Whether you work for a large organisation, at a start-up company or in a hobby project — as a product owner you’re always faced with the challenge of growth: there is an initial product with active customers/users and now you need to grow your product. The scale of economics is simple. Each new customer contributes additional revenue. But what are your options available to kick off growth?
This story provides an overview of standard approaches and tools available. To grow your product you certainly need to be aware of these approaches, though not necessarily deploy all of them. Walk through the list and choose what fits best for you.
Marketing
Success starts with a good product and marketing. Marketing is all about generating a inbound flow of leads, opportunities, deals and new users. Marketing comes in many flavours: large organisations will, traditionally, have a central marketing department supporting your product efforts. Conference talks, analysts and consultants will put you in touch with potential customers. Social marketing and blogging can build a reputation for your product that generates a stable inbound flow. Partners or customers may drive sales when they use your product. Marketing can be as simple as a good app store listing that drives downloads. Marketing is important. There is plenty of information and advice on marketing out there — this article will rather focus on growth driven by product improvements.
Net Promoter Score
Net Promoter Score (NPS) gauges how loyal your customers are. While applicable to any provider-consumer relationship, e.g. boss-employee, the NPS is typically used to measure how likely a user will recommend a product or service.
The NPS is gathered from existing users via survey in just one question: “On a scale of 0–10, how likely is it that you would recommend X to others?”
Users that give you a 6 or below are detractors, scores of 7 or 8 are called passives, and 9 or 10 are promoters. The NPS is calculated by subtracting the percentage of detractors from the percentage of promoters. Example: if 45% of respondents were promoters and 20% were detractors, your Net Promoter Score is 25.
NPS comes with a great advantage: it is clear, straightforward and cannot be mistaken. However, it also comes at the cost of doing a survey. Users do not like surveys. Running surveys to get a current NPS is time consuming and expensive, can be nearly impossible on a small user base without annoying users. To avoid the pitfalls, data collection should happen on small samples of the overall user base or embedded in another process such that it doesn’t appear as a survey to the user.
Delighted and SurveyMonkey are great tools to collect NPS data from your users.
A/B Testing
With A/B testing you can compare variants of your product. To find out what works best you create two or more product variants, track and and compare their performance on a large user base. For example, you may find that certain colors on buttons lead to significantly higher conversion/purchase/signup rates. So you use that color for your buy-button.
The real power of A/B testing comes with continuously validating product evolution in a large user base. You build multiple variants and measure their impact, ultimately choosing the best option to continue with.
To use A/B testing look for offerings related to your particular area of interest. For example, mobile app stores and landing page providers usually have integrated A/B testing facilities. Also look for tools like Optimizely or Google Analytics which you can integrate into your product.
Viral Loops
Ideally, your product is self-distributing in a way where the activity of current users spurs new users to join the system. There are endless ways of achieving this: functions to invite new users, social integration to spread the word, incentives for user referrals or any sort of growth hack that will cause existing users to pull new users into the system.
The impact of a viral loop can be measured by the viral coefficient. It accounts for the amount of new invites to the system, the conversion rate, churn rate and the turnaround speed of the cycle. Analyzing and optimizing viral aspects can be highly beneficial to generate growth for your product.
The internet provides entertaining stories about products that deploy viral loops to increase distribution and market impact. Some products add viral aspects to an existing core, others are viral by design and made for the pure sake of viral distribution.
However, even in today’s world there is a valid space for products that fulfill a purpose that does not contain viral loops by design. Not every user activity needs to go public or requires inviting other users. When investing to make a niche product ‘go viral’ you are usually not investing in the core features. Keep in mind that only good products with happy users will truly benefit from viral loops.
Understand your Churn
The ugly sibling of viral growth is churn: reality does bite — users not only join your product, they also leave. The value of adding new users is eaten up by users that abandon the product. The worst case is users leaving right after they joined, they come at the usual cost of user acquisition but contribute near-zero revenue. Churn tends to be undervalued. Understanding the reasons for churn is essential for product growth: to keep the user count stable you need to add 1% growth for each percent of user churn.
Understanding why users leave will enable you to improve your product and keep these users — or improve your marketing such that you’re not paying to acquire these churn users. Analyzing churn is difficult: departing users will have no motivation to give you feedback for improvement. Only when things are really messed up departing customers will yell and complain at you — so always listen to complaints. They may not save that customer but help you avoid future churn. Try to analyze lost deals and politely approach leaving customers for insight.
Talk to your Customers.
There is one activity that will always be a good choice and never be a mistake: talking to your customers. Either in person or by phone, email or chat. You can extend the customer journey by creating storyboards and user journeys. Understanding your customers’ point of view is of upmost priority for product growth.
Getting Feedback to decide what to build next
As a product owner you will have plenty of ideas floating around on your desk. Some are small, some are large, others are strategic game changes and sometimes it’s just a request for improvement you received from an existing customer. Before deciding on what to build next make sure you get customer feedback: check how many customers are interested in an idea, check how excited they are about the idea and whether the idea needs further refinement before it is 100% on spot for what they need.
When collecting feedback from your customers they not only help you deciding what to build next, this may also generate an upfront pipeline for upgrades or upsales.
Send a Doodle to your customers or use tools like Productific and ProdPad to share your roadmap, get feedback and find out what to build next. Whatever you decide to build next, check you consider effort-benefit-risk.
Plan a Roadmap. And change it.
Managing your product roadmap is a daunting task. You face ever-changing priorities, new customer requests, capacity limits and financial constraints. Some roadmap features are easy to build and provide incremental improvement, other features on your roadmap may be a game change but consume huge resources. For all roadmap items make sure you analyze cost, benefit and risk.
Use a simple task lists like Trello or Google Keep to start managing your roadmap. Look at sophisticated roadmap management offerings like Aha! and Roadmunk when needed.
So, what do I do next?
Your approach to grow needs to be tailored to your needs, choosing the right mix of the many approaches available. In the above list go from bottom to top: product first, growth tactics later. Check which approach can give fast value to your product, open new perspectives and is feasible with your given financial/capacity constraints. You can seek advice of service providers, hire a growth role or simply manage your product towards growth in small sustainable steps. Experiment with different strategies and keep trying new things. Most will fail and it will never be ‘perfect’ but you will find what works best and creates growth for your product.
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