The development of an app costs 40,000 to 200,000 Euro in the first year, depending on its volume. And, according to our industry, only one in ten apps is actually successful. How can you ensure that you invest your development budget in the right idea and increase your chances of success? Simple! Just test your app idea and business plan KPIs as quickly as possible with a Minimum Viable Product MVP.
In our blog article, we will show you what minimum viable products can look like for two apps with different business models, how to measure your MVP’s success and which mistakes you can easily avoid.
1. MVP for Fitness Apps
Business Model: Subscription-Based with In-App Purchases (IAP)
This app category includes calorie counter and recipe apps as well as all mobile fitness video coaches, audio guides and running apps. They are all financed by subscription models, so their financial success is determined by their paywall.
KPIs to Measure for Fitness Apps
1. Conversion rate: How many users make it from downloading the app to the paywall and buy a subscription there?
2. Churn rate: How many users do you lose each year?
1. How Do You Test Your App’s Conversion Rate?
You need to figure out how well your on-boarding process works from app download to the paywall. How do you do that? Easy! You simulate the on-boarding process. For our client’s fitness apps, we recreated an MVP by simulating the on-boarding process with clickable screens of a mobile website. We published our MVP in the Google Play Store to avoid Apple’s strict release policies. Via Facebook ads, we then sent 1,000 users to our fitness app MVP and measured exactly how many users actually clicked on "Subscribe now". Behind our paywall, the users found a basic version of the app that was usable, but in which we had hardly invested any time. Development: 1 week.
Another alternative after the paywall would be to put your cards on the table and write a message á la: "Wow, you're one of our very first users! Unfortunately our app is not quite finished yet. While you’re with us, why don’t you subscribe to our newsletter below? That way, you’ll be the first to know when our app is ready to roll! Don’t miss another day and immediately start working on your fitness goals." Nice benefit: You collect email addresses of potential customers on the side.
Tip: In order for your MVP to achieve meaningful results, we recommend a sample of at least 1000 users. In this way, you can exclude the possibility that your results are due to chance.
2. How Do You Test Your App's Churn Rate?
You offer monthly subscriptions in your MVP instead of an annual subscription. After just four weeks, you’ll get first numbers on how many users you will lose in this period. The churn rate for annual subscriptions differs only insignificantly.
How Do You Know if Your MVP is Successful or Not?
Let's put real numbers to our example: The subscription of your fitness app costs 5 Euros per month and most users choose annual subscriptions. So you will earn 60 Euros per year with each user. Adding the cost per installation (CPI) from your marketing campaign which can be 6 Euros per user for a high-priced app like yours, you need at least 10 percent of your users to subscribe after the download so that your app does not become a loss game. Conversion rate >10%: This is the benchmark for your Minimum Viable Product’s success.
On-boarding Tip: Reduce Screens to Increase Conversion!
A solid benchmark in on-boarding is: You lose 50% of your users on each screen. If your on-boarding process has eight screens up to the paywall, only 0.4 percent (50%^8) make it to your paywall! If you reduce your on-boarding process to two screens, 25 percent of users reach your paywall - a significant difference for your revenue - 600x higher!
So: reduce your on-boarding screens to a minimum. Ideally, your UX is so intuitive that you don't have to explain the app at all (good for you). Also: Think carefully about which data (e-mail, name, etc.) you really need from your users. With each form field on each screen you lose another 10% of your users.
On-boarding is THE art form in app development. If you want to learn more about it and see concrete examples of good and bad on-boarding funnels, we recommend useronboard.com or an entertaining evening with our CEO.
How Do You Know Whether Your MVP is Successful or Not?
It’s simple: When the numbers of your MVP come close to your business plan, or if you think you can realistically double your KPIs in the first year with good product management. Then, and only then, is it worth investing 100,000 euros in the development of your app.
Your MVP is Not Performing Properly?
What if your MVP falls short of your business plans' assumptions? Go deeper and analyse screen by screen where you are losing your users. For example, compare the bounce rate on each screen with its time on page. High values for both KPIs indicate that your screen or the interaction in it (e.g. form) are too complex.
Use the data to improve each screen and your overall KPIs. If you still don't succeed: Discard your idea and start fresh!
2. MVP for Media Apps
Business Model: Advertising financed
Media apps are classic examples for this category. They include news and magazine apps from publishers and media houses and all apps which have editorial content as their core offering. Again, before you spend 100,000 euros on a native app with a complex content management system, test as early as possible whether your app can be successful.
KPIs to Measure for Media Apps
- Churn Rate
- Sessions per Month
- Page Impressions per Month
- Session Length
How Do You Test Your KPIs Effectively?
One way to test quickly and cost-effectively whether your media app is what your audience was looking for is to build a so called Wrapper App. What's that? You simply simulate your app by displaying the editorial content of your homepage in an app that consists only of a browser window. Publish your wrapper app (we recommend the Google Play Store again) and promote it on your website with a pop-up message.
Tip: If you want to test your Wrapper App on iOS users, make sure that it doesn't look too much like a website, otherwise Apple will reject it.
How Do You Measure the Success of Your Minimum Viable Product?
Again, if your MVP numbers come close to your business plan, or if you think you can realistically double your KPIs in the first year with good product management. Then, and only then, is it worth investing 100,000 euros in the development of your app.
Also consider: Each KPI has a multiplicative effect on your revenue. If the churn rate is halved, the number of sessions per month, page impressions per session and page impressions per active user double, your sales can increase eightfold - provided that you can monetize your app right from the start.
Caution: App usage is a bit different to how people my use websites. So online and mobile KPIs should be compared with caution. One reason for this is that apps are located on the home screen of your users and are therefore more present than websites. In our experience, apps have lower churn rates, longer session lengths, and more page impressions than the corresponding websites, even if they are completely identical in content. In addition, you can halve your churn rate by regularly triggering your app users with push notifications.
Tip: If you customize the user agent in your app, you can easily compare the KPIs of a web user (look at the users of your homepage who entered the URL directly) with an app user in your Google Analytics account.
Why Not Create A Minimum Lovable Product?
Isn't it better to put a lot of time and resources into your app prototype so that your customers really love your product? Our opinion: No! Because it will only costs you and give you no additional benefit! Until an MVP becomes "lovable", you put a multiple of time, money and resources into its development - much more than is really necessary. Because let’s remember: The only purpose of your MVP is to test and (hopefully) confirm the theoretical assumptions of your business plan by testing them on real customers.
5 Tips to Consider For Your Next MVP App
- Define exactly which KPIs influence the success of your app the most. Then think about how you can test these KPIs quickly and affordably. "Fake it 'til you make it!”
- Test your MVP in the Google Play Store to avoid the time-consuming approval process of Apple.
- Send test users to your MVP by placing Facebook ads, showing a pop-up for mobile users on your website or promoting your MVP via your own social media channels. Please note: You get significant results from a sample of min. 1,000 users.
- Keep your on-boarding process as short as possible. The shorter it is, the higher your conversion rate will be.
- Don’t just look at your total KPIs but analyse screen by screen where and why you lose users and which elements of your MVP you should improve.
Your MVP failed despite everything? Don’t get discouraged. You had a 1:10 chance to get it right with your first app. Start fresh and use the valuable insights for your next MVP. And most importantly: Celebrate! You've just saved yourself a ton of money by testing your business plan in an MVP first!