Why Consumer Product Metrics Are All Terrible: Insights from Goodreads

Why Consumer Product Metrics Are All Terrible: Insights from Goodreads

Goodreads, the popular social networking site for book lovers, has experienced tremendous growth since its inception in December 2006. Founded by Otis Chandler and Elizabeth Khuri Chandler, Goodreads quickly gained traction and by December 2007, the site boasted 650,000 members and 10 million books added. However, despite its success, Goodreads, like many consumer products, faced various challenges when it came to measuring metrics and user engagement.

One of the common metrics used to evaluate consumer products is the signup rate. A typical product may see 90% of users refuse to sign up, indicating a low conversion rate. Even among those who do sign up, over 90% of users eventually become inactive and disengage over time. This trend is not limited to Goodreads alone but is prevalent across various consumer products. Mobile apps, for instance, often have better engagement metrics but lower upfront conversion rates. When it comes to the homepage, higher signup rates are expected as the traffic is usually generated through word-of-mouth referrals, with people actively seeking out the product to try it.

Engagement and frequency of usage are crucial factors in determining the success of a consumer product. However, it is common for a large percentage of users, often over 90%, to be disengaged on a daily basis. Many users churn or are only active a few days per month. Achieving a daily active user (DAU) percentage of more than 10% is considered a success, but it is not uncommon to see engagement rates as low as 5% or even lower. To improve engagement and frequency, it is essential to tie the product into users' pre-existing behaviors rather than asking them to adopt entirely new habits.

Another challenge faced by consumer products, including Goodreads, is the lack of personal connections within the service. It is surprising to discover that often 50% or more of users do not know anyone else using the same product. This necessitates the need to populate users' feeds with content from other sources or impersonal content. Goodreads, despite being a social network for book lovers, also faced this issue. In fact, even Instagram, one of the most explosively viral products in recent history, had a staggering 65% of its users disconnected from anyone else. This lack of personal connections further complicates the task of creating a vibrant and engaging news feed.

The 1% rule, which states that only a small percentage of users will actively contribute content, adds to the complexity of creating a thriving community and dynamic news feed. When the majority of users do not author content, it becomes challenging to curate a feed that caters to everyone's interests and preferences. This struggle is not unique to Goodreads but is a common problem faced by many consumer products.

Despite the challenges inherent in measuring metrics and fostering user engagement, Goodreads has managed to overcome some of these obstacles and achieve substantial growth. By July 2019, the site had an impressive 90 million members, a testament to its ability to address the "discoverability problem" faced by publishers. Goodreads' approach of leveraging user-generated book recommendations and ratings has proven effective in guiding consumers in the digital age to find books they might want to read. Unlike Amazon's recommendation system, which includes books a user has merely browsed or purchased as gifts, Goodreads' rating system is based on solid data and user preferences, resulting in more accurate and relevant book recommendations.

In conclusion, the challenges faced by consumer product metrics are not limited to Goodreads but are prevalent across various platforms. The low signup rates, high user disengagement, and difficulty in creating personal connections within the service are common issues. However, by leveraging pre-existing user behaviors, focusing on engagement and frequency, and utilizing solid data for recommendations, consumer products can overcome these challenges. To improve metrics and user engagement, here are three actionable pieces of advice:

1. Tie the product into users' existing behaviors: Rather than asking users to adopt entirely new habits, find ways to integrate the product into their pre-existing routines and behaviors. This will increase the likelihood of engagement and regular usage.

2. Focus on engagement and frequency: Aim for a daily active user percentage of at least 10% to consider it a success. Explore strategies to increase engagement and encourage users to return to the product regularly.

3. Leverage solid data for recommendations: Utilize user-generated data and preferences to provide accurate and relevant recommendations. This will enhance the user experience and increase the chances of users staying engaged with the product.

While measuring consumer product metrics may be challenging, with the right strategies and insights, it is possible to create a thriving and engaging user community. Goodreads' success story serves as an inspiration for other consumer products, showing that it is possible to overcome the inherent difficulties and achieve substantial growth.