The Time Value of Shipping: A Framework for Product Managers

The Time Value of Shipping: A Framework for Product Managers

Shipping is a Feature, a core principle for product managers, that emphasizes the importance of delivering imperfect products to customers because what matters most is their use of the product. To apply this principle effectively, we can turn to the concept of the Time Value of Shipping.

The Time Value of Shipping is a framework that recognizes the fact that one dollar today is worth more than one dollar tomorrow. This is because prices rise with inflation over time, leading to a decrease in purchasing power. Similarly, delivering customer value now holds greater significance than delivering value later.

When we choose to delay shipping, we must account for the impact of inflation on user expectations. As time goes on, customer expectations grow exponentially, fueled by the availability of substitute products. The longer customers have to wait for their problem to be solved, the more likely they are to switch to a competitor's offering.

In addition, the scope of a minimum viable product (MVP) expands the longer it takes to ship. Take the example of the tangent point where user satisfaction intersects with the product's capabilities. If the launch is delayed, the expectations of users rise, and the eventual product needs to be significantly better to compensate for this inflation of expectations.

This realization often leads to what is known as the "gap of doom," where companies realize they cannot keep up with the pace of their industry and are forced to pivot. They shift their focus to a market where customer expectations are more attainable, in order to continue innovating and delivering value.

However, it is important to note that not every MVP should be shipped immediately. The time value of shipping suggests that sometimes it is more optimal to hold off on a launch, even if it meets expectations. This is particularly true when considering the network effects that come with launches. After the initial marketing push, these effects diminish, and delaying the launch can allow for a more impactful and successful release.

To summarize, the Time Value of Shipping highlights the importance of delivering customer value now rather than later. It emphasizes the need to consider the inflation of user expectations over time and the potential complications that arise from delayed launches. By understanding and applying this framework, product managers can make informed decisions about when and how to ship their products to maximize customer satisfaction and success.

Now, let's shift our focus to another important aspect of growth hacking - metrics. While it is tempting to focus on vanity metrics such as total users, daily active users (DAU), and monthly active users (MAU), these numbers do not provide meaningful insights into growth rate or user quality.

Instead, growth hackers should pay attention to four key metrics that can truly drive growth and assess the quality of users:

• 1. Daily Net Change: This metric reveals the daily growth or shrinkage of your user base. By analyzing new user acquisition, re-engagement, and retention, you can understand the impact of each component on your current growth rate. This metric provides a comprehensive view of your growth and helps identify areas that require improvement.

• 2. Core Daily Actives: This metric focuses on users who consistently use your service on a regular basis. By calculating the number of users who have used your service today and have also used it five or more times in the past four weeks, you can determine the core group of users driving your growth. This metric helps you understand the loyalty and engagement of your most valuable users.

• 3. Cohort Activity Heatmap: This insightful metric displays how your user retention curve evolves over time. It allows you to track changes in user retention and identify patterns or trends. By analyzing the cohort activity heatmap, you can better understand the effectiveness of your retention strategies and make data-driven decisions to improve user retention.

• 4. Conversion Funnel Tracking: While not specifically mentioned in the content, tracking the conversion funnel for important flows is crucial for growth hacking. By monitoring the conversion rates at each stage of the funnel on a daily basis, you can quickly identify any adverse changes. Even a small difference in conversion rate can compound over time, impacting your overall growth rate.

In conclusion, growth hackers should prioritize actionable metrics that provide insights into growth rate and user quality. By focusing on metrics such as daily net change, core daily actives, cohort activity heatmap, and conversion funnel tracking, growth hackers can make data-driven decisions to drive sustainable growth and improve user retention. Remember, it's not just about satisfying customer needs; it's about delighting users and reaping the rewards of virality.