Understanding Consumer Products and the Power User Curve: Keys to Success

Understanding Consumer Products and the Power User Curve: Keys to Success

Consumer products are unique in the sense that everyone has an opinion about them. As consumers ourselves, we often find it easy to criticize and point out flaws in different products. However, for a product to succeed, it takes more than just consumer opinions. It requires thoughtful conviction, the ability to identify latent consumer needs, and a determination to prove the naysayers wrong. The products that manage to overcome these challenges often become huge outliers in the market.

In the world of consumer products, engagement is a crucial metric for success. The Power User Curve, also known as the activity histogram or the "L30," is a powerful tool for understanding the engagement levels of users. This curve represents users' engagement by the total number of days they were active in a given month. It ranges from 1 day to all 30 days, or whatever the duration of the month may be.

Power users, who are highly engaged and contribute significant value to the network, play a vital role in the success of many companies. While the common metric of dividing daily active users (DAUs) by monthly active users (MAUs) can give a general idea of engagement, it has its limitations. This metric fails to capture the variability among users, from those who are slightly engaged to power users.

Social products with frequent user engagement, such as social media platforms, are well-suited for monetization through advertisements. The high number of users returning frequently allows for a substantial number of impressions, which can support an ad business. Therefore, successive Power User Curves should ideally show users shifting towards the right side of the smile, indicating increased engagement.

However, not every company needs to have a smile-shaped Power User Curve. Different product categories have different user behaviors and expectations. For example, platforms like LinkedIn may not have users actively checking it on a daily basis, but that's acceptable because their business model is not tied to daily usage.

Analyzing the Power User Curve in different timeframes can provide valuable insights. Some products, particularly SaaS and productivity tools, may benefit from analyzing engagement over a 7-day period, while others may require a 30-day analysis. Additionally, plotting the Power User Curve for different weekly or monthly active user cohorts can reveal trends and improvements as network density or liquidity increases in a network effects product.

It's important to note that the Power User Curve should not solely focus on app opens or logins. Instead, it should be based on core activities that reflect the true engagement and value users derive from the product. As the CEO or product owner of a platform, it's crucial to design the product in a way that allows all users to have a chance to succeed. The Power User Curve highlights the heterogeneity among user segments, providing insights into the nuances of different user behaviors and preferences.