How to Measure and Prioritize Growth by Intercom Sr Product Manager

‘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 Senior Product Manager

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

It’s easy to get trapped in a mess of metrics and processes, but at it’s core, growth is about making something people want.

So what does growth PM actually mean? PM is typically about getting a new product off the ground, whereas growth PM is about helping to connect existing customers and new customers with the core value that the product provides. At its core, growth PM is about that value, and it’s vital for Growth PMs to not lose sight of it.

Measuring growth doesn’t have to be complicated, and it comes down to four simple facets:

  1. Measure the right things
  2. Measure things right
  3. Keep the customers you already have
  4. Solve customer problems

1. Measuring the Right Things

To understand how to measure growth properly, we can use a super-simple funnel:

Measuring Growth: A Super Simple Funnel

Acquisition, or, getting new people to the product, is the easiest thing to measure. We can define it as ‘how many people have ever used the product?’ So naturally we can measure it with downloads/signups.

Engagement is proof of recurring value, when people keep coming back to your product. This is a little more complicated to measure, as it involves analysing customer behavior: how often they come back and how frequently.

Finally we have retention. Are you keeping your customer or not?

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, and are the real measure of success for a product manager.

So as you think about the metrics, understand the range of metrics we look at in product. While a lot of focus is placed on acquisition, as a Product Manager you should be focusing primarily on engagement and retention.

2. Measure Things Right

The leaky bucket model

The reason why we need to focus on Engagement and Retention rather than Acquisition can be explained with the leaky bucket model.

When you acquire new users, you get to put them into a bucket. The users that stay in the bucket are engaged, and keep coming back to use your product again. Retention is represented by the holes in the bottom of your bucket, where unengaged users fall through.

If you had a real life leaky bucket, you wouldn’t focus on pouring more and more water into it. You’d try to plug the leaks, else all of the water would eventually flow out, and you’d have wasted all of your efforts.

This is what happens when you’re solely focused on gaining new users, and you’re not taking care of the ones you already have.

Retention is not as easy-to measure as acquisition, but without it your bucket will leak and your product will collapse.

The meaning of ‘active user’

What you should have in your bucket are ‘active users’, but what does it really mean to be an active user? How can we define that? It’s important that you measure activity in the right way.

It’s not about downloads, or people who open your website and leave your website immediately. It’s someone who actually got the value that your product is supposed to provide.

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.

Retention Curve graph

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.

The Product-Impact Model

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.

Did you enjoy this talk? You can find many more like it on our YouTube channel!

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