Welcome to Grow SaaS. I specialise in helping B2B SaaS companies achieve greater growth.

MVP vs. MSP: Building for Sales

MVP vs. MSP: Building for Sales

MVP - a term the startup worlds knows and loves. The popularisation of the 'lean startup methodology' over 10 years ago has seen a dramatic shift in product developments focus on market validation and customer feedback loops.

For those that aren't already aware - MVP (Minimal Viable Product) is a product built to have only those features needed to undertake market validation. This method basically allows a product to be tested quickly and cheaply, with a much lower risk profile if the concept turns out to be a dud.

MVP as a market validation tool is fantastic and is hands-down the core focus of any new startup trying to identify it's place in the world. However when it comes time to starting to sell the product, things often start to look pretty different pretty quickly.

Introducing MSP (Minimal Sellable Product).

I mentor a number of young startups (pre-revenue stage) either stand-alone or in conjunction with accelerator programs (like the Lightning Lab in New Zealand). Often I hit the same issues across these young startups, and most often the number 1 issue is on getting those first sales in the door.

Usually the first handful of sales are hard-won but fairly easy to achieve. These initial customers are enticed in with offers of free periods, customisation and first to market opportunities. In many cases they are also 'favour' customers - only jumping on the bandwagon as they are connected through family, friends or business networks. This is absolutely fine when you first start out and can help to get that first bout of traction and confidence. 

If you've been keeping up with your obligatory SaaS reading list you will already be aware of the looming issue of 'Crossing the Chasm'. I hear you say "But this is only an issue when you are trying to move from Early Adopters to reaching a Main Majority right? That's ages away when you only have 10 customers to date."

Yes and no. The chasm is definitely an issue you need to face later down the track, however there is a similar issue that needs to be faced immediately.

SaaS adoption curve.gif

"Are people willing to pay real money for your product right now?"

That is the million dollar question. If you can obtain real paying customers today (no promo codes, beta extension offers or extended trials - we're talking actual credit card payments), that are not related to you or doing you a favour, then you have MSP (Minimal Sellable Product). However that is often the minority for startups. Simply put; reaching MVP does not guarantee that people will pay for your product. Having strangers pay you is the only true measurement here.

So how do you solve this? 

Start thinking about MSP as well as MVP. MSP is simply the next step in the development process after reaching MVP - but don't make it a surprise. Plan for it. While you are working closely with your customers to determine what they want and value, start asking for payment. If they enter their credit card you're doing something right, if they don't make sure you're asking why. Early stage churn is also a great indicator for MSP, take the time to really dive into why people aren't paying and build it in to your MSP profile.

Don't just build a product that passes market validation - build the product people are happy to pay for.  

Do you really need Rock Star Sales staff in your SaaS business?

Do you really need Rock Star Sales staff in your SaaS business?

Putting a price on it...

Putting a price on it...