Any person who has been thinking seriously about launching their own product knows that an MVP (minimum viable product) is the thing to start with. However, if you start researching more, you discover that many people state that MLP (minimum loveable product) is a better thing to do, while the concept of MVP is outdated. Let’s figure out if this is true.
As a design agency, we meet both clients who want to build an MVP and those who are determined to develop an MLP. Here is our short guide to minimal viable and lovable products.
What are MVP and MLP?
MVP — the minimum viable product is a product with a minimum set of basic features that is used to collect feedback for further iterations.
MLP — the minimum loveable product that has not only basic functionality, but also the potential to make users fall in love with it.
What is the difference between MLP and MVP?
Let’s take a look at the MVP and MLP from the point of coffee: favorite example. There are hundreds of coffee shops in any city. Even in your area, there would be more than one. But which one do you choose when you want some coffee?
The answer depends on many factors: the quality of beans, the skills of the barista, pretty cups, comfy chairs, or the availability of a lactose-free option. These are just a few factors that create a user experience in the coffee buying process.
Each coffee shop offers you a caffeine drink to give you an energy boost. Still, there are certain things that make the process of coffee drinking more pleasurable.
Coffee shops try to create the best conditions to get loyal customers. Depending on your priorities, you will choose a favorite coffee shop (or few) and stick to your choice.
Adding hot water to a spoon of instant coffee is probably the easiest way of making coffee. Using minimum time and resources is the hallmark of the MVP. A hot drink with caffeine in a paper cup in our case can be called “minimum viable coffee”.
On the contrary, preparing a cup of fine espresso requires more time (grinding beans, loading the machine, cleaning it) and resources (professional coffee machine, fancy-looking cup). The product is still minimal (no cream, spices, ice cream), but loveable at the same time. Drinking this type of coffee brings pleasure and makes us come back to the coffee shop serving it again and again.
But what if you are running out of the house at 9 AM for a meeting after having missed the alarm? Which option would you pick? A cozy coffee shop with a barista grinding fresh beans for you, or a cup of instant coffee that you can grab to drink in a car? In such a case, you are likely to go for that very basic coffee.
The latter example shows us that MLP is not always the perfect option. Depending on conditions, MVP might be the best choice.
As a team of professional designers, we want to make thought-out products that people love. However, our clients might be in a condition where they don’t want/ can not invest enough money and time to build a loveable product.
Each product is special and we practice individual approaches. However, if to get a general idea of when to go for MVP and when go for MLP, you can base on the following principles:
When do you need an MVP?
- When the time is limited
- When the budget is low
- When the product is so innovative and unique that the most important is to launch it as fast as possible
- When the product is built for beta testing
When do you need an MLP?
- When the product is not the only one in the niche and has to provide an exceptional user experience to win over competitors
- When you want to gain the loyalty of your target audience right away
- When you have already built an MVP and want to go to the next stage
How to build an MVP
We have a whole article on how to build a minimum viable product, but to save your time, here is a short list of things you have to focus on:
- Define the user's problem and think of a solution to it. Validate the idea.
- Think of the minimum set of features necessary to solve the problem.
- Define the target audience. Even with a minimum viable product, you have to tailor it to people that will be using it.
- Research the market: are there any competitors? What do they offer?
- Create a user journey map. Most startups can’t afford to invest heavily in UX research at this stage, but totally ignoring the research is a way to fail.
- Develop and test the MVP. The keyword here is “test”: remember that MVP is a product that has to be tested by real users, iterated, and serve as a basis for building the future product.
If you are curious about what you can get at the end, check out our article about MVP with examples.
How to build an MLP
Many product managers aim to build a minimal loveable product right away. This is a good objective, but it has some requirements to succeed. Here are some important pieces of advice on developing an MLP:
- Start with functionality. Solving users’ problems goes before making them love the product.
- Avoid adding too many features. The product has to stay minimal, as it would be subject to changes and iterations anyway.
- Talk to users and research. The product that seems to be totally loveable to you might not be as attractive to your target audience. Run some user interviews to find out how people really relate to your product.
- Define the criteria for lovability. Yes, when we talk about UX research, we can try to measure even love.
- Invest in design from the very start. Building a startup team does not typically start with a designer. However, for making an MLP, a skilled UX professional has to be involved in the project at the very beginning: possibly at the stage of idea validation.
The evolution of minimal products
The concept of MVP was introduced in 2001 by Frank Robinson. MLP appeared in the vocabulary of product managers, startupers, and designers in 2013 thanks to Henrik Kniberg. This means that for 12 years people were focused on creating a viable product, until suddenly it was not enough anymore.
What happened during this time? The number of digital products grew exponentially, the competition rose. Developers and design teams make way more effort to create a popular app.
Rising standards in the industry raised user expectations. They are not satisfied with just anything that does the job: now customers are spoiled with sleek interfaces, smart copy, intuitive structure, pretty visuals, lively animation — all this and many other things that create a great user experience..
Nowadays, when apps’ copy talks to us as old friends, while marketing and advertising are doing their best to build a sentimental relationship with a product, being “just a product” is not enough. Only brands that win the love of people get loyal clients, and companies that don’t invest enough in design will soon be replaced by those who manage to create that loveable product
This story explains why people talk about MLP where they previously used to talk about MVP. Many think that loveable is the new viable, and it makes sense.
What else? Live, love, sell?
Along with MVP and MLP, you often see other abbreviations, like MMP and MSP. These stand for minimum marketable product and minimum sellable product (and are the same thing).
MMP is possible after the product has already been through testing and has proven its viability. Making a sellable product is the ultimate goal of all product managers.
And then comes the MCR — a minimum credible release, an MBP — a maximally buyable product… What’s next? Minimum Profitable Product? Minimum cult product? Jokes aside, let’s wait and see what tomorrow brings.
Conclusion
Why do we need so many ways to differentiate between different minimal products? Do you really need to start with MVP and go all the way to MLP at the initial stages of the development?
The key is not in the terms. Whatever you call the minimal product, you have to keep the objective clear: to find product-market fit. Once you achieve this goal, you can start going serious with marketing and thinking of shifting from minimum product to the new level by adding new features and expanding functionality.
So, how do you achieve product-market fit? Find out in our article “How to Screw up Everything but Still Succeed. Guide to Product-Market Fit”
Top Stories
CAC SaaS Metric: How to Calculate and Lower Your Customer Acquisition Cost
There’s no fun in tracking customer acquisition costs. Dealing with growth or customer acquisition tempo, or other dynamic metrics is much more thrilling — they float your business into the sunset of success. Nothing wrong with dynamic metrics, but let’s consider one tiny detail before you hit the gas.
Your speed and your growth don’t matter if the reward you gain from a paying customer is less than the amount burned to win that customer.
When you validate a SaaS idea, customers at any cost are okay — their existence itself proves that the idea resonates and you’re not wasting your time. When you start building your idea into a business, customers at any cost stop being okay. You need to balance the ratio of revenue and cost per customer to make a business model worth growing and scaling.
Eleken design agency specializes in designing SaaS products from scratch, but one of the most frequent requests we get is to redesign an app or a website, like it happened in cases of Gridle or Handprinter. Brilliant teams doing brilliant things but can’t reach CAC payback no matter how hard they are trying, so they ask for help.
UI/UX design can improve the situation with overblown customer acquisition costs. What else can improve the situation is understanding the fundamental driving forces of CAC and working on lowering this metric with every step you go.
That’s a bit abstract. So, let’s do some unpacking.
What is customer acquisition cost
The amount we burn on marketing and sales to win customers is called CAC (customer acquisition cost). This metric is a concern for any industry, but for SaaS, it’s crucial because the subscription model implies that reward is split into small pieces and extended in time.
You spent a ton of money to acquire new customers. FirstPageSage calculated the average customer acquisition cost by industry, and it’s impressive.
You need up to $341 to acquire one paying customer for B2B SaaS. Pretty dramatic.
All that money you spend long before you see a full return on your investment. Not to mention that a full return may never occur in case if a newcomer decides to churn after the first month.
Customer acquisition cost vs lifetime value
Let’s calm the intensity of emotions. Customer acquisition cost alone says nothing about your business, it’s a relative concept. Spending $341 for winning a customer can be too bad if that customer brings you only $300. Or, the same $341 can be a great investment if you earn $1,000 — that’s enough for a payback along with a sustainable profit.
For measuring the amount we earn from a customer, we have another metric called LTV, or customer lifetime value. In tandem with CAC, it makes a litmus test for a SaaS business model and has proved to be one of the key financial KPIs for SaaS companies.
David Skok SAAS metrics golden ratio
Venture capitalist David Skok in his blog defined that for SaaS companies, lifetime value must be at least 3x greater than customer acquisition cost. His rule of thumb became an industry standard, and now any guide on SaaS unit economics you can find will tell you that a golden ratio for SaaS is 3:1.
The chart below shows a perfect picture of your CAC payback model. All starts from spending your customer acquisition money that puts you deep into a red zone of loss. As your customer starts paying for a subscription, you slowly move towards a CAC payback point where you get your money back. That’s where you reach a 1:1 ratio. After, you build up your profit until your customer decides to churn (which is hopefully never).
If everything goes as in the picture, your business model is sustainable. You spend on acquisition less than you earn, and have enough resources to drive the startup’s growth. But things don’t always play out quite as you had intended.
When cost per customer acquisition gets out of control
A textbook case of broken LTV/CAC ratio presents Pets.com, a dotcom enterprise whose downfall was as magnificent as its rise.
Back in 1996, Pers.com was the first marketplace to push pet brands online. Realizing that their business model is operationally cheaper compared to their offline competitors, the company bloated its marketing budgets out of all proportion. Suffice to say, they spent $1.2 million on a SuperBowl ad.
Pets.com burned more cash than they were bringing in with every new customer acquired, and scaling the startup further was making it even worse. Pet.com shut down after they lost $300 Million of investor money. Not exactly what you’re hoping for when starting a business.
No need to go far for similar stories from the world of SaaS. Take Slack, which entered Silicon Valley's hall of fame as the fastest growing business app, and ended up staggering under $91 million of losses and selling itself.
Looks like Slack and Pets.com didn't do some math right.
Doing some math: how to calculate customer acquisition cost
The cost of acquiring a customer is the sum of all marketing and sales expenses over a given period divided by the number of new customers added during that same period.
The customer acquisition cost formula looks like the simplest formula ever. Divide your $500 budget for search ads on your 10 new users, and that's it — $50 for an acquisition. However, there’s still plenty of room for misunderstanding. Like, what is included in customer acquisition costs? And do your freemium users belong to acquired customers?
Patrick Campbell indicates four most common mistakes in how is customer acquisition cost calculated:
- Counting paid advertising as your only acquisition expense;
- Forgetting to include indirect costs, such as subscription for tools, services and software;
- Missing the salaries of all acquisition-related personnel;
- Considering non-paying freemium users as acquired customers — you should count only paying customers.
Any of those mistakes may dramatically affect your LTV/CAC ratio, as shown in the chart below.
Now when we know how to calculate CAC, let’s learn how to define LTV so that we can compare the two metrics.
LTV means the average amount that you expect to earn per customer over their entire lifetime. To calculate it, you need to multiply the sum you’re charging per user in a given month by the average customer lifetime.
Let’s say one user brings $20 per month, and you know that they stay with you for, let’s say, 5 months on average. Using the formula below we can figure out that the lifetime value of one user is $100.
Now when we can measure customer lifetime value ($100) and customer acquisition ($50), we can compare them and figure out that our LTV is 2x greater than customer acquisition cost. Good, but can be better. Can we influence CAC to improve the ratio?
How to lower customer acquisition costs
Nice thing about lowering your acquisition expenses is that it lowers your payback target as well and gets you on the path to profits faster.
Here we’ve got some tips to help you reduce consumer acquisition cost:
- Make user experience frictionless
Only a fraction of your landing page visitors will get curious about your product, and you can easily ruin that small fraction with a landing that creates more confusion than clarity.
Attracted by the freemium offer, users may download your app. But unable to see the app’s value from the first minutes, they’ll abandon it without thinking twice.
Even being one step away from becoming paying customers people will leave if your pricing grid is not clear enough.
Customer friction pops up on every step of your SaaS customers’ journeys. It makes these journeys long and straggly (read expensive) and forces prospective customers to leave halfway to a purchase.
So it makes sense to identify moments of friction everywhere they happen and eliminate them to reduce wastage of customer acquisition budget.
- Optimize your marketing tactics
Calculate your CAC and your LTV within each marketing and advertising channel, so that you can understand their efficiency.
Chances are you rely too much on non-recurring acquisition channels like pay-per-click advertising. Inorganic traffic costs much more money and brings immediate results that reduce to zero as soon as you stop pouring money into Google Ads.
Organic traffic is less expensive in most cases, and its positive effect lasts longer. With content marketing, for instance, it takes time to gain traction in search, but as a reward, you’ll get a compounding effect where traffic from previously published articles adds to traffic from newer articles.
- Focus on audience segments that resonate better
With your early customer acquisition marketing, you may attract a broad variety of users. Many of those people won't be well-qualified; they won’t have a real need for your product and your offer might not be a great fit for them.
If you measure CAC and LTV for all SaaS buyer personas you have, you might figure out that some of the customers are willing to pay a lot, but cost just as much to acquire. On the flipside, you have a group of customers who’re cheap, but willing to pay nothing.
To lower your expenses, focus your acquisition efforts on personas with the best LTV/CAC ratio. Check out how Superhuman pawed their way to success focusing only on the biggest project supporters and abandoning all the other segments of their audience.
Other ways to improve your LTV/CAC ratio
Customers are costly, and you want to know how costly they are to make your acquisition process shorter and more efficient. If your team can lower CAC, you’ll bring yourself closer to your payback target and make your business more profitable. But what if lowering cost per customer acquisition is not the only way to shorten your CAC payback period?
SaaS pricing strategy optimization can skyrocket your LTV/CAC ratio just as good. But that is a whole other story (that we have already written).
What Is Holistic Design? The Future of UX or a Buzzword?
“Holistic design” sounds like a new flashy trend that’s used here and there without a real meaning behind it. However, the term was present long before UX design was born. Some say it was on the scene before the product design became a thing in the 1920s.
Nowadays, when we started using “product design” for digital products and “industrial design” for furniture, gear, and other hardware things, “holistic design” makes a comeback to UX design. Or has it never gone?
We are an agency full of seasoned UX designers, but “holistic design” is not very easy to explain. Let’s start with the main question:
What is holistic design?
Holistic design is a design approach that suggests looking at the product from different angles, considering all the aspects, stakeholders, and the environment.
However, the definition of holistic design is not enough to really understand the phenomenon. The holistic design combines the approach, practices, and the philosophy.
Holistic design is not something that happens solely in the design department. It is a synchrony of all the company processes: to provide a holistic user experience, a good-looking UI is not enough, you need a holistic mindset.
The term “holistic design” is often used in architecture, urbanism, and interior design. For example, ancient Greek tractates about urban planning suggested that architects should consider the directions of the winds when projecting the streets of the city in order to create the most comfortable air circulation.
Some of the problems related to holistic design in other spheres can help better understand how holistic design can be applied in the modern digital world.
When projecting an interior, designers should not only think of the clients’ tastes and general style consistency. Here are some of the questions designers have to consider while developing a holistic design:
- Is the neighborhood noisy? Does the apartment need noise isolation?
- Are the materials sustainable? If we put this vintage fridge, would it be possible to fix it if it breaks in 5 years?
- Is the furniture resistant enough to the cat’s claws?
Holistic design is not something that every client wants. It is a long process and requires not only the budget but also time and will to change the corporate processes and even culture. Of course, the company aiming for holistic design should have a high level of UX maturity.
When the decision to adopt a holistic approach is well thought, you can start shifting to new design practices.
Rules of the holistic design approach
- Take into consideration all the stakeholders, not only users or customers. It doesn’t mean that we have to solve everyone’s problems with our product. Yet, we have to be aware of all things happening around us.
- Research methods. When we focus solely on users, individual interviews are a golden standard of UX research. When we decide to take a holistic approach, we have to add other methods to our research, such as ethnographic research. We have to go out in the field to better understand the environment.
- Participative practices. A step forward from taking into account all of the stakeholders is to involve them in the design process. It is likely to be tricky and even messy, but giving such approach a try doesn’t cost much. The promoter of design thinking, David Kelley, pointed out that involving people of different backgrounds significantly benefits the process.
- Sustainability. Most modern companies want to appear sustainable. They introduce the principle in various parts: from corporate responsibility programs to even the production process. There is always room for improvement in sustainability, and holistic design naturally raises the company standards.
- Ecosystem, not just design system. A design system is a great tool for the company, but it applies mostly to the design sphere. It is often used to simplify and unify UI/UX design. Holistic design implies an ecosystem including values, philosophy, and attention to every detail.
- Going beyond digital. Even if we are talking about a highly digitalized company, in the absolute majority of cases holistic design solutions will change physical items, such as offices, and also the human capital.
Real companies. Holistic or not?
As we say that holistic is an idealistic term, it is hard to say that any company at all is really holistic. Yet, there are some that move in that direction. Sometimes these are the same companies that invest in the petroleum industry (nobody said “holistic” was simple).
Let’s go through some examples to see how far famous companies can get on their way to becoming “holistic”. Is there a way to avoid mentioning Apple in an article about design? Not that we know.
Holistic style. Apple
Apple stands quite close to the holistic design approach. All the products have a clear consistent line, the company has a recognizable style and philosophy. All Apple products sync naturally and gather in an ecosystem: they look similar, they use the same software and user interface, they feel the same. Once people get used to the Apple ecosystem, they have hard times abandoning it.go on using the same products.
However, the sustainability of Apple design is questionable. The company is constantly using the principle of planned obsolescence and its products are not very easy to repair. Also, the well-known method of Apple is to create users’ needs rather than satisfying existing ones. Products are often designed with limitations that require users to adapt to them rather than adapting to users: for example, new Iphones have no power adapters.
Design thinking applied. Bosch
The spectrum of holistic design approach is large. It might be unexpectable to see this company as an example, but there is something we can learn from Bosch, a company with over 150 years history and quite a traditional line of products.
Apart from quality electro domestics, Bosch is known for its success in applying design thinking throughout a large established company. They started with launching a whole “design thinking department” and it changed the processes in the company leading to the redesign of office interiors to adapt to the reshaped collaboration models.
Bosch is now producing a wide range of products apart from washing machines. They construct smart buildings that promote sustainable living. This is a classic understanding of holistic design approach in modern times.
One of the good practices that Bosch adopted is involving people of various profiles in the design process, such as engineers, testers, marketers, scientists. Diverse teams provide the best ground for innovative solutions.
How holistic is Bosch’s approach? They mostly declare the design thinking approach, but being an old German company working with product design, they are well familiar with the notion of holistic design from the first sources. How sustainable is their product? Well, we'll leave it to the environmentalists.
Holistic path of small companies
In this article, we’ll leave apart the interior Feng Shui design companies and will focus on UX.
One of the companies that declare holistic design to be a cornerstone of their work is Tactile design firm. They see UX as a cross-pollination of various disciplines, from architecture to marketing. No surprise that half of the company consists of industrial designers and engineers.
Designers at Tactile dedicate a lot of attention to studying the context of the product they are working on. Also, they surely go beyond digital as they work a lot on physical interfaces and innovative technologies.
As a UI/UX design agency, we are far from claiming ourselves holistic. However, we do like the approach and it is present in our work.
We always try to do a bit more than the client asks us. Solving the problem is good, but our objective is also to simplify the implementation of the design and think of design accessibility even when it is not in the brief.
Take a look at the case study of Handprinter, a lifestyle app. As the product itself is quite holistic, our approach was similar: we thought about all the stakeholders, thought not only about the principal user’s goal – decreasing the handprint - but also about other aspects, such as a social network of like-minded people.
What to start with?
If you are more than just curious about a holistic approach and want to try adopting it in your company, our advice is to start slow. Here are few steps that will get you closer on the way to holistic design:
- Apply design thinking (you might think it is another buzz word and you’ve heard of it a thousand times already… But check out these design thinking examples from top companies if you have doubts).
- Design system. It’s likely that you already have one, but look at it closer: is it a real system based on philosophy or more of a visual components library? Are the principles of the design system used outside of design software?
- Check if your design is inclusive. Without being inclusive, there is no thinking of a holistic user experience.
- Provide consistent user experience. Make sure that your customers are enjoying interacting with the product at every moment of their journey. Every little thing is important for a holistic user experience. How to get there? Dig deeper into UX research, go beyond competitors’ analysis and user interviews.
To sum up
The most complicated thing about holistic design is that different people have very different images of it. The second most complicated thing is that the idea of holistic design is rather idealistic: each goal is never final, the path is ongoing. Yet, following this path would bring many pleasant bonuses on the way.
Let me finish with a quote from Karthik Vijayakumar, Founder and Principal, DYT Studios & Host of The Design Your Thinking Podcast.
Holistic design is to see and think of the world in two broad dimensions – as interconnected and evolving systems. Holistic design is formed by and leads to interconnected systems. Evolving nature of holistic design is when the design leads to the evolution of the interconnected systems.
And if you want to talk more about holistic design — or about anything else — we are here.
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