After helping hundreds of companies navigate the app creation process, we know that the work doesn’t stop at the public release. Once you release a killer Minimum Value Product (MVP), then it’s time to measure the MVP’s success and plan the next steps. We have perfected our measuring process, and are excited to share our hard-won wisdom with you in this blog series.
In last week’s post, How to Build a Killer MVP App, Step 8: Release Phase- Making Sure You Practice Before Your Public Performance, we covered each of the steps needed to ensure your MVP’s release is killer.
However, the work doesn’t stop once your MVP is released. In this week’s blog post, we cover the ninth step for building a killer MVP: the Measure Phase. Below, we will examine how you can use common metrics, such as active users, client acquisition cost, paying users, client lifetime value, and churn rate, to effectively measure the success of your MVP.
An MVP, or minimal viable product, is a bare-bones version of your app. MVPs allow you to save time and money on development while testing the viability of your product, engaging investors and stakeholders, and going to market sooner. You can read all about the benefits of MVPs in our first post, How to Build a Killer MVP: Introduction.
In our previous posts, we have also covered the first eight steps to building a killer MVP:
- Step 1: Agile Development Methods and Divergent/Convergent Thinking: Using Agile development methods and divergent and convergent thinking can help your team find and prioritize the best ideas for your MVP.
- Step 2: User Discovery- Letting User Needs Inspire Epics: Building epics based on users and their needs will help you create a viable, successful MVP.
- Step 3: Market Discovery Phase- Using Market Analysis to Gain Leverage Over the Competition: Conducting market analysis to identify the primary market and discover what sets your app apart from the competition.
- Step 4: Planning Phase- Creating a Plan to Successfully Navigate Your Project Milestones: Using user stories, architecture, and conceptual designs to create a robust MVP development plan.
- Step 5: Design Phase- Taking Your Product from Paper to Prototype: Maximizing your UI/UX to create a seamless user experience and polished look for your MVP.
- Step 6: Development Phase- Embracing Less Engineering and More Testing: Avoiding common Development Phase obstacles using Grio’s key strategies for success.
- Step 7: Stabilization Phase- “Breaking” Your App So Your Users Don’t: Utilizing your test plan to find issues with your MVP so that your users don’t.
- Step 8: Release Phase- Making Sure You Practice Before Your Public Performance: Releasing your MVP strategically to maximize its potential for success.
Below, we introduce Step 9: Measure Phase- Determining Your MVP’s Success Using Key Performance Metrics.
Key Analytics for Measuring Success
How do you know if your MVP is successful or not? You measure.
Key performance metrics vary for each MVP, and are largely determined by the purpose of the product. Returning to our vlogger social media app, metrics such as daily active users, average time in the app, and number of posts viewed could be important metrics. These metrics identify which areas of the MVP need attention or adjustment in order to improve chances for success.
Here are a few common methods used to measure the success of an MVP, particularly for consumer-facing products:
Download and launch rates are not the only factors that measure the success of an MVP. It is essential to study users’ behavior and regularly check the ratings of active users.
Client Acquisition Cost (CAC)
CAC looks at the money spent on an acquisition compared to the number of customers acquired. It is imperative to know how much it costs to acquire a paying customer to determine whether or not marketing efforts are effective.
CAC = Money spent on an acquisition / Number of customers acquired
The average revenue per user (ARPU) is the average amount of revenue generated by each active user of your app over a given period of time. Knowing your ARPU is important for revenue projections and marketing strategies.
ARPU is calculated by dividing your revenue by the number of users over the time period you want to measure, such as a week, month, or year. Typically, ARPU is measured on a monthly level, using monthly recurring revenue (MRR) as an input.
ARPU = MRR / Number of active users
Client Lifetime Value (CLV)
CLV is the predicted value of a user over the length of time they’ll use your app.
CLV = (Profit from a user * App usage duration) – Acquisition cost
Churn rate, also known as the rate of attrition, shows the percentage of users who have uninstalled or stopped using the app within a given period.
Churn Rate = (Users at the beginning of period – Users at end of period) / Users at beginning of period
Measuring and analyzing key performance metrics will allow you to make informed decisions that guide the future development of your product. You should also set goals for these metrics to help you better understand how your product and business can grow over time.
There are a number of great tools for collecting these metrics. Google Analytics, Firebase, Apple AppStore Connect, App Annie, MixPanel, and many other services are capable of acquiring the aforementioned metrics and helping you determine the success of your MVP.
Building a Killer MVP: Next Steps
Once you’ve collected and analyzed your metrics, you are officially ready for the last step of Grio’s process for building a killer MVP. You can learn about Step 10 in our next blog post, Grio’s How to Build a Killer MVP, Step 10: Maintain and Enhance Phase- Valuing the Cycle of Continuous Improvement Throughout Your App’s Lifetime (Coming Soon!).
Let’s discuss how we can transform your brilliant idea into a killer app.
Book a free MVP consultation with one of our industry experts today.
Learn more about Grio’s end-to-end app design and delivery plan, the MVP Blueprint.
If you missed other posts in this series, check out:
- How to Build a Killer MVP: Introduction
- How to Build a Killer MVP App, Step 1: Agile Development Methods and Divergent/Convergent Thinking
- How to Build a Killer MVP App, Step 2: User Discovery – Letting User Needs Inspire Epics
- How to Build a Killer MVP App, Step 3: Market Discovery – Using Market Analysis to Gain Leverage Over the Competition
- How to Build a Killer MVP App, Step 4: Planning Phase- Creating a Plan to Successfully Navigate Your Project Milestones
- How to Build a Killer MVP App, Step 5: Design Phase- Taking Your Product from Paper to Prototype
- How to Build a Killer MVP App, Step 6: Development Phase- Embracing Less Engineering and More Testing
- How to Build a Killer MVP App, Step 7: “Breaking” Your App So Your Users Don’t
- How to Build a Killer MVP App, Step 8: Release Phase- Making Sure You Practice Before Your Public Performance
- How to Build a Killer MVP App, Step 9: Measure Phase- Determining Your MVP’s Success Using Key Performance Metrics
- How to Build a Killer MVP App, Step 10: Maintain and Enhance Phase- Valuing the Cycle of Continuous Improvement Throughout Your App’s Lifetime