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Time and money: They’re the two barriers keeping you from testing your amazing business idea, right? Wrong.
In the ecommerce world, entrepreneurs and business leaders alike can develop a minimum viable product to test the worth of their offerings without hemorrhaging either time or money.
A prime example of a successful MVP strategy — the methodology described in Eric Ries’ best-selling book Lean Startup — is Zappos.com. Today, the company is a billion-dollar online shoe retailer, but when it first started, it was a scrappy startup that lacked many of the key components for success such as ample inventory, customer-service personnel and adequate shipping systems.
Even without those key pieces, Zappos launched a dummy website to gauge public interest before shelling out millions. And even today, Zappos still uses the MVP mentality to inspire ingenuity from its summer interns, allowing them to design and launch new apps for its 6pm.com website.
At my previous company, Roozt, I helped more than 1,000 socially conscious brands expand their digital market shares in their attempts to find product-market fit. My time working with these brands showed me that the best products and companies don’t always need tons of time or a big budget to get traction; they just need the right strategy.
Is your offering MVP-caliber?
Following are the five common traits I’ve seen in the successful startups I’ve worked with over the past decade. To launch your own MVP, make sure your concept hits all five to significantly increase your chances of success:
1. Clearly define your target.
Without an enthusiastic, defined market to focus on, you’re already at a disadvantage. The audience must be engaged and demonstrate that it is a viable, approachable demographic.
In this context, if your product is too generic, you risk producing something nobody identifies with or cares about. For example, YogaClub.com — an online yoga apparel subscription company — delivers brand-name products to its customers’ doorsteps for up to 60 percent off retail prices. It caters exclusively to women who practice yoga, thus nailing its value proposition to the point that it’s one of the fastest-growing U.S. yoga brands.
Too often, startup companies think of the broad market instead of the targeted, passionate one. Create something remarkable for a group of eager buyers, and you’ll be well on your way to establishing product-market fit.
2. Design for scale.
Your target, without question, should be able to reach critical mass. Getting too focused or specific severely limits your odds of success.
Say that you’re targeting a fervent group of, yes, underwater basket weavers. Sure, they’re gung-ho about your product, but if the audience is too narrow, you’ve already limited your potential. You must create a consistent service that tends to their needs.
3. Disrupt and differentiate.
Why should a customer care about your product? What makes it unique? If you don’t have a compelling answer to these questions, it’s time to go back to the drawing board.
The odds of closing the sale increase if your target audience is drawn in by a unique perk presented by the value proposition. Completing a transaction sometimes hinges on how successful your benefits are at engaging the client.
Look again at YogaClub.com. It eliminated the long lines, hassle of shopping and inflated prices for yoga apparel, all while providing customers the latest in stylish exercise gear at 60 percent off the retail price. So, do the same; find the gap that the competition isn’t filling, and fit yourself into it. That’s disruption.
4. Compete on price . . . but deliver profits.
Note the two-part advice. First, the price of your product should appeal to the customer. You can have the greatest product in the world, but if the public deems it too expensive, you won’t sell squat. The solution? Price your product below market rate before your target audience looks elsewhere for a better deal.
Second, be able to make enough money as a company to make your product worth your while. Your gross margin likely needs to be more than 50 percent to get some breathing room.
If you can’t get that high a margin at your disruptive price point, renegotiate with your suppliers, logistic providers and other vendors to further reduce cost of goods sold. Not possible? Then maybe the business isn’t as good as you thought it was.
Make the product unaffordable, and nobody will buy. So, instead, lower those margins, scaling or becoming cash-flow positive without suffering tremendous pain or seeing your expenses grow.
5. Solve a problem.
In a CB Insights survey of the 20 most common reasons for a startup’s failure, the top response — 42 percent — was lack of a market need. If the product doesn’t focus on a problem, customers won’t buy-in to find a solution.
In other words, whatever you offer has to become a want instead of a need. Top-shelf products soothe some sort of ache within their audiences, which many enthusiastic business leaders forget because they have become enamored with their own visions. If it’s simply a nice-to-have, success metrics won’t measure up and customer acquisition costs will skyrocket, thus making your business unfeasible.
So, assess: If you’re falling short on any these tips, adjust your concept to ensure you comply with all five before you launch. That will save you thousands of dollars and countless hours while helping you create a product that the market actually wants. Otherwise, you’ll just be wasting both your time and your money.