2017-03-29 00:00:00 Innovation English Follow the build-measure-learn cycle to test and measure the value of business and product ideas before you make big investments. https://quickbooks.intuit.com/ca/resources/ca_qrc/uploads/2017/06/Client-discusses-business-cycles-with-accountant-at-office-desk.jpg https://quickbooks.intuit.com/ca/resources/innovation/using-build-measure-learn-business-cycle/ Using the Build-Measure-Learn Business Cycle

Using the Build-Measure-Learn Business Cycle

3 min read

Product sellers are doomed to fail when they don’t know what customers want. Customers have countless reasons for disliking a brand or product, and asking for feedback is the only way to create a better plan for success. Product development is often hit or miss. Sellers who take time to measure their efforts and learn from wins and losses increase their chances of finding a business model that works.

What Is the Build-Measure-Learn Cycle?

In sales, businesses always need a way to measure success, whether it’s revenue, product turnover, email subscribers, or website visits. This transparency is key because businesses have a lot of tasks that don’t immediately result in profit. Metrics help a business figure out which tasks are effective or ineffective so they can improve performance. Businesses may focus on the wrong goals altogether and spend considerable time and money creating products that aren’t appealing to customers. The build-measure-learn cycle tests the value of an idea or product before committing to an expensive rollout. The purpose is to build a minimal viable product, measure its effectiveness, and learn what does or doesn’t work at every phase of development. Repeating this learning cycle enables sellers to keep improving until they develop the best solution.

What Is a Minimal Viable Product?

In every cycle, sellers create a minimal viable product to learn how well the idea fits a customer need. An MVP is the simplest product you can use to gain customer insight at a given stage. It can be as simple as a survey, storyboard, or landing page, as long as it provides actionable information for businesses. Continually creating and testing MVPs can help businesses decide when to move forward, abandon a product, or take an existing idea in a new direction. Before building an MVP, businesses need to research their ideas to come up with workable hypotheses. A hypothesis is a temporary guess, which businesses can confirm or disprove by collecting data and experimenting. Business plans are often filled with hypotheses about the potential value of a product, the target customer segment, and the distribution channels. Many of these elements change when product sellers better understand how and why customers use the product.

Using Customer Feedback to Maximize Learning

Customer feedback should shape the development process after every build phase. After all, a product only has value if customers can imagine using it for their specific applications. Consider the case of Unbounce, a Vancouver-based startup that wanted to make landing pages and analytics testing so easy to create that marketers wouldn’t have to rely on IT departments. Before the company actually built a market-ready product, the founders used a blog and their own conversion tests to find potential customers who were excited about the concept. Businesses can get feedback directly from customers using surveys, social media, and focus groups. They can also collect information indirectly by tracking social media engagement and purchase behaviour.

Bringing Better Products to Market

In the measuring and learning phases, businesses use testing to answer key questions about the next steps of development. For instance, how do the test results compare to the original hypothesis? Does customer feedback indicate there’s an emerging or sustainable market for the product? If not, did the testing reveal another hypothesis more likely to yield positive results? The knowledge businesses gain from testing and measuring allows them to eliminate ideas that don’t work and find ones that do. This efficient cycle leads to more focused ideas and sophisticated MVPs. Armed with customer insight, product sellers can grow from product ideas to prototypes to full launches to expanded features. With this lean method, businesses can keep financial costs to a minimum and build productive relationships that make customers feel central to the company’s growth.

References & Resources

Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.

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