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Risk is one of the biggest problems in marketing—and business as a whole.
While it can never be eliminated completely, it can be hedged against. And the best marketers, and business leaders, know how to do this well.
One of the best ways is by using the minimum viable project (MVP) process.
The MVP concept was popularized in the world of startups by Eric Ries in a book called The Lean Startup.
[Twitter “What Are Minimum Viable Projects?”]
I’d like to share a story from my upcoming book, The 10x Marketing Formula, that perfectly captures why MVPs are so valuable (especially for us marketers):
In 1981 American Airlines was in dire financial straits. They were low on cash and high on expenses. This is never a good place to be. To pull themselves from the money pit, they cooked up what seemed a clever, homerun of a marketing campaign. To get millions dripping into their coffers, they offered unlimited first-class travel for life for $250,000.
To most of us, a quarter-million bucks sounds steep (and it’s roughly $600,000 in today’s dollars). However, to the consumers who spend as much time in the air as they do on the ground, this was an incredibly good deal.
A Los Angeles Times interview recounts one of the frequent flyers who took advantage of this deal:
“We thought originally it would be something that firms would buy for top employees,” said Bob Crandall, American’s chairman and chief executive from 1985 to 1998. “It soon became apparent that the public was smarter than we were.”
The unlimited passes were bought mostly by wealthy individuals, including baseball Hall-of-Famer Willie Mays, America’s Cup skipper Dennis Conner and computer magnate Michael Dell.
Mike Joyce of Chicago bought his in 1994 after winning a $4.25-million settlement after a car accident.
In one 25-day span this year, Joyce flew round trip to London 16 times, flights that would retail for more than $125,000. He didn’t pay a dime.
“I love Rome, I love Sydney, I love Athens,” Joyce said by phone from the Admirals Club at John F. Kennedy International Airport in New York. “I love Vegas and Frisco.”
American Airlines soon went upside down on this big bet—and they still kept it going for nearly ten years!
This historic marketing blunder is a good lesson for us 10x marketers. Because this story is far from an isolated incident.
Here’s how it goes. A giant X-factor company puts loads of money into a big campaign. Problem is, this campaign does more harm than good. And whether money is lost from lack of sales, or poorly projected financial impact, the big bet goes belly up.
This stage of The 10x Marketing Formula is called the Minimum Viable Project (MVP), and will help you test ideas, challenge assumptions, and fail fast. This way, you can figure out what works, and what doesn’t, before you invest hundreds, thousands, or even millions, into marketing campaigns or projects destined for failure.
A common misconception about MVPs is that they’re a shitty version of the envisioned project.
The accusation is that if your overarching goal is to build a Boeing 787 for people to fly around the world on, an MVP would be trying to sell a paper airplane with a promise it can do the job just as well.
This couldn’t be further from the truth.
In a recent interview, author Ash Maurya put it like this:
For me, the MVP is the smallest solution you build that both creates value for your customers but also captures some of that monetizable value back—whether in the form of actual money or in the form of data like what Facebook does, which they then turn into actual money down the road. That still is perfectly fine. Can I create value and can I capture some of that value back?
In doing this, the idea can be either validated or proven wrong. Thus rescuing you from the trap of sinking ungodly amounts of money, time, and effort into a plane that wasn’t going to fly in the first place.
At their essence, MVPs are a way of quickly validating ideas by producing the minimum number of features (or content) to satisfy customer or audience needs.
The best startups in the world are excellent at minimizing risk.
The riskiest thing a startup can do is go dark. Meaning they’re in the workshop with the doors locked, the windows closed, the blinds drawn, building their product. They’re hard at work, but they’re spending months building something they think is going to resonate with their target customers.
But just like American Airlines did, they’re making a huge, risky bet their assumptions about the market’s response are correct.
Instead, MVPs allow you to quickly ship a project with just enough substance to validate whether or not people will respond positively to your work.
For American Airlines, they could have used this principle to test their costly gamble. Instead of a lifetime offering, they could have simply sold a limited number.
First, sell one hundred, then test! They would have quickly learned that their assumptions as to who would buy these high-price tickets were way off base.
Sure, they would’ve taken a brief hit in the wallet. But wouldn’t losing revenue for a month be better than losing it for a decade?
The service was designed to be a real-time question-and-answer platform specific to locations. So, if someone was on their way into downtown LA late in the evening, they could shoot out a question about what restaurants are still open. Then, people who were already in downtown LA could answer—all in real time.
However, like every idea, there was a big assumption that the platform’s success hinged on: that people would actually answer stranger’s questions!
For Localmind, it would’ve been a huge, expensive gamble to build the platform on a hunch that people would actually use the service as intended.
So, it was time for an MVP.
Here’s how Croll and Yoskovitz describe it:
“The team looked to Twitter and ran an experiment. Tracking geolocated tweets (primarily in Times Square, because there were lots of them there over several days), the sent @ messages to people who had just tweeted. The messages would be questions about the area: how busy is it, is the subway running on time, is something open, etc. These were the types of questions they believed people would ask through Localmind.”
Their response rate was high, which boosted the team’s confidence that people would answer questions about their surroundings in real time.
They validated their core idea without ever writing a line of code.
This is the power of an MVP.
In fact, at CoSchedule, we created and launched our marketing courses as MVPs.
They didn’t begin as full-featured microsites complete with modules, quizzes, video content, and tons of downloadable resources.
Instead, we built both our Social Media Strategy and Marketing Strategy courses piece by piece. First they were blog posts. Then they were webinars. And all along, we listened to audience feedback and made changes accordingly.
In the end, we validated three big assumptions:
Validating assumptions is a key tenet to the 10x marketing mindset because it minimizes risk while accelerating growth.
To adopt the MVP methodology for your team, capitalize on what startups call a lean “feedback loop.”
Lean loops help you quickly create what paying customers actually want (a novel concept, right?). This means everything from content to features to new products.
You accomplish this in three steps:
The “learn” portion of the loop is really the most important step. It represents the conclusion of the loop, and should result in actionable change to the direction of the product or project.
If you aren’t learning, you aren’t doing it right.
So, what will the result of your MVP process be? What 10x growth project ideas do you have to test? What core idea can you validate before making a big investment?
This process will save your team from investing in big projects that won’t have a commensurate return. And it will give you confidence when your core idea, or value, is validated.
MVPs are a core concept in The 10x Marketing Formula, which will be hot off the press in early 2018. If you want more uncommon insights like applying the MVP process to your marketing projects, get in on the early access list.
You will get the chance to start applying the formula straight away by transforming your mindset, getting a free copy of chapter 1, and a personal invite to our private 10x Marketing LinkedIn Group.
The 10x Marketing Formula is the quickest path to growth. So, start getting results today.
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