• Product/More/Users
• Team/Fewer/Bugs
• Company/Fewer/Support Calls
If you get answers like this, you’re going to run the exercise again.
Don’t get me wrong. These are reasonable responses. They’re exactly what I expect when I run the exercise for the first time. The problem is that they’re not easily addressable. You want more money! Sure, join the club. It’s not terribly exclusive.
So iterate. But this time, you’re going to push people to be more specific. You want them to dig a little bit more deeply into what those goals mean.
The company needs more money. What are you doing to get the money? Raising it from investors? Getting it from customers in exchange for products? Generating recurring revenue in the form of a second sale to existing customers? Converting free trials into paid subscriptions?
Your product needs more users. What sort of users do you need? Power users? New users? Retained users? Engaged users? Paying users? Mobile users?
You may want to run the exercise a few times, having people concentrate on getting more and more specific each time.
Keep running it and pushing for more specific answers until you start getting answers that could be translated into things like:
• The product needs a significant increase in conversion from paid ad campaigns.
• The product needs more customers who perform at least two actions with the product on a daily basis.
• The company needs a decrease in the number of support tickets filed against a specific feature (with no increase in the number of support tickets filed against related features).
• The company needs to be able to ship physical goods to customers within five days.
What you have just done is to start to identify a measurable and achievable business need for your team.
This is the first step in the process. Too often, companies fail to take this first step and jump straight to things like “adding features” or “redesigning the product.” The problem with skipping step one is that you won’t have any way of measuring the success or failure of your future work. You can’t know whether you’ve succeeded if you don’t know what success means.
But it’s not enough just to pick a goal. That’s why I asked you to have your team drill down into specific needs. The business need that you select needs to be both measurable and achievable in order to be useful in determining success.
Why Measurable?
There are entire books written about the right way to collect analytics and metrics, and this is not going to be one of them, although you will find an overview of useful metrics information in Chapter 11, “Measure Better.” Whether you’re measuring with off-the-shelf tools like Google Analytics, or you’ve created your own system for tracking the metrics you care about, or you have an entire team of data scientists at your disposal, you need to have some way to assess your progress objectively.
More than that, you must be able to measure whether or not your specific change created the improvement. In other words, it’s not enough just to know that company revenue improved. You also have to have strong evidence that the things you did made that change happen.
For example, if I own a company making fuzzy, footie pajamas, I can predict that my sales will increase dramatically from November to December. I cannot, however, take credit for that increase, since even I hesitate to take credit for Christmas. However, if I create a special marketing campaign that I release to a certain percentage of random users, and those users spend more than others who didn’t see the special marketing campaign, then I can measure the exact impact of my marketing campaign on sales.
Unless we measure what effect our changes have on our product or company, we can never truly know that what we are doing is making things better.
Why Achievable?
You could measure whether your company, in general, makes more money. In fact, many people’s bonuses depend on whether the company as a whole hits a target. But unless you work in a very small startup with only one product, the chance that a single team can move the needle on company revenue is vanishingly small.
This doesn’t mean your efforts aren’t important! It’s just that even the best product decisions can be offset by a bad decision in another department. We’ll address how to minimize the danger of that a little later on, but the important thing to remember is that we’re picking targets that we can not only measure but also that we can reasonably expect our teams to hit.
If your team works on features exclusively for power users, it’s probably a bad goal to increase the number of new user conversions. Select something that directly relates to the work your team does on a daily basis.
Unless a need is achievable by your team, you’re setting yourself up for failure and disappointment by tackling something that is out of your control.
Quantifying the Business Need
Now that you know your measurable and achievable business need, you’re going to determine how to change it.
To do this, you need to understand the stages through which a visitor to your product goes while transforming into a serious, long-term, retained user. Or rather, you need to understand the stages through which you would like that user to go. This is the ideal path a person could take from potential customer to die-hard, long-term fan.
PRO TIP
If you were having difficulty picking a business goal in the previous exercise, making a User Lifecycle Funnel can make things clearer by showing where users are abandoning your product. This may help you spot some of the biggest opportunities for improvement.
To visualize this process, you need to make a User Lifecycle Funnel. Here’s an example in Figure 1.2.
The User Lifecycle Funnel for your product will not look exactly like this. We’ll get to how you create yours in just a minute. But I want you to imagine the process and the person who would go through it.
There is a person out there in the world who would benefit from using your product. This person is a potential user. What do you have to do to take a potential user and turn that person into a retained, revenue-generating customer who is a big fan of your product?
Well, first, they have to become aware of your product. Then they need to understand enough about it to know that it might solve a problem for them and decide it’s something they want to try. They might try it out or engage with it in some way and realize that it’s for them. They might then convert into a real user by giving you some information about themself. They might even generate some revenue by paying you. That would be nice. And finally, if you’re lucky, or you’re very good at your job, they might keep coming back year after year so that your product becomes a part of their life.
FIGURE 1.2 Behold the User Lifecycle Funnel.
What’s great about having a User Lifecycle Funnel for your own product is that it can help you track where people are falling off this path. You do this by adding the real metrics for your product at each stage of the funnel (see Figure 1.3).
In this example, 1,000 people are becoming aware