What is a good product and how can a good product make money for a company?
|
Any business model and product that is not aimed at making money is rogue. But what is a good product? We have users, traffic, stickiness, and also AR PU value? How do good products make money for a company? Today we will talk about the commercial value of the product. Why are we talking about this topic? I don’t know if you have heard such information from the Internet or various news clients, or from your friends, that various companies (especially many startups ) have good products and their business is developing rapidly. However, there may be an unavoidable hurdle: the product cannot be monetized and cannot obtain the value that investors and the company originally expected. In other words: countless product developers spent a long time working on UI and UE; our brothers and sisters in development and testing stayed up late and worked overtime to make the products and push them in front of everyone. But in the end, it’s not that everyone didn’t work hard, but that when the product faced the market, the market acceptance was very low. Today we are going to talk about this issue and share my views on this matter. I hope that we can discuss it together and see how we can do better. Let's start with two questions Let’s look at two questions first: First, why were seemingly okay product projects shut down and transferred within the company? Second, a startup company has received millions of dollars in capital, made a good product, has a certain number of users, and the users like the product, but why does it feel that the capital is not optimistic enough? I have encountered and heard a lot of such things in the past few months. As product people, we actually encountered a hurdle. Everyone did a good job in the first stage, which I call the first stage of the product, called passing the "user barrier." At this time, we are really doing product experience design: it is enough as long as users feel that "it is very pleasant and enjoyable to use". In fact, many products also need to take this first step, and this is the first stage that every excellent product manager must go through. But in the second stage, the products we make must ultimately generate value, and they need to pass their "development stage." At this time, it is not that users do not recognize you, but whether the market and capital recognize you. At this time, your product is actually going through the "life and death test". The issue involved here is the product value chain, or in other words: it is necessary to commercialize the value of the product in some way. Here is a simple example: There are some different kinds of shops with great bourgeois feel all over the country, mainly coffee shops. These coffee shops are generally very small, and some of them have disappeared after being open for a while. The problem it encounters is that the experience for this small group of people may be very good, but this store does not make money, and no one will continue to do business that loses money. Looking back at what has happened in the past six months, everything has been more intense than expected, just like the original carnival. First, Didi and Uber . You have been using these two products for more than a year, or even two years, and today they have finally merged. Before the merger, neither Didi nor Uber was making any money. So the first thing they did after the merger was to raise prices. Second, the crisis of LeTV. When the stock market was booming last year, LeTV really got out of control. Its total market value is equivalent to that of Weibo, 360 and Sina. Even the market value of these Internet companies combined is not as high as it. But today everyone has seen the crisis that it has caused: the business has expanded too much and too much money has been burned. Although it has gained a large number of users at the terminal, the entire supply chain has begun to distrust it. Let’s take a look at the takeout food we come into contact with every day, whether it is Meituan , Baidu Nuomi or Ele.me. A few months ago, I saw advertisements in the company’s elevator every day, especially Ele.me. But in recent months, it all disappeared suddenly. We see that even those companies with huge user base, high brand awareness, and money to burn are adjusting their strategies; not to mention the countless startups that failed in the angel round, A round, B round, and C round. Many of my former colleagues and friends have also closed their companies recently. Another thing: the entire industry is conveying the message of a capital winter. Everyone is thinking: We spent so much money and created so many good products (or we think they are so good), why don’t we get the due return in the market? Here are some data and information about venture capital from Goldman Sachs: From the third quarter of 2011 to the third quarter of 2016, we can see the growth of the entire investment curve. The bar chart below shows the amount, and the number above shows the number of invested companies and projects. It peaked in the third quarter of 2015, then began to drop sharply from the fourth quarter, and then gradually declined. This is the situation around the world. More specifically, it divides the situation into different situations in America, Europe and Asia. As you can see from the purple line, there is more investment in Asia and North America, but investment in North America has dropped by about 30%, while it is even more in China. The difference will be even greater in the amount of investment. We dropped from about 15 billion to 7 billion, almost in half. In fact, the number of investment companies has not been reduced by half, but the amount of investment has been reduced by half. The third piece of information: China’s information from Q3 2015 to Q3 2016. At its peak in Q3 2015, it invested in approximately 141 projects with a total amount of 10 billion. However, by Q3 2016, the total investment was less than half of what it was then, or just over 30%. The investment projects also dropped by almost half. This is actually an industry trend, and I would like to take this opportunity to tell everyone: as a good product manager, you must be sensitive to numbers. Being sensitive to trends and numbers can help you make a lot of product plans (to better improve your product) and increase your ability to be accepted by users and the market. What is a good product? Let’s go back to the topic of what a good product is. Back to this question, these things are actually related to your data (the product I am talking about today can be regarded more as a project rather than a specific app or a function). To be a good product manager, you cannot just look at the users the product is facing, but you must separate the environment it is in and its contribution to the market, rather than just saying that I have made a beautiful thing. ▍Answer: What is a good product? What kind of product is a good product? WeChat is a good example, with users and traffic stickiness. But even with WeChat, Tencent has been thinking over the past period of time: WeChat costs Tencent tens of millions of US dollars a month, so how can it create value for Tencent? Of course, after exploring in the past one or two years, there are now many ways to monetize on WeChat, including advertising, games , official accounts , and other life services, including payments and so on. We will also see some smaller, simpler products that are more targeted at niche areas. They may not have such a good father with money to burn every day. When there are no such resources, what do you rely on? So I think a good product also has an ARPU value: it should be able to generate direct value and benefits through your product. Otherwise, every bandwidth you spend, every engineer you use, and every UI you use will become a significant cost for the company. Over time, we will encounter some of the problems we discussed at the beginning: why people are becoming less and less interested in good products and good projects, and less and less willing to invest. So now that we have these great products, how do we demonstrate their value? Before we commercialize our products, the product value must include three aspects to be relatively complete: users, partners, and the company. Only when these three aspects are done well can your product be truly successful. Looking back, any good product in the world will take these points into consideration very well. There may be a certain order of priority, but a complete product includes all of these. Distorted values We will also encounter a problem: when we are creating product value, there is a distorted value: many products provide crazy subsidies to users. After providing subsidies, what habits do they cultivate in users? In fact, it cultivates a habit of taking advantage of others in you. Does it really cultivate users to use your product to solve problems? Or does it train you to improve your user experience? Even when I take a taxi myself, I will only use the company that offers the highest subsidy. I think their experience doesn't make that much difference to me, but the subsidies they provide really do have a big impact, so I think this is a very distorted value. At that time you have acquired users, but these users may not really be coming for your product. I don’t know if you have seen another product in your city: ofo, and Bluegogo in Shenzhen, including the Mobike that we use most. Now a fierce battle has started. This competition has become a bit vicious. They are copying each other, attracting users, and engaging in price wars. We should think about: Can such a product form a closed loop in its App? In a competitive environment, such a product may face the same situation as Didi and Uber in the future. It is undeniable that they make really good products and the experience is also very good. As a user, I am willing to use it, it solves a lot of convenience problems for us. But from a business perspective, can this thing last for a long time? Can it last for 3, 5, or 10 years? These all need to be questioned. ▍Making money for the company So we have done a lot of groundwork before, talked about some major trends in the industry, and talked about some of the values that products should have. Looking back, I think: A truly qualified product manager should be focused on making money for the company. You do a great job, your boss recognizes you, and the project manager thinks you do a good job. And because you do this very well, your friends and your team will benefit from it, and everyone will like you more and more. There is no way around this: create value for the company and capital to gain profits . Anyone who starts a company, makes investments, or develops products essentially wants to make a profit. We also hope that our salary today is 6,000 or 8,000, and we hope it will reach 10,000, 20,000, 30,000 or 50,000 tomorrow. This is the value we need to pay for what we do. There was an American TV series before, called "Who Created America", which was a documentary. It roughly talks about who created American history in the 100 years from 1850 to 1950. The protagonists of the story are all business tycoons, including Rockefeller in the oil industry, railway business, electricity business, steel tycoon and other industries. They explained very clearly the real considerations and competitive situations when they were making products and running businesses. Maybe many classmates will say, I am just a small product manager, profit, revenue, traffic, many things are decided by my boss, the market has already decided, I have no influence on it. But from another perspective: as a product manager, you should not just think of yourself as a process in the entire product business (yes, even if you can only do so much, your boss and the market will decide everything for you). Today, maybe you are also a junior product manager and you need to practice some skills; for example, you need to know how to provide a good user experience, how to interact and communicate with designers, and how to integrate your resources. This is the foundation. For example: Today, Baidu Search is definitely the core product of Baidu, but as it grew from the very beginning and went through the previous step (the basic part of the product manager), the boss spent a lot of energy, but the countless small innovations in the middle came from the accumulation of every product manager who worked on it. To date, Baidu gives a million-dollar award every year to the product manager and his product team who can think from the overall business level and provide help to the business on each project, and it is also the highlight of the annual meeting every year (so I think such a large company still attaches so much importance to it, and in fact many companies will gradually pay attention to it). Even if you are not a key person today, and you are not the product manager who makes the final decisions; but you know the logical thinking behind these thoughts, you can make decisions that affect your company, and your product approach to thinking, which I think may be of great help to you (at least when you challenge your boss or colleagues one day, you will have a basis and logic, and no one can refute you when you tell these reasons). Let’s look at this god-like figure, Steve Jobs. No one should be able to deny that he is a god-like existence. We cannot deny his genius, obsession and persistence towards products. But when he was forced to leave, the biggest reason was that he had invested a lot of manpower and resources in making Lisa and Macintosh, but these products sold very poorly and the entire company suffered huge losses. Later he returned to Apple and created a global peak in the next ten years. In fact, it was also because he reduced the products and projects he controlled, reduced the use of personnel, and reduced costs. His customized iMac product became the fastest-selling personal PC in history, and brought Apple back on the right track. When he is making products, in addition to his devilish pursuit of product details and materials, there is a deeper layer in his thinking. He knows what kind of product is a good product. It is not that we like to put it in the cupboard, but that the product is really liked by the public. Consumers are willing to pay for your product and are willing to pay to use your value. This is the best thing. Looking at products from a financial perspective The second question is that when we think about product commercialization, I suggest that all product students must learn and get used to looking at products from a financial perspective. Let me give you an example: At the beginning of the year, WeChat started charging fees for cash withdrawals. It works fine, why charge? In fact, there are some financial data behind this: Tencent's revenue in 2015 was over 100 billion yuan, and its profit was over 30 billion yuan, with a profit-cost ratio of about 46%. Baidu's revenue in 2015 was only over 60 billion yuan, and its profit was also over 30 billion yuan, with a profit-cost ratio of 102%. This is a huge gap. The transfer fee on WeChat is too high because banks charge a handling fee, which has caused Tencent’s costs to increase by 35% to more than 40 billion yuan. So by the fourth quarter of 2015, its revenue costs had increased by 52%, costing it more than $10 billion. So it decided to charge a 0.1% handling fee on WeChat starting March 1st. Based on these numbers, Tencent made product adjustments on WeChat. Let's take a look at the recent changes caused by this adjustment: In the third quarter of this year, Tencent's revenue has reached 40 billion (last year Tencent's full-year revenue was only 100 billion, but this year's third quarter revenue is 40 billion), and its profit is more than 10 billion, an increase of 43% over the same period last year. It is just this small WeChat transfer fee that reduces most of its expenses. This is the financial logic behind the features when we design products. Baidu's revenue is declining, the first negative growth in its history. Their profit growth today is the lowest in history and is almost negligible. So you may see more strategic contraction and adjustments in Baidu's products in the future. The numbers behind these often determine what kind of treatment you will receive for the products you make in the company and the projects you are involved in. Some people say: Although my products are not making money now, they are the future of the company and we must invest in them. There is a limit to this kind of thing and a time limit. When we are making a product, have we ever thought that the entire product team only has 5, 8, or 10 people, but we actually want 20 people just because we cannot complete all the functions? I would like to advise everyone: when your product does not have a clearer, commercializable model, try to reduce the scale of the product unless its number of users is increasing dramatically. If not, or there is no hope of explosive growth, try to keep your own products, projects, and teams at a small scale so that they can survive longer. Maybe you have a team of 5 people and the company spends $100,000 on you a month. However, if it is a team of 20 people, the company may spend 500,000 yuan on you per month. The pressure your project faces at this time is not just the pressure you feel when making the product yourself. It is also very obvious when the company makes budgets, distributes bonuses, and makes other budgets every year. So I suggest that when your product is not yet mature, you should try to keep the product scale small, and always pay attention to and remind yourself of the company's input and output of your product. How do good products make money for a company? There are some popular and literary products, including Xunlei itself. Let’s see how they are monetized. ▍Flow products First, let’s talk about Weibo Weibo was extremely popular in 2010 and 2011. Because of Weibo, Sina’s stock price increased fivefold in two or three months. But after WeChat became popular, its stock price fell back to its original level. When Weibo was spun off and listed, its stock price was very low at the beginning. However, this year, Weibo completed the commercialization of its product very well, and its valuation has increased almost five times from the beginning of the year to now, surpassing its earliest imitator Twitter, which has made Weibo burst into another kind of vitality. There are actually many ways to monetize on Weibo, including advertising, traffic, and spontaneous promotion. Every time I post a Weibo, it asks me if I want to promote it. If you want to promote it, how much will it cost if 100 people see it, how much will it cost if 500 people see it, and how much will it cost if 1,000 people see it. So, I think everyone should study Weibo carefully. Second, WeChat I think WeChat’s life services, its media function (especially self-media , which plays a big role in this regard), and its role in directing traffic to e-commerce and games are much stronger than any other product that WeChat had before. Tencent’s annual revenue growth, especially the growth in mobile game revenue, is closely related to WeChat. Tencent's revenue has reached hundreds of billions, and it can still grow by several tens of percent every year. This value is brought to it by WeChat. Other applications Let’s look at some other high-end apps, such as MONO, Curiosity Daily, and Daily Eyes Opening. These three applications are very literary and artistic applications with excellent product design. I personally like these three products very much. When I was using it, I found that they were also iterating rapidly, and their commercialization was iterating as rapidly as their product design. Like Curiosity Daily, it has adjusted several versions and scales from its initial commercialization to now. Daily Eyes has been purely ad-free since the beginning, but in the past six months, I have also found that it has tried many different models, such as recommendation ads, e-commerce, and other models. Not to mention MONO, it recommends a lifestyle. These high-end products are now also in a hurry to iterate quickly. Although they have investors and companies supporting them, they also hope to make money for the company after getting through the initial stage. ▍Social product: Momo’s commercialization Let’s take a look at Momo, which is the most familiar to everyone. Momo’s commercialization is a little unfamiliar to everyone. Momo’s commercialization was successful at the beginning, and it started with a membership system just like Xunlei. But the biggest income comes from two other things: One is a game. After you enter Momo, you will be recommended very simple and straightforward games, such as Fishing Master, Bullfighting, and other games that have a gambling nature. Games are the biggest source of money that Momo makes besides membership (if you pay a little attention when installing, you will find that Momo’s recommendations in games are really simple, direct and crude. He does not have good game development capabilities, but Momo has taken a very clever approach). The second one is even more amazing: live streaming . It directly grafts the most popular things, and I don’t think there is any sense of incongruity in doing it; when you can’t make appointments to chat with strangers, you can spend your time and money well in live broadcasts. If you have paid attention to their company's stock, it has been like a roller coaster this year, almost 4 times higher from the lowest point to now. This is actually the entire market's recognition of this product. Such products are very vital in the market. ▍Tool product: Thunder Let’s take a look at Xunlei (of course, I am not the person directly responsible for Xunlei’s mobile phone business, but our colleagues are working very hard). Mobile Thunder has only been developed in the last two years, and we found that users only want to download when using Thunder. Xunlei now has tens of millions of active users every day, and the cost of running this product is tens of millions a month, which is very expensive. However, simple advertising attempts simply cannot meet the needs of the market or the needs of company operations . We finally found Tencent, and many of the conversion experiences that you see on Thunder now actually come from Tencent. We have learned a lot from them, and recently our products have started to improve, and the level of attention we receive in the company has also changed. For users, there may be some dissatisfaction in the process. I believe that after a period of adjustment and experimentation, it will definitely find a better way, which will allow users to use it better and find a place where the market will recognize it more. How to tap into the commercial value of non-independent closed-loop APP products? I think the product we saw earlier is an independent closed-loop App product. Simply put, you only need one App, and this product does not rely on a third party, so you can keep users in it completely. But I believe there will still be many people making non-closed-loop apps. What is a non-closed-loop app? There is a category of smart hardware made by everyone, which means that your App must rely on another hardware or service to be implemented. The second type of non-closed-loop app is a product like O2O . Users place an order in your app, but the entire experience is not actually over; it ends when the takeaway is delivered and you go to the site to pick it up. This is different from having complete control over an independent app. How can we create the commercial value of such a product? Simply put: we need to be an even better e-commerce company while providing excellent product experience. You need your App to be able to sell your own products well. All of Xiaomi’s apps have recommendation sections, telling users that they can buy the product or where to buy it. A particularly typical example is Xiaomi's TV box. Every time I watch the Xiaomi TV box, as long as I stop, a variety of product recommendations will be displayed in the middle. Although I feel a little disgusted, I can still tolerate it. Moreover, through this constant brainwashing, I will have a better understanding of Xiaomi's products. I think this is a non-closed-loop independent App product. You cannot control the hardware part (this may be done by other departments), but as a product manager, you can better maximize the commercial value of such a non-independent closed-loop App, and you have a more proactive voice. In this way, we will not be restricted by the fact that the hardware is not selling well, so the App is not good; conversely, although the hardware may not be well made, the App has helped users understand and know us to the greatest extent possible, and can be used very well. Mobile application product promotion service: APP promotion service Qinggua Media information flow The author of this article @易鹏宇 is compiled and published by (Qinggua Media). Please indicate the author information and source when reprinting! |
>>: How should APP push messages?
Recommend
What skills do event planners need to have to get a high salary?
What is the core competitiveness of event plannin...
How to operate an App from Fenda
1. Introduction Looking back, from the popularity...
What is Web Hosting? What are the advantages and disadvantages of shared hosting?
After the website is completed, where should it b...
The cost of leads is so low! Beauty training information flow delivery case
The National Day is coming soon. This article wil...
How can CPC and OCPC grab market share?
Friends who work in search advertising know that ...
Tips on how to get an operational plan with millions of PVs!
There are two types of information platforms on t...
How to promote videos on Bilibili? Guide to promoting videos on Bilibili!
Bilibili is a video community based on creation, ...
Commonly used data templates and software in Chaoge SEM bidding daily work
The following are the data templates and software...
Community operation methods and mainstream community types!
The main members of online fan communities are yo...
50 financial secrets to comprehensively improve your wealth!
Money is not everything, but it can solve most pr...
Master the user portrait knowledge system from 0 to 1 in one article
I took a course on user portraits some time ago, ...
Practical Tips | Things to do to improve conversion rate (Part 1)
User motivation and resistance analysis When user...
How to use email marketing automation tools to enhance software company sales?
SaaS company sales are divided into "interna...
Simple brick-moving 0 virtual project, as long as you spend your precious time, it is only a matter of time before you can do it
Today a member came to me to get some information...
2020 Shanxi Province College Entrance Examination Results Release Time: When to Check College Entrance Examination Results on July 24
On July 20, the Provincial Admissions Examination...