From time to time, I get a call from a pro-serv company that has invested a lot of time and money into launching a product that simply isn’t selling. They don’t know what went wrong. Can we help? After a little digging, we often find out they didn’t get enough (or any) market feedback as they were building. They were sure about the solution/product/offering and wanted to get right to selling. In the right situation, I am all for going right to selling, BUT do it without building anything! Save thousands of dollars, maybe hundreds of hours, and Sell then Build.
The "sell-then-build" Minimum Viable Product (MVP) involves selling a product concept or prototype to customers before it is fully developed. It is a bold, customer-centric approach that aligns closely with lean startup principles and design thinking. Here’s why and when it is a smart move.
Why a "Sell-Then-Build" MVP is Effective:
- Validates Market Demand Early: A "sell-then-build" MVP tests market demand before significant resources are invested in product development. This approach reduces the risk of building a product that customers do not want or need. By gauging interest and securing commitments early, companies can ensure they are on the right track.
"One of the biggest challenges in product development is ensuring that you are solving an urgent and expensive problem that customers are willing to pay for. A 'sell-then-build' MVP helps validate this upfront." (Productize, p. 77).
- Minimizes Waste: Developing a full product before selling can lead to wasted resources if the market does not respond positively. The "sell-then-build" approach aligns with lean principles by minimizing waste and focusing efforts only on what customers have shown interest in.
“An MVP allows us to test our products in real life with real buyers and users to validate a product’s core value, helping to avoid costly mistakes.” (Productize, p. 21).
- Builds Customer Relationships Early: Engaging customers in the sales process before the product is fully developed helps build early relationships and trust. This interaction provides invaluable feedback that can be used to tailor the final product more closely to market needs.
- Generates Early Revenue: Selling before building can generate early revenue, which can be reinvested into the product development process. This revenue stream can reduce financial risk and provide a clearer runway for the product's growth.
- Reduces Time to Market: By focusing on selling the concept first, companies can quickly gauge demand and make adjustments before full-scale development, reducing the time it takes to bring the right product to market.
When to Use a "Sell-Then-Build" MVP:
- High Uncertainty About Market Needs: If there is significant uncertainty about the market's needs or how they might respond to a new product, a "sell-then-build" MVP is ideal. It allows for testing hypotheses about market demand and product-market fit with minimal investment.
- Limited Resources: For startups or companies with limited resources, investing in full-scale product development can be risky. This approach allows them to test and refine their product ideas without committing significant resources upfront.
- Early Customer Validation is Critical: If customer validation is crucial for securing funding or for further development, this approach can provide the necessary proof points early on. Investors and stakeholders often look for validated demand before committing funds.
- Market Entry Needs to Be Rapid: In fast-moving markets where speed is essential, selling the concept first allows companies to pivot quickly based on feedback, ensuring they keep pace with market demands.
- Concept Testing for Innovative Products: When launching innovative or disruptive products, understanding how potential customers perceive and respond to the idea can be challenging. Selling the idea first helps gauge interest and gather feedback to refine the concept.
How to Implement a "Sell-Then-Build" MVP:
- Create a Compelling Prototype or Concept: Develop a prototype or detailed concept that effectively communicates the value proposition. This doesn’t have to be a full product but should be enough to demonstrate the core idea.
- Develop a Sales Strategy: Approach potential customers with the concept, clearly outlining the benefits and how it will solve their problems. Gather feedback and look for pre-orders, deposits, or letters of intent as validation.
- Use Feedback to Refine: Use the feedback from these initial sales efforts to refine the product concept. Understand why customers are interested, what features they value most, and any reservations they may have.
- Iterate and Build: Based on the feedback and commitments, iterate on the concept and start building the product. This iterative approach ensures that the final product is closely aligned with customer needs.
- Deliver and Improve: Once the product is built, deliver it to the early customers and continue gathering feedback for further improvements. This ongoing feedback loop helps refine the product and plan for future versions.
Two Big Dangers To Watch Out For When Using a "Sell-then-Build" MVP:
- You're just going back to bespoke services contracts. This needs to be a TEST of the product. Avoid back-tracking to custom services by requiring that there be more than one buyer before you start the build and limit the amount of “customization” or special requests that potential buyers make.
- Don’t lose sight of your hypothesis testing. Limit your selling to just a few product-minded team members who understand the goal is to sell and learn. If you open it up to everyone too early, you lose the ability to improve the product and/or the GTM materials before the full market launch.
As you can see, it's a fine line we walk with a"sell-then-build" MVP strategy but very worth it allowing you to focus on customer needs while minimizing waste. By validating market demand early and building relationships with customers from the outset, companies can significantly increase their chances of developing successful products that meet real market needs. If you need help walking the line, don’t hesitate to reach out!
For more insights on productization strategies and MVP development, check out Productize.