How to build a product from 0 to 1: Growth

It is not difficult to find growth points for any product, but which growth points will show results faster, which are more urgent at this stage, and which have a greater impact are often easily overlooked or the product managers themselves do not know. What to do is always more important than how to do it. Developing a correct growth plan that is in line with the company's current stage of development is the first step to achieving growth.

Because the products I was mainly responsible for were live streaming and voice chat social networking, I will use the example of the recently popular voice live streaming product to briefly explain how to formulate a growth plan.

1. Clarify product business goals and user value

Every product needs to have clear business goals to ensure long-term operation; every product also needs to meet user value so that users can use our products for a long time.

The most difficult part for a product manager is that he or she often needs to make decisions, such as which requirements to meet, which functional designs to choose among those with pros and cons, and how to make choices when business goals conflict with user value.

Students who are working on products in the early stages often like to make decisions from the user's perspective. In fact, a qualified product manager may need to think more about this demand or design. Is it related to our business goals? What can it bring to the platform? What can it bring to users? We need to balance the "contradictions" between business goals and user value in the short term, and make correct decisions from a multi-dimensional perspective.

In many things, business goals and user value are contradictory, but if we look long enough, we will find that business goals and user value are interconnected. Product managers need to analyze and find the intersection between the two, so as to determine our North Star goal and make trade-offs based on the actual situation of the company to achieve a win-win result.

So how do you determine the product's business goals and user value? I think you need to ask yourself three questions:

1. Who are our target users?

There are relatively few entertainment programs in the Middle East, and due to religious and political constraints, young people in the Middle East have many "implicit social needs", so our target users are mainly young users in GCC countries aged 18 to 40 who are eager to communicate.

2. What is our product positioning?

As a voice social product, its core function is multi-person voice chat rooms. Users can choose rooms based on their friends, country, and topic, and conduct many-to-many voice communication. The product positioning is also very clear, which is voice social networking in the Middle East.

3. What value can our product provide to users?

For Middle Eastern users who enjoy social interaction but are constrained in real life, the Voice Room provides them with a platform for many-to-many communication and chat. They can also use the mini-games in the room to break the ice in their social relationship chains, solving the social difficulty of communicating the first sentence with strangers.

When you are able to answer these three questions, the product’s business goals and user value will become clear, and then you can connect the two to form a closed loop. Through the closed-loop business goals and user value, we can see that as long as we can meet user value, we will eventually achieve business goals.

2. Identify the North Star Metric

The significance of determining the North Star Indicator is that we can find a clear growth direction through the North Star Indicator, determine the priority by the impact of different growth points on the North Star Indicator, and have a unified evaluation standard after the growth experiment is completed. So how do you determine your North Star Metric?

I personally think that you can refer to the several standards mentioned in the book "Silicon Valley Growth Hacker Practical Notes":

• Can reflect the core value users get from the product
• Can it lay the foundation for the product to achieve long-term business goals?
• Can it reflect the user's activity level?
• Can the improvement of indicators indicate that the company is developing in a positive direction?
• Is it simple, intuitive, accessible, and disassembled?
• Is it a leading indicator rather than a lagging indicator?

Regarding the North Star goal, it is adjusted according to the product cycle and strategy at different product stages. We can define the product cycle as the introduction stage, growth stage, maturity stage and decline stage. For example, Tantan is an app for making friends with strangers, but why has it been developing its live streaming business in recent years?

It is obvious that the Tantan app has entered a period of decline and must develop new business models to find its growth points.

We can confirm the preliminary indicators of the North Star Indicator through the closed-loop connection flow chart of business goals, user value and the product cycle: active logged-in users, active users entering the room, and active users taking the microphone.

Here I recommend a North Star indicator measurement table. Combined with the product's business model and user core value, you can clearly see the situation of your candidate North Star indicators and avoid the problem of going in the wrong direction. Of course, the North Star Metric is not static. As the product enters different life cycles, the North Star Metric should also be constantly adjusted.

Finally, we confirmed that the North Star indicator is the active users of Shangmai. Through third-party data tools, we can also see that Shangmai behavior is strongly correlated with retention, which further verifies the correctness of the North Star goal.

3. Mapping the User Journey

By mapping the process from a new user to the final North Star goal, you can see the steps a new user needs to go through to activate, and then extract the conversion indicators for each step, so that you can clearly see where the bottleneck of activation is.

When we find that the conversion rate of this user journey is too low but we can’t find an optimization solution, we can also design some novice guides based on the user journey so that every new user can experience the core process of the product.

4. Build a Growth Model

Through the composition of the North Star Indicator, the North Star Indicator is refined and summarized into a mathematical formula, so that we can think about growth in a comprehensive and simple structured way.

Based on the input variables in the growth model of the number of users who come to the microphone every day, we continue to decompose each variable until it cannot be decomposed anymore, and find all the single input variables that have an impact on growth. Finally, we can get the North Star indicator formula as follows:

Daily microphone users = Daily new microphone users + Daily old microphone users = Download volume × App launch rate × Registration and login success rate × Room entry rate × Room entry and microphone rate + Number of old users × Room entry rate × Room entry and microphone rate

5. Find the growth levers

After we sort out the input variables of the North Star Indicator, we can find that each input variable is a growth direction. Under each direction, we can sort out many growth demand points, but which growth points should we prioritize?

At this time, you need to find the growth lever. The significance of the growth lever is that you can obtain the greatest benefit with the lowest cost, so as to maximize the growth effect. We can substitute historical data into the growth formula to find the growth lever.

Based on historical data, we can understand the current North Star indicator and its input variables, and it is also easy to see where the growth bottleneck is, so as to focus our growth strategy.

As shown in the figure above, comparing the room entry rate and room entry microphone rate of new and old users, optimizing these two indicators at this stage can quickly improve the performance of the North Star indicator, because compared with other indicators, they have greater room for optimization and faster results. So at the moment, the rate of new users entering the room and the rate of new users entering the room and going on the microphone are our growth levers.

6. Prioritize Growth Needs

1. Substitute the North Star formula

After knowing the current focus indicators, we can propose corresponding optimization strategies based on the corresponding indicators. Then, how do we prioritize these optimization strategies? There are two main measurement criteria:

1. Expected impact on North Star Metric
2. The cost of strategy

For example, we have two requirements. One is to increase the room entry rate of new users and increase the room entry guidance for the first login. The other is to increase the microphone access rate of new users after entering the room and increase the microphone access reminder after entering the room for 2 minutes.

For these two growth strategies, we need to estimate how much of an improvement in the indicators can be brought about by the distribution of these two strategies. Assuming that Strategy 1's room entry guidance is estimated to increase the room entry rate of new users from 50% to 70%, and Strategy 2's reminder to go on microphone after 2 minutes of entering the room is estimated to increase the room entry rate of new users from 25% to 30%, then we can substitute them into the North Star indicator formula to calculate how much their respective increases on the North Star indicator are, and thus rank the demand priorities based on the investment costs.

• Strategy 1: The North Star Index value that can be increased by "guiding into the room" = 2w × 95% × 85% × (70% - 50%) × 25% = 807.5
• Strategy 2: "Reminder to go on the microphone after entering the room for 2 minutes" can increase the North Star indicator value = 2w × 95% × 85% × 50% × (30% - 25%) = 403.75

When both strategies require very little manpower, it is obvious that strategy one has a higher priority than strategy two. It is important to note here that comparing a one-time growth strategy with a long-term compounding growth strategy requires simulating the growth trend, rather than just comparing short-term results.

2. Demand pool template

Before outputting requirements, product managers should determine the growth indicators and the growth value they can bring. In this way, we can determine the amount of growth this indicator can bring to our North Star indicator, and then determine the priority of growth needs based on the growth amount of the North Star and the cost of investment. Here I would like to recommend the framework style of the demand pool.

VII. Final

The biggest difference between a growth product manager and an ordinary functional product manager is that growth products are data-driven business growth, while ordinary functional products are solution-driven.

The era of making snap decisions and imitating competitors' products at a granular level is over. To achieve growth, we need to find key growth indicators, constantly propose hypotheses, and verify data based on scientific growth methods and plans.

"Everything is an experiment. Through it, you either achieve growth or learn experience." This sentence is what I have been using to encourage myself when doing growth practices after reading "Silicon Valley Growth Hacker's Actual Notes". Now I share it with my classmates who are on the road to growth. Regardless of whether your attempts at growth are successful or not, as long as you have the courage to try, you will always gain something for your product and yourself.

Author: Qu Hui

Source: Silicon Valley Growth Hacker Practical Notes