‘Growth’ is a great business buzzword, but it’s a very real thing which Product Managers need to feel comfortable with. That means measuring and prioritizing! Robbie Allan came to Product School to demystify the concept of Growth in Product Management, and tell us how to do it right.
Meet Robbie Allan
Robbie Allan has been working in product growth for the past ten years. Previously he worked with Zynga in the development of the Facebook game, Farmville. Before that, he also ran a mobile team in SurveyMonkey. Currently he is working with Intercom as a Senior Product Manager where he helps businesses chat with customers.
Making Sense of Product Growth
What’s the purpose of Product Management? We can find the answer in this very simple quote from Paul Graham, the founder of Y-Combinator.
“Make something people want.”Paul Graham
How to Measure Growth
Measuring growth doesn’t have to be complicated, and it comes down to four simple facets:
- Measure the right things
- Measure things right
- Keep the customers you already have
- Solve customer problems
1. Measuring the Right Things
To understand how to measure growth properly, we can use a super-simple funnel:
While we all like to see high acquisition rates, what’ll actually help you grow are engagement and retention. Acquisition is easy but not that valuable. Engagement and Retention are hard, but extremely valuable.
2. Measure Things Right
The reason why we need to focus on Engagement and Retention rather than Acquisition can be explained with the Leaky Bucket analogy.
The water being poured into the bucket is the acquired customers, the water coming out is the customers that are lost. Hence, the size of the bucket indicates how many customers are retained. In conclusion, it’s imperative that the rate of lost customers be lesser than the amount of acquired customers coming in. The way to make a business sustainably grow is to keep the leaks in your bucket to a minimum.
3. Keep the Users You Already Have
One way to measure the users you already have is retention curve. Retention curve is the percentage of people who are still active over a course of time out of all the customers who initially signed up. A healthy retention curve should flatten out after a certain period of time, which indicates that a certain percentage of acquired customers are still actively using the product.
You might also be interested in: Product-Driven Growth
4. Solve Customer Problems
You need to walk the walk, as well as talk the talk. Solve customer’s real problems, don’t just pretend to do so.
What Retention doesn’t look like, is a notification on your user’s phone after they’ve cancelled their subscription saying ‘We Miss You!’ They know that what that really says is ‘We Miss Your Money!’
What you should focus on is providing more value, to keep customers sticking around.
The Product-Impact Model
Usually as Product people, we come up with features that will give us a certain business result. Growth works the other way around. You’re starting out thinking about the business result you want, and deciding which features will help you achieve it.
When moving between each of these stages, you’ll need to focus on a different aspect of Product development.
- When looking to drive customer behavior, you’ll need Analysis to look into which customer behavior would drive the desired business impact.
- For solving customer problems, you’ll need to Research what problem could be solved to drive that behavior.
- Finally, Design the product feature that solves the problem.
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