Learning without a working product - Our first Low Fidelity MVP

Some weeks ago we started our first experiment using a low fidelity Minimum Viable Product for one of our projects (Whatson) and the first questions came up before we even started:

How to structure such an experiment? What are the indicators to mark it as a success? How much time should be invested?

The Low Fidelity Minimum Viable Product

There are different kinds of MVPs and as we are just starting this project, we used a low fidelity MVP. This can be something like a paper mock-up or a landing page describing the most important features and problems you want to solve. Stefan Roock provides a nice illustration and classification of MVPs here. 

The intention of the Lean Startup way is to test your hypotheses and get customer feedback as soon as possible, even if you do not have a working product yet.

Before we decided to create the landing page, we held customer problem and solution interviews, as suggested by Ash Maurya. Those helped us to improve our understanding qualitatively, but now it was time to present our product idea to a broader audience.

 

Conversion Funnel

When it comes to web based products or mobile apps potential buyers go through different stages before becoming an actual customer. Steve Blank describes this as the "Get, Keep and Grow" Customers Funnel in his book The Startup Owner's Manual. 

As we do not a have a working product yet the phase we concentrate on is the Get Customers phase, which includes two major steps:

Acquisition: That is when your  potential customer visits your website, by clicking on a paid Google Ad or a Facebook message or whatever channel you are using.

Activation: That is the point were the visitor becomes a customer, by downloading your product, signing up, etc.

The numbers

So the basic question we actually wanted to answer was, do enough people care about the product and do they find it compelling enough to tell their friends.

Without a working product, however, these questions are not that easy to answer, especially the latter.

As we did not have a usable product we were not quite sure what to define as activation. Another unclear point was the number of acquired and activated customers. How many do we need to mark this experiment as a  success?

First we decided  that entering your email address can be counted as an activation, as this is commonly used as an indicator.

Steve Blank defines 44% activations of 5000 visitors is a huge success, whereas if you got just 50 sign ups, you should check what went wrong. Furthermore he suggests to start such an experiment as soon as possible.

Furthermore I found this answer on Quora by Joshua Ledgard, Founder - KickoffLabs.com:

"5% is bad.
10% is OK.
20% is ideal.
30% is ahead of the curve."

Draw a line in the sand 

Even though we now knew the percentages, we still had to come up with absolute numbers. The book Lean Analytics confirmed what we actually thought: draw a line in the sand. That means, at the beginning pick any reasonable number and define a goal. It is more important to compare the result afterwards and most of the time you will be somewhere in the middle anyway.

  

So here is what we came up with. We divided the activation step into two different parts:

Customer giving us their email address and customers liking us on Facebook.

Our goal for the next 2 weeks: 150 Facebook Likes, 20 email addresses and a conversion rate around 30%.

Channels: Google Adwords, Virality through chosen friends, Online forums

We did not acquire anybody through Facebook or Twitter status updates or invite people directly, but included some of our friends. We sent a prepared message to around 30 of our friends and asked them to spread the word.  

Result

After optimizing our Google Adwords campaign (using this great article from KISSmetrics) we had a good enough click-through rate and about 30% of the visitors entered their email address.

Unfortunately we did not have exact numbers on the people that were reached on Facebook, which made it hard to argue that a page-like counts as an activation.

So we decided to make another experiment and verify the engagement of our page-fans. We created an account on Next-Fat-Business and asked our page-fans to give us their vote. At that time we had 115 likes and ended up with around 45 votes.

This was all done within 2 - 3 weeks, which is not that long. During that time we invested some hours per day to promote the product, improve the Adwords campaign, talk to the potential customers and tweak the landing page itself.

Lessons Learned

Facebook does not provide such a virality as it used to. After having 100 likes it is quite hard to acquire new customers without paid ads. Of course it is quite difficult to create virality without a product or fancy video.

Verify the engagement of your Facebook fans and activate them with a second experiment.

Activation can be anything: entering an email address, a fake sign up or a call for action.

We think that absolute numbers are not that important, but the trend and a little bit of gut feeling. 

Use this experiment to evaluate your channels, because acquiring new customers won't be easier even with a working product.
 
Friends promoting a product to their friends works really well.

After two to three weeks you get a first impression of how appealing your product is. If at any time the conversation rate drops below 10 % stop the experiment and verify why. Furthermore promoting your landing page and product should be something you do consistently from the beginning.  

Did you have any similar experiences? How did your experiments do?

P.S. I’d love to talk to you on Twitter: here.

** You might also like: How to get Customers' Attention **

How to get Customers' Attention - 7 Must Haves for your Landing Page

As a Startup the biggest disadvantage of our products is that nobody knows them. Before people can start using your products (and pay for them), they must recognize that you even exist. A first important step in this process is a well designed Landing Page.

At the moment we struggle to get our first customers for our products (even if we haven't launched any product yet, pre-sales has already started). We are neither a famous nor a big company, we need to look for proper customers right from the beginning. Those who are really interested in our product. These are the first ones you have to convince. One way to do so, is to create a landing page with all important information of your product in short form. Most people don't stay longer on an unknown website than 7 seconds, so you have to use your time efficiently. Here are the 7 most important steps to pitch your product via Landing Page.


1) Pitch the idea in 10 words or less - the title of a product will probably not tell that much about it's key features. Give your customers an insight of the idea behind the product. What's the new delighting thing about it? What's the difference to similar products? After reading the pitch, potential customers need to be curious about the product and ready to read more.

2) List the key features - bring your product down to your most important key features. Your Unique Value Proposition. What is it that makes you special and why should someone use your product? Name 3 - 5 reasons and describe them with a few words.

3) Add icons to the features - Never forget that the attention of the average customer lasts only for a few seconds. Icons next to the paragraphs help him to understand in no time what it is all about. Moreover they will help him to make the product stick in his mind. 

4) Show them what they'll get - If you produce a smart phone app or an online service display a screenshot.  The image doesn't need to represent the actual product, but gives a first impression of the look and feel.

5) Give them the possibility to contact you - You will need early adopters and constant customer feedback. So give them a possibility to leave their mail adress. So you can mail users easily, activate them by doing so and ask for their feedback.

6) Use social media- Maybe the customer doesn't want to give you his email address. In this case it's more likely for him to press the "like-button". Due that you can contact him easily through Facebook, Google+ or Twitter. Moreover it's free advertising for your product, since his friends will notice what he likes. So insert social media buttons.

7) Finally it's all about entertainment - Show your visitors something special. The best way to do so is a creative video. There are many catchy, touching and/or hilarious videos of start ups on the web (especially on kickstarter). We haven't used this tool yet, but it's the most effortless way for the customer to get informed about your product; and it's probably much more emotional and personal than just plain text.

Keep this ideas in mind and you Landing page will have tremendous succes! :)

On becoming a TryErr - Get the e-book for free

Since it's world bloggers day, it's the perfect time to introduce our first e-book: How to become a TryErr.

It's about starting new challenges, overcoming fears, using your imagination to get better everyday and how to handle failures. Get it now for free by subscribing for our newsletter (on the right side - check your spam folder ;) ).

Read it, enjoy it, share it!

Business-Customer Development - First Try

Last week we had our first interviews with business customers. This article briefly illustrates how we approached this topic and covers creating personas, contacting customers and holding the interviews.

The intend of this whole process is to learn more and more about the problem hypothesis we created. So instead of simply believing the stuff we came up with, we go out of the building and talk to people to verify it.

One of our solutions is a two sided platform and of course we decided to tackle the riskier part first and concentrated on the business side. The side where the actual money would come from.

 

So first we started by creating personas, each representing a certain type of company. By doing so you are able to identify the early adopters and know which of them to approach during the early stages.

After that we had to decide how to contact them. We chose good old e-mail and set up a template including:

Problem Statement - what are we trying to solve?

Solution Summary -  what we want to do about it.

Interview Proposal

5 Short Questions

In case they were not interested in an interview, we included some short questions, so we could get at least some information. The e-mail was sent to 14 different companies and two of them replied within two hours. Both were interested in answering our questions personally and so we made an appointment.

The interviews lasted 30 to 45 minutes and were based on five key questions, which are built around our problem-hypotheses. The prospects were really kind and even forwarded us the contact information of five new companies.

We de-briefed at the same day, which is about walking through the interviews and updating our personas and the problem hypothesis.

All in all it was a good start. However, we will try another approach for contacting future prospects, as three out of 14 is by far not an optimum. Furthermore having only three to five interviews within one week is actually too slow (Speed, Focus, Learning).

Here you can find further information:

leanstartup.pbworks.com

Ash Maurya

Learning to fail

"Fail faster, succeed sooner" - David Kelley

"Do not touch the hot plate!" And of course we did it anyway. But we learned from our mistake - something that is not so common anymore. 

Life is about learning, but when we were young we learned differently. We tried things out, we made mistakes, we failed, but we learned from it.  Somehow on the way to becoming an adult things changed. Suddenly failing was something really bad; remember when having a bad mark? The teacher was angry, mom was outraged and grandma had to pray 3 Hail Mary so the mighty Flying Spaghetti Monster won't be mad. As we started to realize that failing is not really a valid option anymore, we changed our behavior. So we tried to avoid the uncertainty, stopped to try things out or even started lying or blaming someone else. Making a mistake was really nothing you could be proud of.

However, you cannot change the fact that life is about learning. And when I started to read about The Lean Startup I was amazed by its focus on learning. And that failing experiments are totally fine, as long as it helps you somehow. It felt like failing was socially acceptable again.

In software development for example, bugs are a sort of failure. A common mindset however is to 'fix and forget'. What we should do is to sit down, take some minutes and try to figure out what actually happened: design issue, requirement misunderstanding etc. Thereby you can learn from it and it maybe won't happen again.

However, even failing needs to be learned. Before doing something new you should consider the following:

First, mitigate the risk. When you fail, does that mean you will die? Lose all your money? If you do not unit test that code snippet, will the product explode?

Second, invest just as little as necessary. The good thing about doing something new is that you get to know a lot, even with just little data.

Well, Happy Failing! :)

** You might also like: How to be a TryErr ** 

Innovation by living in the future

Many organizations or entrepreneurs are always on a search for "the next big thing". The next idea, that brings you millions of customers and even more dollars. We had the same issue. What we did? We sat together and did a lot of brainstormings about the biggest customer needs and possibilities to solve them. Proud and euphoric about our ideas we started to do some competitors analysis - and figured out that our "great invention" already exists.

I guess, that every one of us already made the experience, that one had a brilliant idea - and then it turned out, that someone else had the same idea already before. The problem is, besides you and me, there is also a bunch of other pretty smart guys, who also have some nice ideas. Innovator's major problem becomes more and more to find problems, not solutions. Whenever there is an opportunity, there is someone ready to exploit it, as it seems.

So where can we find the opportunities to get in the game of inventions and innovations? It makes neither sense to look for it in the past nor in present. So find your opportunities in the future.

The way to do so, is by interviewing "Lead Users". Lead Users are people, who have significant knowledge of upcoming trends and developments in a specific field. It's not about forecasting. It's about living in the future. Lead User have the knowledge of customer needs, because  they have them.
Take the emerging market of augmented reality games: We know that there is a lot of buzz around this topic. But the whole thing is just starting. What's needed are persons who know what's happening in the field, even if there isn't a real "field" yet. Such persons could be experts for mobile phone games (since augmented reality games are merely played on these devices), a beta tester of "ingress" (a huge upcoming augmented reality game) or even a sociologist (who can describe how people move within a given area). The point is that: We know the topic that we want to work on and these lead users know what is going to happen in this area.

Lead the User by Using the Leader

Sounds nice, so far. But how do we use the expert's knowledge efficiently? The lead user research process takes 4 phases:

In phase 1 you decide what area you are interested in (sports, medicine, games, etc. - especially when you are an entrepreneur, take one you are REALLY interested in - you'll need the enthusiasm ;) ). Decide, what's your business goal and who your team members will be. Take care, that there is at least one person with the required technical knowledge (e.g. a software engineer, when you plan to make an online service) and one person with marketing skills - you can make inventions through technical expertise; but it takes customers to make it an innovation. When you have that team, do some literature research about upcoming trends  and define lead users (authors of scientific articels, popular blog poster, experts within the particular market).

In phase 2 you are going to fetch some of the identified lead users and ask them for their great wisdom (wise people are always willed to help other people with their overwhemling wisdom - so just contact them pere mail or phone ). Ask them two different types of questions: "What do you know?" and "Who do you know?". The first kind of  questions is to identify the emerging customer needs and problems (concentrate only on needs and problems in this phase - it's harder to find a problem than a solution!). The second kind of question is to build up a network of lead users, who can give you additional information.

In phase 3 you put your collected data together. Every team member gets an overview of the research and develops prototypes (or sketches) about possible solutions. Discuss the ideas in team meetings and get a priliminary concept of the solution.

In phase 4 finally you get back together with the lead users and create a feasible proposal. Ideally you invite them to a workshop together with the team. Tell them your insights and your thoughts about potential solutions. And make then a written proposal for your great innovation -  and take care that all your business goals are met!

Lead user innovation is a fabolous way to get new products or services - all it requires, is curiosity and importunancy - don't be afraid of big names and big ideas. Those guys started just like you.