Reducing Product Risk and Removing the MVP Mindset: What To Do With a High Churn Rate

Reducing Product Risk and Removing the MVP Mindset: What To Do With a High Churn Rate

In the world of product development, there are two key challenges that every company faces - reducing product risk and dealing with a high churn rate. These challenges may seem unrelated at first glance, but upon closer examination, we can find common points and connect them naturally.

When it comes to reducing product risk, it's important to understand that our approach should be different depending on the type of customer we're building for. Initial releases will never have everything teams want, but that's okay as long as we continue to iterate and provide value to users as soon as it becomes available. However, users of products are generally unreliable narrators of their own behaviors and preferences. While we can and should regularly talk to them about their problems, we have to infer solutions ourselves. We can't expect our consumers to be excellent product thinkers. As Henry Ford famously said, "If I'd asked customers what they wanted, they would have said a faster horse."

To de-risk our projects, we need to invest in understanding both the problem and the viability of the solution. Cody's design quality framework proposes that the level of investment before something reaches a customer is tied to our confidence in these aspects. This means that when building features on top of an existing product, we can be even more lightweight because we are building on a foundation that already has some level of validation. Minimum Viable Products (MVPs) and Minimum Viable Features (MVF) are important in proving that our ideas solve a problem, but if we want to unlock the full potential of our product or feature idea, we need to invest a lot more.

Now, let's shift our focus to dealing with a high churn rate. Churn can be split into two categories - customer churn and revenue churn. Customer churn refers to the number of individual customers who have deleted their accounts, cancelled their subscriptions, or not logged in for a certain period of time. Revenue churn, on the other hand, focuses on the monetary loss from these customers and measures the future transactional value that is lost.

There are several common causes for high churn rates, including competitors, false advertising, usability issues, reputation damage, reduced functionality, unmet needs, bloated price points, and poor customer service. When faced with a high churn rate, it's important to look at your options and take action to reduce the damage.

One option is to engage in damage control. Identify the root causes of churn and address them head-on. This could involve improving the product's usability and accessibility, addressing reputation damage through transparent communication, or enhancing customer service to meet the needs of your users.

Rewarding loyalty can also be an effective strategy to reduce churn. Consider implementing loyalty programs or offering incentives to customers who have been with you for a long time. By showing appreciation for their continued support, you can encourage them to stay engaged and loyal to your product.

Sometimes, a re-brand can help breathe new life into a product and attract customers who may have been lost due to previous issues. A fresh look, improved messaging, and a renewed focus on solving customer problems can make a significant impact on reducing churn.

Finally, the most important step in reducing churn is to talk to your customers. Regular communication with your users can provide valuable insights into their needs, preferences, and pain points. By understanding their perspectives, you can make informed decisions on how to improve your product and retain their loyalty.

In conclusion, reducing product risk and dealing with a high churn rate are two critical challenges that every company faces. By understanding the different approaches required for different types of customers, investing in understanding problems and solutions, and taking proactive steps to reduce churn, companies can navigate these challenges successfully. Here are three actionable pieces of advice to remember:

• 1. Continuously iterate and provide value to users as soon as possible, even if it's not the complete solution they initially wanted.

• 2. Invest in understanding both the problem and viability of the solution before reaching the customer, and be prepared to invest more if the idea shows potential.

• 3. Engage in damage control, reward loyalty, consider re-branding, and most importantly, regularly communicate with your customers to understand their needs and reduce churn.

By following these strategies, companies can minimize risk, retain customers, and ultimately build successful and sustainable products.