Step-by-Step Instructions

Recap

Before we dive into Workbook 4, let's take a look at where you've been.

You started with Finding Your Early Adopters. In that workbook you answered the question:

Is there a problem out that your customers are actively looking to solve?

This phase represented your classic Customer Discovery phase.

Next, in Offer Testing, you answered the question:

Are customers ready to solve it?

In this phase, you wanted to know, if you restated the problem back to folks in their own words, would they engage with you to solve the problem?

In Offer Testing you developed your marketing strategy, including optimizing your marketing message and channels.

This led to Currency Testing, where you asked:

Will they pay for a solution?

In this phase, you tested whether your customers were willing to give you something of value in exchange for the solution to their problem. In other words, you tested your sales strategy.

That brings you to where you are now. In Utility Testing, you will be answering the question:

Can you solve the customer's problem?

This is what Utility Testing is all about. It's now time to start solving your customers' problems!

Not Your Standard MVP

In this workbook, you will begin building your product. This is often referred to as an MVP, or Minimally Viable Product. This begs the question, why am I introducing a new term like "Utility Testing?" Why not just call it not it "MVP Building?"

Most simply, the term MVP is too broad and too vague to be useful. The term MVP means too many different things to too many different people.

For example, Dropbox famously produced a video of its early idea for a product, before anything had been built. The video generated 70,000 new user signups before the product was available. The video gives you a sense that the product already exists, but in fact, that was partially an artifact of video editing.

Is a video representation of a product an MVP?

Another example is Google's first version of their search engine. They provided an actual search engine, though it was only available for searches on the topics of Linux and Stanford University. In other words, this was an actual product - not a video representation of a product - though it was extremely limited in its usefulness.

Is a limited, primitive version of a product an MVP?

MVPs can run the gamut from a representation of a potential product that does not yet exist, to a product with limited functionality, all the way to a product that has already been put through the rigor of FDA testing.

Even when we think about what MVP means, we run into challenges:

Minimal: How small is "minimal?" What does that mean for your product?

Viable: This term is relatively useless. Does "viable" mean you can build a viable business with it? Does "viable" mean is has a chance of solving the customer's problem? Does it mean both?

Product: What constitutes a product? Is it a video of a thing? A primitive version of it? A version that solves the customer's problem?

According to Eric Reis, who made the term famous, a Minimal Viable Product is:

That version of a new product which allows a team to collect the maximum amount of validated learning about customers with the least effort.

In other words, an MVP is the simplest thing you can build, that helps you learn "the maximum amount of validated learning."

This term is extremely valuable to the Lean Startup methodology, from a theoretical perspective. It represents what you've been doing this entire time: trying to learn as much you can by taking small steps towards a validated business model.

At the same time, the term is too vague to provide structured guidance on what you should do next.

By Eric's definition, MVP actually refers to any experiment where you are collecting data about the next iteration of your product. In fact, with by this definition, you have already build an MVP: your Offer Test was an MVP; your Currency Test was an MVP. Now you are simply moving on to the next iteration of your MVP, which I happen to call a Utility Test.

While you are going to build something here, I'm not going to refer to it as an MVP because, in reality, everything you've been doing within the FOCUS Framework has been an MVP.

What is Utility Testing?

So what do I mean by the "Utility Testing" phase of MVP development?

Utility is synonymous with "useful."

In this book you will be testing whether you can be sufficiently useful to your customers.

In order to measure your usefulness, or utility, to your customers, you'll be focusing on three metrics:

• Emotional Delta: As it turns out, it matters more how your customer feels about her problem than whether or not you solve her problem.You can be most useful to your customers by creating a positive emotional change for them:

  How much better do they feel about their problem after having interacted with you or your product?

• Customer Lifetime Value: How much currency all told will the customer give you throughout the course of all of your interactions.
• Viral Coefficient: For every one customer you acquire, how many additional customers will they introduce your product to. This represents how quickly word will spread about your product as you begin to solve people's problems.

These terms all have a relationship to one another: the greater the change you are able to achieve in your customers' emotional state, the higher the Lifetime Value they'll provide, and the more people they will share your product with. Hence, as the Emotional Delta increases, so will the other values.

Lifetime Value and Viral Coefficient (K Factor) should be familiar from the Currency Calculator exercise, where you estimated those values. Now you will get a chance to actually measure them.

Throughout this Utility Testing workbook, you'll be measuring these metrics to ensure your estimates were accurate and that you can achieve your Victory.

Topics Covered in Book 4

• What features go in your Utility Test?

You will learn what features should you include in each of your iterations, and how you can prioritize your features to know what to test first.

• What is a successful Utility Test?

You will learn what you should measure and how to determine success.

• How to build a Utility Test

You will learn how to set up a Utility Test, even if you do not have a technical product, and what elements go into a successful experiment.

What's Next

Next up, you will tackle what features go into your Utility Test and how to prioritize their order.