Solutions Overview

The solutions overview stage indicates that your conversations are transitioning from discussing theoretical value to practical next steps. The goal of this stage is to discuss the specifics of how your business can add value to your prospect’s business if they become your customer.

Instead of broadly describing your products and services, you’re positioning the recommended solutions you have based on your prospect’s specific needs and goals.

We use both parties accepting a meeting to review potential solutions together as the trigger for this stage to begin.

Solutions Refinement

The solutions refinement stage involves narrowing down the original solution recommendation into a more realistic version that you’ll move forward with. It provides an opportunity to engage a prospect more deeply after they have time to digest information. It’s a very collaborative step full of clarifying questions, thoughtful rebuttals, and expectations being challenged.

We use a meeting being booked for the purpose of refining the solutions recommendation and that meeting being accepted by both parties as to the trigger for this stage to begin. This stage lasts until the formal proposal is sent to be signed.

Formal Proposal/Contract

The formal proposal/contract stage is when you send a final document with the details of your proposed engagement to the prospect for their company to review and sign off on.

We consider this stage to start when we send a written document to the prospect and it ends when the deal is either close-won or close-lost.

The Takeaway

Sales pipeline stages give you a way to measure your sales process and the effectiveness of how your team operates at each stage.

Are some stages lasting significantly longer than others? What’s causing that? Are there smaller steps occurring there that you’re not considering?

If there are friction points, being aware of them can help you improve how you position your solution and company. Or, that length can be caused by too many steps being combined into a single stage.

For example at New Breed, our longest stage was “proposal presentation,” which encompassed both the solutions overview and solutions refinement stages described above. The stage took so long because it contained multiple essential steps: An initial call with the presentation, a refinement call, and all the communications that happened in between. So, for better visibility, we split it into two separate stages that way we could track the presentation and refinement steps separately.

When you’re deciding what stages your business should use and how many there should be, map it back to your sales process and, more specifically, the critical steps of your sales process; what exit criteria or triggers need to happen before a prospect can move on?

Like the stages themselves, the trigger criteria will vary from company to company. A SaaS company might need access to some of your software before they can do a demo. A security company might require an NDA before they’ll present a solutions overview. Those requirements would be reflected in the trigger criteria for the applicable stages.

The stages themselves are the categories of the process, but they can also contain sub-statuses. For example, the formal proposal stage involves the contract being delivered, reviewed, negotiated, and signed.

However, if you were to make each of those statuses their own stage, it can require tedious manual updates or a plethora of automation in order to maintain the data quality you need to operationalize based on pipeline stages.