It is truly an exciting time in mobile app development. It has jumped by leaps and bounds over the last decade. The most recent trend is cloud-based mobile mvp app development. It sprung up to improve security, functionality, and storage capacity. More to that, it adds to the app’s capacity to cater to VR and AR technologies. VR stands for Virtual Reality and AR for Augmented Reality.
The phrase “time is of the essence” has never been more relevant than now for mobile app development. To fit in with this, the concept of Minimum Viable Product (MVP) has exploded. Having an MVP is a crucial stepping stone to a successful online business. A well-crafted MVP fulfills quite a few vital missions. First, it allows getting the initial traction and gathering user feedback. Second, it validates the business idea on real users. Thirdly, your simplified app version forms a user base. The latter comes together with revenues to allow you to scale and grow your business. So the pivotal question is: When do you evolve your mobile MVP app to a fully-fledged app?
If you are still pondering where to start with your business idea, consider checking out this Startup Services article.
This post will address the issue of when is the right time to evolve your mobile MVP app into a fully-fledged solution. To answer that, we will go over the following:
Table of contents
- What a mobile MVP is and what are its advantages?
- Goal 1 – Has your MVP brought adequate initial traction?
- Goal 2 – Has your MVP sufficiently validated your business idea?
- Goal 3 – Has your MVP formed a sizeable user base?
- The best strategies for scaling an MVP app
- Final Considerations: focus on sustainable mobile app growth
- Frequently Asked Questions (FAQ)
What a mobile MVP is and what are its advantages?
With any business endeavor, it is important to remember the key goal so that you don’t get sidetracked. With a mobile MVP, your first task is to narrow down to only core features that best represent your business idea. It serves the goal of getting your product quickly to market and doing some real-world testing. MVP in itself goes through a few distinct stages which we described in our article 5 startup stages. We sometimes see that mobile MVPs linger on their MVP stage for a while too long. Momentum gets lost and business dwindles down. Once your MVP has fulfilled its purpose, it should evolve.
MVP is meant as a temporary phase of your product existence. Of course, there are exceptions to that rule. But if you have ambitious business goals, staying on MVP is like installing a glass ceiling for your revenues. It is as if you can see the potential but you are deliberately limiting your growth. Why is that? MVPs are meant to cater to a pool of early adopters. It is often around 5-10% at best of the potential target user pool. In some industries, this number does reach 13.5-15%. But what about the remaining 85% of users?!
So you’ve developed your mobile MVP. It has all the key features that allowed you to test the app’s core idea. You got fast to the market so you had a chance to iterate based on real-world usage of your app, and, in the meantime, started generating revenues. It will come in handy for covering the development costs and saving up for the next development effort among other things.
What exactly does this MVP stage give you, if to be specific?
- minimize the risks and costs associated with mobile MVP app development.
- validate market demand and determine whether your developers’ ideas have legs or whether they require refinement.
- swift publication to market, whereby the app’s initial feedback can set a path for further development.
- allow developers to focus on building a simple, usable, and intuitive app that engages users rather than wasting resources on unnecessary features.
- quicker and more efficient testing cycles that help to detect issues early on in the development process, thereby mitigating long-term financial and implementation risks.
So, how do you know if the MVP phase of your product is over and it is time to move on?
Is your MVP ready for scaling?
We’ve established that the key goals of the MVP phase of your mobile app are:
- Goal #1 Get initial traction;
- Goal #2 Validate a business idea;
- Goal #3 Form a user base.
Each of them can be measured by a set of customer and revenue KPIs. They are presented in Table 1. These will be not the only metrics you might be tracking for your business. You can vary the number of these depending on your business plan. But they are the ones you should be tracking to make a decision about scaling. So, the fundamental approach is to:
- For Goal #1 monitor Customer Acquisition Cost (CAC), Average Revenue per User (ARPU), and Customer Churn Rate (CCR)
- For Goal #2 track Monthly Recurring Revenue (MRR), Revenue Churn Rate, and Revenue Growth Rate.
- For Goal #3 keep an eye on Customer Lifetime Value (LTV), Monthly Active Users (MAU), and Average Revenue per User (ARPU).
Table 1 Customer and Revenue KPIs
|Revenue Metrics||Customer Metrics|
|Average Revenue per User (ARPU)||Customer Acquisition Cost (CAC)|
|Revenue Churn Rate||Monthly Active Users (MAU)|
|Revenue Growth Rate||Customer Lifetime Value (LTV)|
|Monthly Recurring Revenue (MRR)||Customer Churn Rate (CCR)|
Goal 1 – Has your MVP brought adequate initial traction?
Initial traction means the signs of interest and rate of adoption of your product. An MVP is targeted at early adopters, and success in gaining their attention is referred to as initial traction. Once the project is launched, you should start measuring the metrics shortly after. They will show whether you’ve hit the real market need. Also, you will see whether the product resonates with the target audience.
MVP is created with the primary goal of testing the product hypothesis. Initial traction is a key critical moment as it is sign #1 of your business viability. Some businesses will be taking longer time than expected to get the MVP off the ground. It indicates that the initial idea might be a bit of a miss. However, with an MVP, it simply means that the product will require more iterations to reach success. Remember, MVP is really good at minimizing risks.
Vital metrics to track at this point should reflect:
- how much it costs to attract users (Customer Acquisition Cost),
- how much revenue each user generates on average (Average Revenue per User),
- how many users stay and leave (Customer Churn Rate).
As we’ve mentioned earlier, there are also more detailed and subtle metrics. You can track those for the purpose of iterations and improvements. They are often metrics related to measuring user engagement or involvement. In this case, you will be tracking all interactions not just the ones that result in purchase. For a mobile app, they are app navigation, touch gestures, and user engagement with push notifications. Mobile app UX has a set of mobile-specific metrics which are important when you launch. Here, we will keep an eye on the fundamentals for the purpose of making a scaling decision.
Customer Acquisition Cost (CAC)
This metric includes all expenses for acquiring customers. For a mobile MVP app specifically, it means answering the question: How much money goes into getting a user to download an app? It includes whatever marketing you are using: from ads to influencer marketing. You take all your expenditures on acquiring customers and divide them by the number of new users. You need to measure whether this cost is sustainable for the long term. In addition, it should be reasonable. Lately, this metric has risen for all businesses. For mobile apps, you are looking at an average CAC of $30 per user. It is best if you can compare it against your competitors if this data is available. A well-crafted mobile MVP app shouldn’t overly depend on advertising to attract users. You should be able to generate organic traffic and word-of-mouth marketing. A good sign for scaling is a reasonable CAC that gradually lowers down. It means your MVP initially clicked with the market and organic traffic is growing.
Average Revenue per User (ARPU)
This metric measures how much revenue a user generates on average for your business over a specific period. So, the total revenue divided over the number of users over a specific period of time. For a mobile MVP, you should make sure these periods are reasonably short. Depending on the nature of the business, you can even measure it daily or, better, hourly. This is common for offline businesses too. Restaurants keep track of an average check while parking lots or entertainment outlets keep tabs on hourly revenues. Ideally, you need to see this metric growing. After all, once the users tried your products, they will be coming for more. Plus, initially, you might be offering welcome discounts and promotional offers. These should be reduced as users interact with your product. So you need to see a quite substantial increase over time.
Customer Churn Rate (CCR)
It reflects the number of users who stopped using your product. This metric must specifically reflect the number of users who bought something from you but decided it wasn’t a good value for their money. For a mobile MVP app, you need to track how many users are inactive and uninstall your app. In short, all users who disengage with an app. The formula is the difference between the number of users at the beginning of the period and the end divided over the number of users at the beginning.
When a user deletes an app from their phone or stops using it, the app store doesn’t usually receive any notification about it. However, mobile MVP app developers can measure the app’s uninstall rate and inactive users through embedded analytics systems. These systems can track these and provide data over time. Some mobile MVP app developers may use in-app surveys or pop-up messages to ask users why they have uninstalled the app. Still, these features are not commonly used as this form is optional and a few responses will not represent the majority.
Addressing the churn rate requires close monitoring and asking for feedback from users while they are still active. The critical time is the first week since installation. 80% of user disengages happen at this time. For mobile apps, the churn rate is often as high as 75-77%. Yet, there are apps that manage to keep it at the 27-32% level. Overall, tracking spikes in user disengages is one of the key tasks of your team for a mobile MVP app development.
A consistently low churn rate is a sign of a healthy MVP that can be scaled. Fluctuations to higher rates indicate problems and inconsistent quality. Of, unless they were the results of some tests. It is common for an MVP to experiment and carry out A/B testing. Just make sure you know why CCR is fluctuating so that you can be sure of the ability of your product to create a loyal customer base in the future.
To sum up, for a few months after launch you should keep a close eye on customer acquisition cost, average revenue per user, and churn rates. Since you target early adopters, your marketing costs (CAC) should be minimal within reason and you should see organic traffic grow. The average revenue per user (ARPU) should have a strong and healthy increasing trend. The churn rate (CCR) at this stage should be mostly low and fluctuations should be explained by product A/B testing and experimentation.
Goal 2 – Has your MVP sufficiently validated your business idea?
This goal focuses on the product-market fit. You can base the decision about the completion of this goal on the metrics discussed further. However, it is also important to consider the gathered feedback from your users. Is your product getting positive user feedback? Even a simple decision to leave feedback is already a big indication of user engagement. If your users are impressed enough and encouraged to share positive quality feedback, it means you have clicked with the market. Customers’ time is invaluable. Marketers fight for their attention. When users take the time to provide any form of feedback, it is a significant advantage for your business. However, it is important not to overstimulate feedback-giving. It should be genuine. When users are heavily incentivized to leave feedback, it might reflect on your balance sheets and provide faulty data. It is essential to understand how well your product solves the problem of your target audience. Have you managed to satisfy their needs and meet their expectations?
Now to metrics. You should analyze each in isolation but also combine them to understand the bigger picture. It is essential to measure these metrics against the planned numbers as well as against market trends and competition. It will allow you to get confidence in the success of the fully-fledged app.
Monthly Recurring Revenue (MRR)
This metric captures the stability of the app’s revenue streams. Here you would consider subscriptions and other payments. You can calculate it by multiplying ARPU by the number of paying customers. When it comes to a mobile MVP app development, offline functionality significantly impacts the app’s revenues. Offline functionality is the ability to offer some features without an internet connection. The need in this feature varies depending on the nature of the app. In-app ads depend on being online. Thus, subscription often primarily targets users who need offline access. You need to carefully consider the balance of online spending opportunities with offline subscription payments. The ability of your MVP to generate consistent revenue is what MRR reflects. A sustainable monetization model is a sure sign of a strong foundation for scaling.
Revenue Churn Rate
This metric is interlinked with the customer churn rate. It tracks the percentage of lost revenue because of customers disengaging. Yet, this metric measures a bit more than that. It also factors in downgrades if you have different tiers of subscription. To calculate this metric, you go several ways depending on your pricing model. You can calculate this rate for each category of users separately and then average it out. Or if your pricing model is simple, you can just take monthly recurring revenue at the start of the period minus monthly recurring revenue at the end of the period and divide it over the monthly recurring revenue at the start of the period. However, be sure not to include the new customers in this count. For example, imagine 200 customers disengaged from the app, 50 customers downgraded their subscriptions, and then got 300 new customers. It might look like you haven’t churned any revenue, when in fact you have.
You should strive for a low revenue churn rate. It will mean that users are happy with the product and continue to value what your product has to offer. It is an indicator of the sustainability of your revenues. It is a mission impossible to have a zero revenue churn rate. But you should keep it as low as possible and lower compared to the competition. After all, your product is supposed to be something better than already exists.
Revenue Growth Rate
This is an indicator of how strong the demand for your app’s offering is. Ideally, this rate should be stably high from period to period. You can determine it by dividing the difference between the revenue for the latest period minus revenue for the previous period over the revenue for the previous period, then multiplying by 100 to get a percentage. Ideally, it should be a positive number. The robustness of the revenue growth should make you start thinking about scaling. If your app is consistently growing from month to month: scaling is almost inevitable.
To conclude, you should see sustainable monthly recurring revenue with a low churn rate and high revenue growth rate. This trifecta indicates that your MVP has fulfilled its mission: your business idea is validated. You have paying users whose problems your MVP successfully solves and your app is providing a compelling user experience.
Goal 3 – Has your MVP formed a sizeable user base?
This is the stage when you want to see whether your app holds the promise for future growth. It is essential not to scale prematurely. Your user base should be stable enough and big enough to provide a solid ground for your expansion. One metric we already discussed in Goal #1 but the period over which it should be analyzed will differ. You need to clean up the data to see how many users stayed since they joined. So, not based on the company’s standard reporting period. But you will need to track it relaying on users’ behavior. You also need to pay close attention to how their spending is changing over this period.
The problem of premature scaling often lies in tracking metrics for standardized periods. When you track weekly or monthly, you might see a good user flow to your consumer base. And with regular marketing efforts, you will have spikes in revenues during promotions. However, what you should focus on is how many users choose to stay from month to month and track indicators for these users. You may even want to track selected users starting from the launch. It is essential to observe what happens to the purchasing behavior of long-term users. A solid loyal user base is not what you fuel with ads and discounts (unless it is very peculiar to your business model).
Customer Lifetime Value (LTV)
Your mobile MVP app might see success already a year after its launch. Considering that there are customers who are loyal for decades to some companies, the longer the period you can observe the better. Depending on the nature of your business, you, first of all, should determine what the target lifetime period is. You should clearly separate one-time customers, accidental customers, and those with whom you will be building your business. Again depending on your business, you might need to separate your loyal customers into groups.
In general, current marketers’ segmentation of clients is: whales, dolphins, and minnows. Whales are the most desirable clients who often engage with your app and spend a lot. Dolphins are those who exhibit moderate spending but still are your regulars. Minnows are the least important clients who spend very little and come and go frequently. So, for LTV, you should track the spending of your whales and dolphins. Ideally, you won’t be able to even know that final LTV because your whales and dolphins are with you for the whole duration of your MVP stage since launch. These users deserve metrics to be tracked specifically for them.
As you can see, LTV is the most important metric to see whether users are finding enough value in your product to stick around. Their loyalty and engagement indicate that your mobile MVP app is meeting or even exceeding their expectations. Tracking this metric will significantly add to the confidence in the decision to scale.
Monthly Active Users (MAU)
This metric helps you evaluate your app’s popularity. A steadily growing MAU shows that your app creates interest and drives engagement. The more users engage with your app from month to month, the better. Though, it is vital to establish the target frequency of engagement. You might want to again break down the user base into categories based on their engagement level. For example, users who engage daily, a couple of times per week, and infrequent users. Ideally, a growing MAU should be supported by the growing frequency of user engagement. In addition, you should filter out the users based on the target action. What do they come in to do? Is it a minute-long check after your app sends a pop-up? Or is it a quality interaction?
Average Revenue per User (ARPU)
We have already talked about this metric in assessing the initial traction section. At that time, your ARPU could be measuring only short-term revenues per user. But when you come to goal 3 of your MVP, you have much more expansive data. Using the previous whales-dolphins-minnows categories, you would track ARPU accordingly.
Unlike the LTV metric, ARPU captures the quality of revenue-generating efforts within a specific period. ARPU reflects the quality of your pricing models and promotions. LTV is the indicator of the customer lifecycle with repeat purchases and potential upsells or cross-sells. The key is that when you reach evaluating Goal#3, you should already have whales-dolphins-minnows customer groups and more data to base your scaling decision on.
To wrap up, by looking at LTV, MAU, and ARPU you can make a final decision on whether to scale or wait with it. These metrics consider long-term prospects, current popularity, and efficiency of your pricing model respectively. MVP is when you can still experiment to reach the ideal mix which you can then scale.
- If your ARPU is high but MAU is low consider adding some engagement features to your mobile MVP app.
- If your MAU is high but ARPU is low your pricing models such as subscriptions or promotions might need adjusting.
- If your MAU is high but LTV is low, you likely have a great product but poor marketing which doesn’t utilize upselling or cross-selling.
Each individual metric should be viewed in relation to others in order to make a solid scaling decision.
The best strategies for scaling an MVP app
Another factor to consider when making a decision about evolving your MVP is: what kind of scaling you are going for. Are you looking to expand the feature set or develop a product for different platforms? Or go into new markets? There are different ways you can scale your mobile MVP app. It ranges from performance optimization to expanding into new platforms to localization. You are welcome to check out this Scaling Stage page for more information and examples of real-world apps.
Here, we’ll present a brief overview of the main scaling strategies.
You may consider opting for VR or AR technology. It is quite a new trend, and users often love these features. They allow for much more immersive UX. Thus, you can better address user requests and pain points.
Often, at the outset of your project, you create a feature roadmap and update it upon receiving user feedback. You can also consider other extra features such as user communication, more exciting UI/UX, etc.
When creating an MVP for what is going to be only 10% of your user base, your development team might start off with a smaller technical capacity. Once you see your MVP grow, you might venture into optimizing performance to handle 10x or 25x more traffic, reduce load times, and do other tricks. Some companies choose to compress and minimize their mobile apps and others build fat ones with a load of features. It all depends on your initial plan and received feedback.
With an MVP, you often start with one platform. For example, you can start with a mobile MVP app development for Android. When things work out, you may want to develop an app for iOs, a web solution, or else. By doing this, you will be able to reach wider audiences. Yet, each platform has its unique requirements and promotion techniques. This is why it is often best to focus on one at a time.
You might want to try reaching broader international audiences through the app’s localization. It often involves translating your app’s content into local languages. More importantly, you should adapt your app to suit local cultural preferences, tax laws, and state regulations.
Once you’ve built a solid user base, it is often possible to scale into offering more and more services. You can develop more products or services to sell through your app. For example, if you built a lot of subscription users, you can add some products which are available only as a one-time access. If you developed a mobile e-commerce app, you can scale into a mobile marketplace. If you first focused on sales of one-time deals, by adding more items to your store, you can start a subscription model.
Overall, making sure your MVP is standing strong you can choose from a variety of directions to go. However, when you make this decision it is not a guessing and forecasting game – it is based on real-world performance, user feedback, and market trends. These are the main strengths of starting with an MVP. Evolving it further becomes much less risky and much more secure.
Final Considerations: focus on sustainable mobile app growth
- Mobile MVP app development is made significantly safer by developing an MVP first.
- MVP represents a stripped-down temporary version of your product.
- MVP aims to 1) get initial traction, 2) validate a business idea, and 3) form a user base.
- Fulfilling these 3 goals allows you to gather data and iterate to create a solid app for further scaling.
- It minimizes risks associated with bigger investments into a fully-fledged app.
Frequently Asked Questions (FAQ)
A mobile MVP (Minimum Viable Product) is a simplified version of an app with core features to quickly bring it to market and gather real-world testing. The advantages include minimizing risks and costs, validating market demand, focusing on core features, and facilitating quicker testing cycles
To determine if your MVP is ready for scaling, monitor metrics related to initial traction, business validation, and user base formation. Measure Customer Acquisition Cost (CAC), Average Revenue per User (ARPU), Customer Churn Rate (CCR), Monthly Recurring Revenue (MRR), Revenue Churn Rate, Revenue Growth Rate, Customer Lifetime Value (LTV), Monthly Active Users (MAU), and more.
Initial traction refers to the signs of interest and user adoption of your product among early adopters. It’s a crucial indicator of your product’s viability and resonance with the target audience. Metrics such as CAC, ARPU, and CCR help measure initial traction.
Business validation involves assessing whether your product successfully solves users’ problems and meets their expectations. Metrics like MRR, Revenue Churn Rate, and Revenue Growth Rate help measure the validation of your business idea.
To determine if your MVP has formed a substantial user base, track metrics such as Customer Lifetime Value (LTV), Monthly Active Users (MAU), and Average Revenue per User (ARPU) over a longer period. Consider user engagement, frequency of usage, and revenue trends.
Scaling strategies include expanding features to cater to user requests, optimizing performance to handle increased traffic, adding support for different platforms (e.g., Android and iOS), and localizing the app for international audiences. Monetization strategies like introducing new products or services can also support scaling.
Developing an MVP first is a safer approach for mobile MVP app development. MVP’s temporary version helps gather data and iterate for a solid app. Focus on achieving initial traction, validating your business idea, and forming a user base before making scaling decisions. The ultimate goal is to ensure sustainable growth for your mobile app.