Build Better Products: A Modern Approach to Building Successful User-Centered Products

By Laura Klein

It’s easier than ever to build a new product. But developing a great product that people actually want to buy and use is another story. Build Better Products is a hands-on, step-by-step guide that helps teams incorporate strategy, empathy, design, and analytics into their development process. You’ll learn to develop products and features that improve your business’s bottom line while dramatically improving customer experience.

• Language: English
• Publisher: Rosenfeld Media
• Release date: Nov 1, 2016
• ISBN: 9781933820453

Laura Klein

Laura has spent 15 years as an engineer and designer. Her goal is to help lean startups learn more about their customers so that they can build better products faster. Her popular design blog, Users Know, teaches product owners exactly what they need to know to do just enough research and design.

Book preview

PART I

The first piece of the puzzle is understanding your goal.

Goal

In order to build something great, you have to know what great looks like. For most businesses, that means creating something that is either profitable or that fulfills a specific strategic need for the company.

It’s generally at this point that I get asked, But what about nonprofits? Or governments? It’s true, nonprofits and government agencies shouldn’t be focused on turning a profit. That doesn’t mean that they don’t have a goal. Maybe it’s educating more children or distributing more medicines. Their needs are defined by the mission of the organization.

For-profit products, on the other hand, have at least one very specific need—to take in more money than they spend.

This section will help you determine your business need, which will create the foundation for building a better product.

CHAPTER 1

Defining a Better Business Need

Exercise: Creating a Measurable and Achievable Goal

Quantifying the Business Need

Exercise: Defining Your User Lifecycle Funnel

The User Lifecycle Math

The Dangers of Starting from the Business Need

Expert Advice from Christina Wodtke

There are a lot of different methods for defining your business need, but there’s only one goal. You need to understand the primary thing about your business that you should improve right now.

Sometimes you don’t need to go out of your way to determine your business needs. They’re sent down to you from on high. The CEO declares that this quarter the company will focus on a specific type of revenue or on cutting costs. The SVP of the department says you have to hit an annual revenue target. Your boss hands you a set of goals for your team.

In those cases, your task is to figure out how you, working on your specific product or in your specific business unit, can contribute to the goal that has already been defined for you.

Of course, if you’re the CEO, or if your company’s only quarterly goal is survive until next quarter, your job is a little bigger. You need to decide what your single point of concentration is going to be.

Why? Because having a single, achievable goal will simplify your decision-making process. More on that later.

To determine that goal, we’re going to run an exercise. You’ll find a lot of exercises in this book. You should try to run all of them. More than that, you should run most of them with your team.

First, I want to say an important word about teams. When I describe teams, I use titles like product manager, designer, researcher, and engineer. Those may or may not be the members of your team. Maybe you have a product owner or a project manager or a scrum master or a creative director or a principal scientist or a machinist. That’s great. Include them.

The people who should be running these exercises with you are the people you work with every day to build a product. These are people who are actively involved in making decisions about who your user is and how the product should work for that user.

For some exercises, you’re going to bring in external stakeholders who don’t work on the product every day but who have important input. These might be people from the legal department or from finance. Your company might not even have those departments. Again, use your judgment.

I also assume that you, the person reading this book, are someone who is making a lot of decisions about how the product will work and how the team will work together. You might be a product manager, a designer, an entrepreneur, the head of an innovation team, or dozens of other things.

The titles aren’t important. What’s important is making sure that the people who are making product decisions have all the information they need to build the best product they can.

EXERCISE

Creating a Measurable and Achievable Goal

Whether you’re determining a business goal for your company, your entire product, or just for your own team, it’s important that everybody agrees what the goal is. This is an exercise I like to run with new teams to find out what people think they should be doing.

Gather your team together and ask them to complete whichever of the following questions is more appropriate to your team.

If you do not currently have any goals set by somebody higher up in the company, have them finish this sentence:

RUN THE EXERCISE: GOAL CREATION

TIME TO RUN

30 minutes

MATERIALS NEEDED

Sticky notes, Sharpies

PEOPLE INVOLVED

Product managers, designers, researchers, engineers, stakeholders, data scientists (where available)

EXERCISE GOAL

Determine a measurable and achievable goal for your team to focus on.

If I could wave a magic wand, our company/product would have more/fewer _________.

If you do have an overarching goal or metric that has been assigned by someone else, like a quarterly revenue or growth target, have them finish this sentence:

In order to reach our company target, our team/product should have more/fewer _________.

Have everybody on your team independently take three minutes to write their answers on sticky notes—one set of answers per note (see Figure 1.1).

FIGURE 1.1

Write each set of answers on its own sticky note.

Next, have everybody on your team read their various stickies aloud and put them on the wall. Try to group related ones together.

PRO TIP

If anybody wrote product/more/features, fire that person immediately.

Some likely responses to this exercise will be:

• Company/More/Money!

• Product/More/Users

• Team/Fewer/Bugs

• Company/Fewer/Support Calls

If you get answers like this, you’re going to run the exercise again.

Don’t get me wrong. These are reasonable responses. They’re exactly what I expect when I run the exercise for the first time. The problem is that they’re not easily addressable. You want more money! Sure, join the club. It’s not terribly exclusive.

So iterate. But this time, you’re going to push people to be more specific. You want them to dig a little bit more deeply into what those goals mean.

The company needs more money. What are you doing to get the money? Raising it from investors? Getting it from customers in exchange for products? Generating recurring revenue in the form of a second sale to existing customers? Converting free trials into paid subscriptions?

Your product needs more users. What sort of users do you need? Power users? New users? Retained users? Engaged users? Paying users? Mobile users?

You may want to run the exercise a few times, having people concentrate on getting more and more specific each time.

Keep running it and pushing for more specific answers until you start getting answers that could be translated into things like:

• The product needs a significant increase in conversion from paid ad campaigns.

• The product needs more customers who perform at least two actions with the product on a daily basis.

• The company needs a decrease in the number of support tickets filed against a specific feature (with no increase in the number of support tickets filed against related features).

• The company needs to be able to ship physical goods to customers within five days.

What you have just done is to start to identify a measurable and achievable business need for your team.

This is the first step in the process. Too often, companies fail to take this first step and jump straight to things like adding features or redesigning the product. The problem with skipping step one is that you won’t have any way of measuring the success or failure of your future work. You can’t know whether you’ve succeeded if you don’t know what success means.

But it’s not enough just to pick a goal. That’s why I asked you to have your team drill down into specific needs. The business need that you select needs to be both measurable and achievable in order to be useful in determining success.

Why Measurable?

There are entire books written about the right way to collect analytics and metrics, and this is not going to be one of them, although you will find an overview of useful metrics information in Chapter 11, Measure Better. Whether you’re measuring with off-the-shelf tools like Google Analytics, or you’ve created your own system for tracking the metrics you care about, or you have an entire team of data scientists at your disposal, you need to have some way to assess your progress objectively.

More than that, you must be able to measure whether or not your specific change created the improvement. In other words, it’s not enough just to know that company revenue improved. You also have to have strong evidence that the things you did made that change happen.

For example, if I own a company making fuzzy, footie pajamas, I can predict that my sales will increase dramatically from November to December. I cannot, however, take credit for that increase, since even I hesitate to take credit for Christmas. However, if I create a special marketing campaign that I release to a certain percentage of random users, and those users spend more than others who didn’t see the special marketing campaign, then I can measure the exact impact of my marketing campaign on sales.

Unless we measure what effect our changes have on our product or company, we can never truly know that what we are doing is making things better.

Why Achievable?

You could measure whether your company, in general, makes more money. In fact, many people’s bonuses depend on whether the company as a whole hits a target. But unless you work in a very small startup with only one product, the chance that a single team can move the needle on company revenue is vanishingly small.

This doesn’t mean your efforts aren’t important! It’s just that even the best product decisions can be offset by a bad decision in another department. We’ll address how to minimize the danger of that a little later on, but the important thing to remember is that we’re picking targets that we can not only measure but also that we can reasonably expect our teams to hit.

If your team works on features exclusively for power users, it’s probably a bad goal to increase the number of new user conversions. Select something that directly relates to the work your team does on a daily basis.

Unless a need is achievable by your team, you’re setting yourself up for failure and disappointment by tackling something that is out of your control.

Quantifying the Business Need

Now that you know your measurable and achievable business need, you’re going to determine how to change it.

To do this, you need to understand the stages through which a visitor to your product goes while transforming into a serious, long-term, retained user. Or rather, you need to understand the stages through which you would like that user to go. This is the ideal path a person could take from potential customer to die-hard, long-term fan.

PRO TIP

If you were having difficulty picking a business goal in the previous exercise, making a User Lifecycle Funnel can make things clearer by showing where users are abandoning your product. This may help you spot some of the biggest opportunities for improvement.

To visualize this process, you need to make a User Lifecycle Funnel. Here’s an example in Figure 1.2.

The User Lifecycle Funnel for your product will not look exactly like this. We’ll get to how you create yours in just a minute. But I want you to imagine the process and the person who would go through it.

There is a person out there in the world who would benefit from using your product. This person is a potential user. What do you have to do to take a potential user and turn that person into a retained, revenue-generating customer who is a big fan of your product?

Well, first, they have to become aware of your product. Then they need to understand enough about it to know that it might solve a problem for them and decide it’s something they want to try. They might try it out or engage with it in some way and realize that it’s for them. They might then convert into a real user by giving you some information about themself. They might even generate some revenue by paying you. That would be nice. And finally, if you’re lucky, or you’re very good at your job, they might keep coming back year after year so that your product becomes a part of their life.

FIGURE 1.2

Behold the User Lifecycle Funnel.

What’s great about having a User Lifecycle Funnel for your own product is that it can help you track where people are falling off this path. You do this by adding the real metrics for your product at each stage of the funnel (see Figure 1.3).

In this example, 1,000 people are becoming aware of the product, maybe through seeing an ad or sharing from a friend or through some other channel. But only 5% of those people get beyond that stage. Then, of the people who do learn a bit about the product, the product is losing another 20%. And so on, losing more people at each step.

FIGURE 1.3

People fall out of the User Lifecycle Funnel at every step.

At the end of it, this product has nine real, retained customers. Now, sure those are going to be your best customers ever, but you’re still paying to get your message in front of 1,000 people and only ending up with nine of them, so unless you’re selling something really expensive, you’re going to want to increase the number of people who make it through the funnel.

Some of you who are paying attention are probably saying to yourself, But I have different types of users! And they interact with my product very differently. It’s an excellent point, and I’m glad you brought it up.

If you have more than one type of user, your product will have more than one User Lifecycle Funnel. We’ll discuss how to determine exactly who your users are in later chapters, but many of you will have products that have, for example, a customer who buys the product and users who use it. Those may not be the same person.

Enterprise products almost always have this issue—the customers are company CIOs or VPs who write checks while the users might be individual contributors or managers. Marketplaces have both buyers and sellers, each of whom interacts with the product very differently and has a different User Lifecycle Funnel.

When you create a Facebook account to stay in touch with your friends, you have a different User Lifecycle Funnel than you would if you were a business using Facebook to run ads. You’ll eventually want to identify all the different types of users of your product and create measurable User Lifecycle Funnels for each of them. That can come later.

The reason that you need to create at least one of them is to understand where your biggest business problems exist. You see, I call this model a User Lifecycle Funnel, but in reality it’s more of a sieve. With funnels, everything you pour in the top comes out the bottom. That’s what funnels do. It’s their job. This is a terrible funnel. Your job is to visualize your funnel so that you can make it less sieve-like.

EXERCISE

Defining Your User Lifecycle Funnel

Every product has a User Lifecycle Funnel whether it’s being measured or not. There are stages that people have to go through. You just need to understand what they are so that you can measure them effectively.

This is a short exercise, and running it with everybody on the team—designers, product managers, engineers, marketers, finance, whoever is a stakeholder—can help you make sure that everybody understands where your product is losing users.

RUN THE EXERCISE: USER LIFECYCLE FUNNEL

TIME TO RUN

1 hour

MATERIALS NEEDED

Sticky notes, Sharpies, paper, whiteboard, list of questions

PEOPLE INVOLVED

Product managers, designers, researchers, engineers, stakeholders

EXERCISE GOAL

Understand the stages a user encounters while going from visitor to lifelong customer.

Tell your team which user they will be creating the User Lifecycle Funnel for. If you need help choosing, there’s more information about understanding who your users are in the next few chapters. For now, you need to pick one single user for everybody to work on. Maybe it’s an end user. Maybe it’s the buyer. If you have a simple mobile app that only really has one type of user, then it will be easy. If you work at someplace like Salesforce, you’ve got a choice to make.

Give everybody a stack of sticky notes and something to write with. You’re going to ask each person several questions and show them some sample answers for a product that isn’t your own. When you ask a question, you’re going to give them three minutes to write as many answers to that question as they possibly can. Each answer should go on its own sticky note.

Each sticky note should be labeled in the bottom-right corner with the question number it answers (see Figure 1.4).

FIGURE 1.4

Label the answers with the appropriate question number.

Participants should not talk to one another during the writing time. Talking comes later.

STEP 1: Ask the Questions

You will notice that all of the questions are in the future tense. That does not mean you get a pass on this exercise if you already have a product. You can easily do this exercise with a real product with millions of users. Just change the wording to the present tense: "How do you rather than How will you."

If you’re planning on releasing a big new feature or a new version of your product, you can also run this exercise on individual features, rather than on entire products.

QUESTION 1: How will you get people to hear about your product or service?

This first question is something that a lot of people struggle with, but they shouldn’t. What you’re asking here is, Where do people who use my product spend time at the moment in their lives when they might be interested in learning about a new product like this?

Companies tend to default to easy things like advertising on Google or Facebook, but this is worth thinking about a bit, since different types of products get recommended or discovered in very different places.

Facebook might be a great place to advertise certain products, but is it right for you if you’re selling a new medical implant to surgeons? Or if you’re selling a Software as a Service product to Chief Marketing Officers? Probably not.

Typical answers to this question could be:

• Specific blogs or forums where people talk about the problems your product solves

• Physical spaces like gyms or doctors’ offices

• Conferences where professionals in your space gather

• Facebook

• Specialty publications for people in a particular industry

QUESTION 2: How will you help people learn enough about your product and service to know they want to purchase or use it?

When you think about this question, you’re really asking yourself how hard your value proposition is to understand. Some products are harder to get than others.

If you’re not making toothpaste or video games or something in a pretty clear category, you might need a different sort of messaging and outreach in order for people to understand what you’re selling. If you’re solving a problem people didn’t know they had, you’re going to have to do more education than if you’re solving a well-understood problem.

Typical answers to this question could be:

• An explainer video

• A landing page

• A free webinar or webinar series from an expert

• A blog post from a prominent blogger explaining how they use the product

• An online course

• An in-person sales demo

QUESTION 3: What is the aha moment in someone’s first use of the product?

Hopefully, there is a moment for every person when they start to use your product and they achieve something valuable. This is the moment when they accomplish whatever they set out to accomplish.

In a video game, it might be completing the first quest. For a product that helps people send email marketing campaigns, it might be the first time that a user successfully sends out an email to their list. If you’ve got a meal delivery service, it might be the customer’s first delicious bite of food.

You can often find that aha moment from watching new users interact with a product. It’s that moment when their eyes light up, and they smile and understand exactly how this product can benefit them.

There is no typical moment in products. The only rule is that it should happen the first time a person uses your product, if at all possible, because this is going to be that little hit of excitement that makes them want to come back a second time.

QUESTION 4: How will you get permission and ability to contact users?

The answer to this question may very well be we won’t. That’s fine. You can offer value to people without contacting them later. When I walk into a Starbucks and pay for a coffee with cash, they don’t get any data on me, and it’s still a fine exchange for them.

Of course, there are also ways for them to collect my data if I choose to give it to them in exchange for something, like signing up with my email address in order to get a free coffee on my birthday.

However you feel about privacy or giving away your data or holding data from someone else, understand that, when you ask somebody for something like their name or their email address or for the right to contact them in some way, you are asking for something of value to them, and you need to offer them something of value in return. Maybe that’s access to your product, but a lot of people won’t hand over an email address or a Facebook login without understanding the value you’re giving them.

This is what I call the conversion step. Now, for those of you who work in ecommerce, I’m using this term a little differently than you may be used to. For most ecommerce products, the conversion metric is the sale. You talk about converting a visitor into a buyer, but I’m talking about it a little differently. A conversion in this case is something that happens when there’s any exchange of value—it could be a visitor creating an account or signing up for your mailing list. It’s that moment when they decide to join your product in some way.

Typical answers to this question could be:

• Have the user fill out a profile for better recommendations.

• Ask for an email address on a landing page in exchange for early access to a new version of the product.

• Get the user’s mobile number and permission to text them when their car arrives.

One important thing to note is that you should always include the reason the person would give you the information when defining this step of the User Lifecycle Funnel.

QUESTION 5: How will you make money from this user?

I won’t lie. This is my favorite step, but I’m always a little astounded by how many members of teams don’t know the answer to this in any detail. They might know the basics like we sell advertising, but they don’t know things like how to make the number go up or down or which types of advertising pay the best. Or, if they sell products and services, somebody on the team won’t know what things like gross margin are on products or what the balance is between selling hardware and selling customer support for that hardware. This is worse in startups where revenue isn’t a focus yet. Even if you’re not taking people’s money today, you still have to have a plan for how you will eventually make a profit. And no, the answer is not volume.

In other words, a lot of people on your team may not understand your actual business model, and that’s a problem if they’re making any decisions, because they’re going to make bad trade-offs. They’re going to make choices that lose you money because they don’t know that they’re losing you money. And that’s not OK.

Remember, when you’re answering this question, you need to be aware that different users might generate revenue differently, and some might not generate it at all. If you run a nonprofit or a government product, all of your revenue might come from donors or taxes, and your users would not have a revenue step. If you run an ad-supported business, the viewers might generate revenue by viewing ads, while advertisers would provide revenue by paying you for showing the ads. Yes, it’s the same money, but you should track it in both places.

Here are some typical answers to this question for specific companies:

• Viewing an ad: Buzzfeed readers

• Making a purchase: Amazon purchasers

• Paying for a seat license: Salesforce managers

• Moving from the free plan to the pro plan: Dropbox new users

QUESTION 6: What will happen within the first couple weeks to turn early users into long-term, retained users?

Finally, you need to know why people are going to come back time after time. After all, people might want to use your product. They might even be really motivated to use it. But if motivation were all it took, we’d all be going to the gym five nights a week, and I wouldn’t have forgotten my New Year’s resolutions by February.

Something will happen in the first week or two of using your product that should point to someone becoming a long-term user. Facebook had an interesting metric. It found that people who connected with seven friends in the first ten days of usage were very likely to be retained and still be users in a few months. When new users connected with friends quickly, they found value in the product sooner and created a network that would keep drawing them back week after week.

Finding that link was useful to Facebook, since it meant that it could focus on improving a metric—connecting with friends—that was useful for long-term retention but that could also be measured within the first couple of weeks.

You have something that will make people come back time after time and keep your product compelling. Much like with question number 3, there’s no typical thing here. It’s entirely dependent on your product and the value it offers its users.

STEP 2: Make the Funnel

Now that everybody has written down their answers, you’ll have a bunch of sticky notes and a room full of slightly confused team members. The next step is to put your funnel into order.

I told you to ask the questions in a particular order, but that may not be the right order for your particular product.

Take a look at these two different funnels shown in Figure 1.5. Do you see the difference?

FIGURE 1.5

The order of the steps may vary depending on the product or user.

They look very similar, but they represent entirely different types of products and users.

This first one might be a media company like BuzzFeed or YouTube or the New York Times.

In that funnel, the user could become aware of the product by seeing an article or video shared on social media—that’s awareness. The education step is very short—probably just the headline or maybe a comment made by a friend. The second they click on the link to view the entire article or video, they generate revenue by creating an ad view.

Maybe then they start to realize the value of the product and click on a few more articles or take a quiz, which shows engagement. They may come back and become a recurring user in exactly the same way for months. They may or may not ever decide to create an account or download the mobile app, which would be a conversion activity, or they might convert days or weeks later. In fact, conversion in this case is entirely optional.

The second product might be a Software as a Service (SaaS) tool for enterprises with a freemium plan. For example, imagine some sort of customer relationship management tool that lets you use the product for a little while before asking you to commit.

In this case, the user might become aware of the product because they heard about it at a tech conference, or a new employee talks about a system they used at their old company. You might need quite a bit of education on a system like this—maybe a webinar or a case study, since the customer needs to figure out if it’s likely to be the right thing to introduce to the entire company. Since there’s a free trial, the user can set up an account—that’s conversion. The user then gets onboarded and starts to input their data into the system so they can test things out and engage with the product. Maybe they use it over the course of several days in a row, because once their data is in there, they start to find it more and more useful. Finally, if it’s useful enough, the user may convert to an enterprise, paid plan and start generating revenue.

What does your funnel look like? Get everybody on