How to Grow Your Product

Growth is a key responsibility for any product manager. If a product is not growing, why would a company need someone to manage it? The company can have engineers or administrators maintain the machine. This article covers how you can drive business growth by driving product growth.

Measuring growth

A company’s financial success is a byproduct of delivering value to customers. For many companies, product is the primary vehicle for delivering this value. Product growth is driven by short-term desire, and long-term love, for an elegant, indispensable solution to the customer’s most painful problems.

Measuring how well your product is performing as a solution is challenging because you are dealing with emotional humans. Predicting how people will feel is difficult. How often can businesses predict the next blockbuster movie, viral meme, or app that resonates with the masses and takes off? Even if we could hear the thoughts in everyone’s heads, we would still struggle with deciphering the emotions flooding them during an experience.

Because it’s difficult to measure complex emotional states and dynamics, we use proxies to estimate how a product is doing. Product teams should ask users their thoughts and feelings (surprisingly underutilized). Teams should also observe and quantify user behavior, particularly patterns of recurring and predictable behaviors, habits, not random or infrequent events.

Use a metrics framework to manage growth

Organize your key metrics using a framework. One popular framework for consumer app startups is “Pirate Metrics” (or variations, such as AARM). Use a framework that is appropriate for your business and product models (e.g., don’t blindly apply a B2C framework to a B2B business).

It’s easy for product managers to convince themselves that driving engagement is random and unknowable. Despite the jargon, the approach is straightforward. For example, if you are the owner of a bar, you might ask:

• Acquisition: How do I get people to know and care about my bar enough to decide to visit?
• Activation: How do I get visitors to realize how great my bar is — having the aha moment(s) upon enjoying a delicious cocktail, meeting a beautiful stranger, and feeling like this is their new go-to spot?
• Retention: How do I get first-time customers to return next weekend, and again each week?
• Monetization: How do I financially capture the value created for satisfied patrons? What are the opportunities beyond getting customers to spend more on food and drinks?
• Referral: How do I get patrons to love my bar so much that they tell all of their friends and bring others for their first visit?

There will be a unique and nonlinear progression of your product’s growth. During each phase of the lifecycle, different metrics will be the most important (e.g., the One Metric That Matters). Your job is to discover the most important levers (and pull them) to deliver core value to your customers as much and often as possible. Then harvest this growing value as realized revenue.

Manage your metrics and progress using a Key Metrics Tracker. Below is an example for a health clinic management software platform. This product helps patients manage their care and staff to support them:

You’ll notice that the metrics are organized by the phase in the user’s journey. The user’s and business’ journeys run in parallel. Metrics on the left are leading indicators (e.g., early engagement) while those on the right are lagging indicators (e.g., CSAT, NPS, financials).

Below the section for “Patients” are sections for “Agents” (clinic staff) and “Providers” (doctors). Each section represents a user persona in the multi-sided product model.

Drive growth by managing user segments

A simple way to think of growth is: ↑ User base (# users) * ↑ Conversions ($ per user)

You’ll need to focus on both factors, but optimized conversion rates will asymptote (I’ll cover this subject in a separate article). Thus, you’ll often achieve quicker results by starting with easy wins to increase your user base.

To increase your user base, focus on the quantity and quality of users in the various stages of the funnel:

• ↑ New Users: Build awareness and interest, drive a decision, and call to action to increase prospects entering your world from top-of-funnel sales and marketing activity.
• ↑ Current Users: Activate these New Users, retain active users, and re-activate Dormant Users to make this segment your largest.
• ↓ Dormant Users: Decrease the number of formerly active users who are slipping away due to disengagement. Re-market and re-engage these users to activate them once more as Current Users.
• ↓ Churned Users: Decrease the number of lost souls. These people are not recoverable unless there is a material change to supply (e.g., your product, competitive landscape, new rules to the game) or demand (e.g., evolving customer expectations, new demand drivers such as a global pandemic). Avoid acquiring the wrong type of users in the first place by iterating your top-of-funnel strategy to target prospects who are a better fit with your unique value proposition. Eliminate operational issues (e.g., product bugs, bad customer service). Also, proactively refer Churned Users to alternative solutions so they don’t detract New Users or dilute your brand for Current Users.

Here are the user segments in different parts of your funnel:

Kick-start the engine of growth

The best way to grow your product is to make sure it clearly communicates and delivers incredible value (10x the alternative). Identify and unblock issues preventing your customer from understanding and receiving this value. Complete this step first, so you don’t waste resources trying to attract new users who won’t stick around.

For many business models, user retention is a key driver of growth. Initially focusing on retention over acquisition is capital efficient. Acquiring a new customer can cost five times more than retaining an existing customer. Meaning, if you have a leaking hot tub, it’s smarter to plug the leaks before filling it with water.

Growth is built brick-by-brick by keeping customers happy and adding new customers accretively. For most products, “there is no silver bullet, only a lot of lead bullets.” Your engine for growth is the virtuous cycle of engagement-retention-referral.

Kick-starting this engine is key for optimizing the bottom of your funnel. Keeping (and adding) customers in this cycle of value exchange (solution for money) will allow your business to:

• Increase customer satisfaction and goodwill
• Increase revenue (and pricing power)
• Decrease marketing costs due to increase in word of mouth and shift from paid to free media
• Increase the base from which to amortize the fixed costs of the business
• Increase profitability and predictable cash flow

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