I discussed in my first post on minimum viable products (MVP) that 90% of startups fail because they don’t know the purpose and/or how to utilize an MVP to create products that customers love.
In my career, I’ve been a part of and seen a lot of businesses and teams fail to deploy products and MVP’s, where the causes of these failures are often the lack of understanding of the critical importance of starting with market research, as well as the best practices for market research.
These are the cornerstones of developing a successful MVP, and why every entrepreneur, startup, and product team needs to gain knowledge of these foundational activities.
I’ll provide some of my market research best practices for startup MVP development, but first let’s clarify the difference between market research and MVP development…
Market Research is not MVP Development
There’s a lot of confusion about what distinguishes market research from MVP development. Some believe they are the same thing, but they’re not.
The main difference between market research and developing an actual MVP comes down to data and decisions.
My general rule for determining what stage you’re in: if the output of your process is just data & insights, then you’re likely in the market research stage. If you’ve already collected data & insights and you’re trying to reach a yes/no development decision on a specific product concept and target audience, then you’re in the MVP development phase.
Additionally, most startups and large companies that want to launch a new product typically have multiple product ideas and/or variations on a single product idea. In this case, it’s best to utilize Market Research to narrow the focus instead of developing multiple MVP’s, mainly because it’s cheaper and quicker to obtain market insights.
Here’s some of my top questions to answer in the Market Research phase:
- What data do I need to determine which product to build?
- What product should I build?
- What customers should I target?
- What competitors currently exist (if any)?
- How can I differentiate my product from my competitors?
- What price point should I set for my product?
- What are the best ways to engage my customers?
- How can I best acquire customers?
Top Market Research Activities & Tools
It’s best to kickoff your Market Research with foundational activities that will provide a broad range of insights to better inform your product concept. Here’s my top picks for market research activities:
- Competitive Analysis – Google Search is the defacto tool for searching competitors, along with Semrush and Similarweb
- Market & Opportunity Analysis – Google Market Finder is a great tool for identifying new potential markets
- Market Trends – I highly recommend using Google Trends to analyze product trends in the market and measure demand and interest
- Surveys – Survey Monkey and Google Surveys are cheap and effective ways to solicit feedback from your target audience
- Focus Groups – Explore in depth discussions with your target audience using a focus group, which is easier today utilizing virtual tools like Discuss.io and Zoom
The Key Market Research Campaigns for Developing the Best Customer Insights
Once you’ve completed your initial market research activities and have gained key insights to inform your product concept, it’s best to continue obtaining more specific market data from your target audience before proceeding to the MVP development stage.
For this, I recommend using the following types of market campaigns:
This marketing campaign is reasonable to use if you have some email base of potential customers and want quickly to check if your new idea interests them.
- Comparatively cheap and fast to implement
- It targets a specific audience
- Allows direct interaction with each customer
- Requires having an email base of target users
- Email campaigns have low conversion rates, which may impact the results
- Works best in tandem with a landing page MVP or other approaches as a follow-up step
- If you need to validate your value proposition among an existing customer base
- If you’d like to determine whether your customers are interested in a new feature or product
Compose a clear email text, a catchy title, and a bright image. Using specialized software like Mailchimp or ConvertKit, you’ll get detailed statistics regarding how many recipients opened your email, read it, clicked on the buttons or links inside, etc.
To investigate your target audience, you can use all free and paid promotional methods available today. With the rise of social networks, it has become easy to test a product or service idea on a broad audience. You can connect with influencers on social media, make posts to attract interest to your concept, and check if customers are willing to use it.
- It helps to discover which aspects of your product are most appealing to customers
- It is flexible in terms of demographics and other target audience parameters
- It is great for running split tests for obtaining comprehensive marketing statistics
- Requires expertise in marketing analytics
- To run comprehensive ad campaigns, you will need to make investments
- It doesn’t give a lot of exposure, but it’s an excellent tool for testing ideas and learning the target market
- When you need to explore the target audience and learn the preferences of your potential customers
Landing Page Campaign
This is a great way to connect with your target audience and investigate the best scenarios for future development. Startups often lack feedback from potential customers due to having no audience without having a ready-made product. Landing page campaigns solve this problem.
- Relatively inexpensive and easy to deploy
- It is a concise tool to measure a unique value proposition, so if you put a signup button on a landing page, you can evaluate if your service finds an echo in users before starting actual product development
- By collecting email addresses or other contact information, you can easily follow up with these people for your marketing needs
- You can use different messaging strategies by creating multiple landing pages to test which message gets the most interest from your target audience
- While landing page MVPs generate interest in the product, there is no conversion factor provided.
- It implies limited data collection – If a landing page visitor chooses not to take action, there is no explanation why, and therefore, you cannot analyze what made people turn away
- If you need to get an initial customer base for product creation to define the content and features of the future solution
This solution describes the future product and asks consumers to pay for it upfront before its actual release. This allows you to gain early adopters and get funds for further product development. Using this type is reasonable if you have a unique and exciting offer.
While a pre-order campaign allows getting prepayments as an investment for a startup, it imposes certain risks. For instance, you need to ensure the quality and usability of the end product to satisfy the customers’ expectations that have already invested their money in your project. Also, it gives less feedback than an ordinary “sign up for updates” landing page campaign. Unless you have a reputation of a world-renowned successful business owner, people might feel suspicious when paying for a non-existent product.
- It allows making money from nothing, but you become responsible for your promise to customers
- You can test the demand for certain functionality before development
- Depending on the product complexity and investments required for its development, sometimes you can start its creation only after collecting the required number of pre-orders
- Sometimes the collected payments do not directly reflect the demand for the final product if a famous industry leader conducted the pre-order campaign, where it can be a result of the company’s reputation
- If you need to receive prepayments for the development process or check whether your customers are ready to pay for the product
Fake Door Campaign
The “Fake Door” campaign approach is also called an audience building campaign because it helps to measure interest in a product or specific feature without actual implementation. It closely resembles the “Landing Page” approach, although you’ll need to pretend that a product already exists before leading a user to a “coming soon” message.
For example, you create a landing page that offers access to a feature you’d like to test. Let’s say you would like to know if people are interested in a new Premium subscription plan for your service that gives some additional options. You put the required information and a call to action button on a landing page and see how many people click on it. The button itself leads not to a subscription page or checkout. It leads to a message that this functionality is “under construction.” You can collect emails of interested users to notify them when it becomes ready.
- Great for discovering how potential users perceive the offer
- Quickly proves or disproves the tested idea
- It prevents a business owner from delivering the features and services that customers don’t want to use
- Reduces the risk of losing funds on developing an unsuccessful product
- Potentially can decrease your credibility, as some customers perceive such experiments as a scam
- Implies lack of insights and distortion in results, as many users may interact with the ‘fake door’ for the sake of curiosity
- If you already have a customer base, the “Fake Door” campaign is a suitable tool to determine if they might be interested in a new feature or product
The “Fake Door” campaign can be more than just a landing page. It can be a button in your existing web app, a short link, or any other asset. It is one of the low-fidelity types of marketing campaigns that helps to measure the target audience for a specific product or service without much expense. It’s suitable when you want to check if your idea is relevant by getting a general picture without validating the technical viability of the future solution.
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