In every profession, you can find acronyms that help people communicate ideas faster. The same relates to product management.
As a product strategy consulting firm, we decided to prepare a small list of such acronyms. But instead of making a boring vocabulary, we'll explain them via stories and insights from our everyday routine.
Three Versions of Your Product: MVP, MMP, MLP
When business people start a new venture, they first come up with the MVP. But what happens next? If you don't know about MMP, and MLP, read on.
A minimum viable product (MVP) is something most entrepreneurs know about. It's a version of your product that brings the primary value (or meets the primary intended need of your customer) in the cheapest and simplest way possible. It's not about saving money on the development, but rather about testing hypotheses. To reach the desired profitability as quickly as possible, you'll want to fail fast and fail often, and the concept of MVP was created exactly for that.
Now, imagine you've built your minimum viable product. What's next? Which feature has a bigger priority? This is where MMP comes into play.
An MMP – or minimum marketable product – is a product consisting of a minimal set of features that people are ready to pay for. That's why it is also known as a minimal sellable product.
Often, MVPs are indeed not the products people are ready to pay for. The first and foremost idea behind an MVP is to confirm the need you want to address and demand with such a product. That's why it might be just a video demonstration (the case of Dropbox), or a landing page collecting emails of people ready to use the future product (the case of Buffer), though our clients usually prefer to build actually working software products.
But today people want to have something more than just a need addressed with another app. They want to get positive emotions when using it, only then they're going to be ready to pay for it. So an MMP includes a set of features to meet users’ one specific need completely and thus have commercial appeal.
But then, if we're talking about users being ready to pay for something, is it always a rational decision? Any professional business analyst knows emotions and feelings affect us in a way smaller than rational arguments. Hence we might love the product even if it's not functionally perfect yet. And so, an idea of MLP was introduced.
An MLP, or a minimum loveable product, is a product that might not have many features worth paying for, but it is done in a way that makes people… well, fall in love with it.
Now, here's the comparison table of these three concepts:
In the end, you'll want your users to both love your app and be ready to pay for it. And it seems like you have a tough choice selecting between an MMP or an MLP after you confirmed your hypotheses.
But if you're doing everything right from the start, the only major difference between MMP and MLP is design. It should be just brilliant. In most cases, it's easier to invest in making your design brilliant from scratch.
Bonus:
MVE: Minimum Viable Experience, a term that focuses on what a user feels when using your product. If such feelings are positive, you can expect users to come back and reengage with your product later.
MVF: Minimum Viable Feature. Once you've rolled your product out, you might have a certain hypothesis regarding a separate feature. So you use minimal resources to quickly add an MVF to your product and analyze users' feedback to see if it indeed brings important and clear value.
Acronyms for Better Product Building Process: POC, USP, DOD
Earlier, we've been talking about MVP, a version of your product that helps check your initial hypothesis. In product strategy consulting, we often suggest building something as simple as an email collecting script on an existing site first.
However, if you're building something completely new, you also need to make sure that this idea is feasible. In other words, everybody wants a cheaper car, but can you build one without sacrificing its reliability and other aspects? To check it, you'll need to build a POC, or Proof of Concept.
A POC is often shown to investors to attract money for further development. Hence POC is an extremely important milestone in your product roadmap.
And if you're building something that exists already or had been invented before, what is going to be the main convincing argument for your customers to buy your new product? It might be the price, or a feature, or brilliant design — whatever it is, it's your USP or Unique Selling Proposition.
Finally, if we're talking about software development, chances are you're not going to be the one writing actual code for your product. In this case, you'll need to properly communicate what you want to the development team. The most common way to do this is to decide on the DOD, or Definition of Done, for every task.
Simply put, DOD explains what is needed for a task to be done, and it contains as many details as needed to avoid any ambiguity and uncertainty. For instance, if we’re talking about code, DOD will describe how this code should be written, compiled, submitted, reviewed, etc.
DOD helps teams to have predictable progress, increase the estimated accuracy, and overall work more effectively.
Bonus:
DOR: Definition of Ready. This is a set of requirements that must be met for a task to be ready for taking into work. It usually requires a ticket to be open in your issue tracking system, design assets to be prepared, DODs to be written down, etc.
WSJF: Weighted Shortest Job First. A popular approach with an acronym rarely used in verbal communication, WSJF helps prioritize your tasks by putting the ones that bring the most impact for the least effort first.
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Most important KPIs: LTV and CAC
Let's say your product has hit the market and gained some traction among users. To figure out how successful it is, a digital business analyst will first determine its KPIs, i.e. key performance indicators. They can vary a lot for different products in different industries. At the same time, you invest in marketing, sales, design, development, and every aspect of your product can also have performance indicators.
To get an overall understanding of your product success enter LTV, or customer lifetime value. This KPI shows how much revenue a single customer brings during their relationship with your product or business. Here is the most common formula for it:
LTV = Purchase value x Number of purchases (per year) x User lifespan (in years)
Thus, LTV focus can help you understand the bottleneck of your product and what you should invest into more. For instance, in the case of SaaS applications, the LTV formula can show the effectiveness of the onboarding process, overall usability, and value of the product over time. In other cases, low LTV might provide insights on how to care more about your users, either by improving the quality of your support services or delighting them with surprises like discounts, early access to new versions, etc.
Then, there's CAC, Customer Acquisition Cost. It shows how much you pay to attract a new user to your product. To find it, you'll need to sum up the efforts you put to make your customer pay for your product. In most cases, it includes marketing expenses, but often you will also sum up things like software costs and wages.
Once you calculate CAC, you need to compare it with your LTV. Your business can be deemed viable and successful if your LTV is higher than CAC. Otherwise, you need to learn more about your customers to engage them better. Alternatively, if you have no ideas on how to decrease your CAC, you can focus on increasing your LTV.
Bonus:
DAU: Daily Active Users. A helpful indicator showing how good your product is at making users come back to using it every day.
ROI: Return of Investments. A key business indicator showing the profitability of your product.
Bottom Line
Let’s reiterate the suggested acronyms in a simple table.
Though we tried to present those acronyms in an easily readable format, the amount of them might still be overwhelming, and that's OK. Slang is usually learned with everyday practice, not by reading vocabulary. However, you might still want to bookmark this page for later use in case you'll hear those acronyms again.
