The Challenges of Consumer Product Metrics and the Importance of Product Channel Fit in Growth Strategy

Hatched by Kazuki
Sep 15, 2023
4 min read
4 views
Copy Link
The Challenges of Consumer Product Metrics and the Importance of Product Channel Fit in Growth Strategy
Introduction:
Consumer product metrics play a crucial role in determining the success of a product. However, these metrics often present challenges, with high rates of user disengagement and low conversion rates. In this article, we will explore why consumer product metrics are often considered terrible and how product channel fit can make or break a growth strategy.
The Dilemma of Consumer Product Metrics:
When analyzing consumer product metrics, it becomes evident that many users refuse to sign up for a product in the first place. Even if they do sign up, over 90% of users become disengaged and inactive over time. Mobile apps may have better engagement metrics, but they often struggle with lower upfront conversion rates. This discrepancy can be attributed to the fact that homepage traffic is usually driven by word of mouth, resulting in higher signup rates. However, engagement rates remain a challenge, with only a small percentage of users actively using the product on a daily basis.
Engagement and Frequency:
Engagement and frequency are critical factors in determining the success of a product. It is not uncommon for more than 90% of users to churn or only be active a few days per month. Achieving a daily active user (DAU) rate of 10% or higher is considered a success, although more often than not, it falls below 5%. To improve engagement and frequency, it is essential to integrate the product into users' pre-existing behaviors rather than asking them to adopt new ones. This approach increases the likelihood of sustained usage.
The Challenge of Building a Dynamic News Feed:
A significant hurdle in creating a healthy, dynamic news feed is the fact that a considerable percentage of users do not know anyone else on the platform. This necessitates the need to backfill their feed with content from a single source or impersonal content. The 1% rule, where only a small percentage of users generate content, further complicates the task of curating an engaging news feed. Instagram, despite having 65% of its users disconnected from others, managed to become one of the most viral products in recent history.
Product Channel Fit and Growth Strategy:
Product channel fit plays a pivotal role in the success of a growth strategy. A company that has achieved product channel fit can generate over 70% of its growth from a single channel. It is crucial to understand that products are built to fit channels, not the other way around. This means that companies must adapt their products to align with the channels they utilize. Quick time to value and enabling virality through short viral cycles are key factors in achieving product channel fit. Additionally, products benefit from network effects, where the value increases as more users join. User-generated content and motivation to contribute further enhance product channel fit.
The Power of Prioritization:
To succeed in finding the right channel, it is essential to prioritize and focus on one or two channels at a time. Many companies fail to find distribution channels that work, but if they manage to nail one, they can build a great business. Seeking diversification for the sake of diversification is not advisable. Product channel fit, like other fits, is constantly evolving and can break as new channels emerge or old ones become obsolete. Companies like Zynga, PopCap, and King have survived, but transitioning to new channels took them a significant amount of time, allowing competitors to capture some opportunities.
Conclusion:
Consumer product metrics present significant challenges, with low sign-up rates and high user disengagement. Achieving strong engagement and frequency requires integrating the product into users' existing behaviors. A dynamic news feed can be challenging to curate, especially when a significant percentage of users lack connections. In the pursuit of a growth strategy, product channel fit plays a critical role, with companies relying heavily on one dominant channel. Prioritization and adaptation are key to finding the right channel, as diversification for the sake of it can lead to failure. To succeed, companies must monitor and adapt to the ever-evolving landscape of product channel fit.
Actionable Advice:
- 1. Focus on integrating your product into users' pre-existing behaviors to improve engagement and frequency.
- 2. Prioritize and tackle one or two channels at a time, seeking the power law channel that can drive significant growth.
- 3. Continuously monitor and adapt to changes in the product channel fit landscape to ensure long-term success.
In conclusion, understanding the challenges of consumer product metrics and the significance of product channel fit is crucial for companies aiming to build successful products and grow their user base. By addressing these challenges and utilizing actionable advice, companies can overcome hurdles and establish a strong foundation for sustainable growth.
Resource:
Copy Link