Types of Consumer Software products
In my last article, I talked about MVPs and the types of products that product managers build from a market/organization’s perspective. This got me thinking about the various types of products and as always, my brain started organizing them based on themes.
Let us dive into the classifications right away!
Typically, Software products that exist today can be classified into 3 broad categories:
- Attention Seeking products
- Transaction based products
- Productivity based products
Attention Seeking products:
Industries such as Digital media, Social media, Online Gaming, etc. typically fall under this category. The goal of such products is to seek your attention. The business model is to typically capture the user’s attention and monetize them through either advertisement or subscriptions.
Reputed publications such as The New York Times, The Washington Post, etc. have chosen the subscription route, as there is a trusted following for their content in the market. The driving principle for acquiring customers/users to buy into such subscriptions is through rich content worthy of the audience. These publications appeal to a select target segment of the market and serve them well. The acquisition itself is a freemium model, where a portion of the content is delivered free to the users on a pre-determined cadence.
The second model is the advertising model. Here the content is free for the user, however, the user pays the price to the organization through their data These organizations run targeted ads against the content or the user. Social media sites like Facebook, Instagram, YouTube, SnapChat are notorious for their advertisements. Of late, there has been a rising trend of thought-leaders from various sects of the society calling out these platforms/media outlets for their callous handling of the rising tensions in this world.
There are other models as well — sometimes organizations choose a combination of the above two. But, in essence, these products typically seek to harp on the attention of the users. So, all the features built for these products have one guiding principle — how do we increase engagement on our product/platform by existing/new users?
So, typically, their key results are measured against DAU/MAU (Daily Active Users, Monthly Active Users), Time on a page, Time per session per user, Page views per user, etc.
Transaction based products:
These types of products are the bulk of the world we see around us. eCommerce and Banking are the two most widely and wildly popular industries under this classification. Some other industries such as fitness, Travel, Home consumer market, Food, Lifestyle, etc. also fall under this classification.
The primary objective of such products is to help users/customers finish an action that the product intends to provide. For example — in eCommerce, the primary action is to enable the user to buy a product. In a food-based app, the objective is to allow the users to find a restaurant and order food. In a fitness-based app, the user intends to lose/gain weight, stay/eat healthily.
The business model of these applications are generally two-pronged:
- Offer the application for free, but increase the propensity to finish the transaction
- Offer the application for a fee on a subscription, but offer the transactions for free
In the first model, every interaction is directed to ease out the customer to complete the transaction. eCommerce, Lifestyle, food, and travel fall under this category. For example, Amazon offers the fastest checkout experience — they went to great lengths to patent their “One Click” buy so that the customer finishes the transaction fast. This strategy also increases the possibility to get the customer again. Uber lets you choose your destination and ride type and books the trip, then, matches you with the closest driver.
In the second model, the application is a subscription application aimed at a target segment. For example, a customer may have to pay a monthly subscription to track their calorie intake — myFitnessPal. This subscription model may sometimes also be freemium offering — offer a portion of the product for free, but pay a small fee monthly/weekly for a more advanced set of features. The goal of such a transaction-based product is to acquire the customer and help them in their discovery journey. Once, such customers become “engaged” customers, nudging them into a subscription and retaining them with special features or benefits will ensure sustained revenue growth.
Typically, the guiding result for such Transaction-based applications/products is conversions. The companies may play around with different pricing models to attract different customers in different situations. Other typical results that are measured are transactions per visitor, Frequency of transactions, etc.
Productivity-based products
This is the third type of classification that encompasses products that motivate, let, encourage or simply aid users to be more productive. Some examples include, but not limited to, project management software, customer service software, etc. Products such as Microsoft Word/Excel/Powerpoint, Gmail, Calendar apps, To-do lists, Trello, Jira, Aha, Slack, Grammarly, etc. all help users be more productive.
Most, if not all, of these products, typically follow a Subscription model. The famed Microsoft Office moved away from a software one-time buy bundle to an online cloud-based subscription model. These companies can either take a Freemium model or a trial-to-upgrade route, depending on the strategy of the said organization and the competition within their market.
These products track engagement and task completion as their measures of success. They track Daily Active Users vigorously as that number directly impacts their ability to scale and succeed. One notable feature that is common or predominant across these applications is their “Help” section. It is generally a comprehensive how-to of the entire product, plus helpful tips on shortcuts. This feature, I believe, is critical to the success of these products, as the more usable these products are, the more adoption these products garner.
Finally, there may be other types of products that may fall out of these classifications, but typically, these are the three broad classifications of software products. Some products may be a combination of one or all of these above classifications too. For example, weChat may be primarily an Engagement/Attention seeking product, but when you pay a friend or use the application for a transaction, you are using the application as a transaction-based product.
As a product manager generalist, you must stay true to the intersection of UX, Tech, and Business and understand the intention of your product stack. The decisions you make as a product manager will have a lasting impact on the product and the users who use your product.
What are some other types of software products you have dealt with that do not fall under these categorizations? Have you had experiences where you transitioned a product from one to the other and what was driving your decision?
