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Good to Great: Achieving 
Product Excellence in Web 2.0

             Dan Olsen
     CEO & Founder, YourVersion

Achieving Product Excellence
  Creating Customer Value
  Product Management
  Maximizing ROI on Development Resou...
My Background
  BS, Electrical Engineering, Northwestern
  MS, Industrial Engineering, Virginia Tech
  MBA, Stan...
Who Are You?
By show of hands, how many of you are
  Product Managers
  Other Business Roles
What makes a Product Great?

 Value to 
Customers! ...
Customer Value

   Copyright © 2008 Olsen Solutions LLC
How do you Create Customer Value?
By offering a product that:
    Provides benefits to customers
      Fulfills customers’...
Types of Customer Benefits
  Save money (e.g., VOIP software)
  Make more money (e.g., affiliate programs)
Time savi...
The Customer Benefits “Ladder”

                          …which means one less thing to 
Olsen’s Hierarchy of Web User Needs
       (adapted from Maslow)
    Customer’s Perspective                               ...
Kano Model: User Needs & Satisfaction
              User Satisfaction
                                  Delighter (wow)

Importance vs. Satisfaction
       Ask Users to Rate for Each Feature
              100                                   ...
How to Elicit User Needs & Problems
Need to understand your customers
  Talk to them
  Ask them what they like and don’t l...
Product Management

     Copyright © 2008 Olsen Solutions LLC
A Product Manager by any Other 
   Name Would Smell as Sweet
Product managers are sometimes called
  Product marketing man...
Product Management is
    Critical Link in Value Creation

Market            Product          Development 
• Current   ...
A Process View of Product Management
PM’s Job: A Successful Product
Know market and customer better than anyone else
Translate business objectives and customer...
Maximizing ROI on 
Development Resources

      Copyright © 2008 Olsen Solutions LLC
What does ROI Mean in a
  Product Development Context?
Return on Investment (ROI)
  Investment = cost or resources require...
Return (Value Created)   Analyzing Product Ideas by ROI

Return (Value Created)       Prioritizing Order of Ideas by ROI

                         7   ...
Can Improve ROI by Covering Key 
      “Product Thinking Steps” Efficiently
           Business      Product        Produc...
UI Design

Copyright © 2008 Olsen Solutions LLC
Web 2.0 PMs Need UI Design Skills
 The Design Gap
   Many start‐ups don’t have UI designers
   Product managers often aske...
The UI Design Iceberg
  What most
  people see
  and react to                     Visual
Elements of UI Design
User Interface (UI) Design
  Conceptual Design: e.g. Quicken’s checkbook metaphor
  Interaction Desi...
Making UI Design Decisions
Typical UI design question:
“When using web pages, do users scroll down?”
  ‐ Yes
  ‐ No

UI qu...
Put Key Conversion Actions Above The Fold
          Landing Page A                 Landing Page B

The Fold: “Chrome” Takes Away Pixels

The Fold Isn’t Binary Either

                                               768 px
% of Users

Analyze User Screen Height Distribution
 to Select Design Height for Key Pages
Product Design vs. User Benefits
Q: If two products equally deliver on the exact 
same user benefits, which product is bet...
Optimizing The Equation
     of your Business

“If you’re not clear on your objective, 
 you will probably never achieve i...
Setting Clear Business Objectives:
What are We Trying to Accomplish?
Setting Business Objectives
  What is our business st...
Identify the Equation of your Business
           “Peeling the Onion”
Profit = Revenue ‐ Cost

   Unique Visitors x  Ad Re...
Why Are Metrics Important?
Many choices and decisions to make each day
  Product feature and design decisions
Using Metrics to Optimize the 
           Equation of your Business
   What are the key metrics for your business?
Track Metrics as Time Series
Time series much better than ad hoc bulk analyses
Track metrics daily
   One row for each day...
Making Metrics More Useful
To facilitate comparisons over time
  Ex: Measuring how good your registration page is
Viral Loop Steps and Metrics

             % of users   Invites per                        Invite
              sending  ...
Define Your Funnel & Ratio Metrics








Sample Signup Page Yield Data
                                                Daily Signup Page Yield vs. Time
Optimization Through Iteration
                the metric

Doubling Number of Invitations Sent per Sender by 
         Adding Address Book Importer

Reducing Registration Process
                                                               Abandonment Rate
Summary: Cheat Sheet for
    Building A Great Web 2.0 Product
Know your customers and their needs
Get clear on how you cre...

     Copyright © 2008 Olsen Solutions LLC
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Good to Great: Achieving Product Excellence in Web 2.0 by Dan Olsen


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Best practices in product management, UI design, product development, metrics, and optimization by Dan Olsen from Web 2.0 Expo NYC on September 18, 2008.

Published in: Business, Technology
  • If you like my presentation, I'm excited to tell you about an all-day workshop I'm hosting on Jun 12th in Palo Alto. It's called 'Toolbox', and we'll be covering best practices in product management, UI design, and marketing with an emphasis on startups.

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    My startup YourVersion launched to the public on Sep 14 at the TechCrunch50 Conference where we won the People's Choice Award. I've developed YourVersion using the product management principles that I talk about in my SlideShares.

    YourVerson is a real-time discovery engine that continuously discovers new, relevant tailored to your interests and makes it easy to bookmark and share that content. In addition to the website, we have a free iPhone app and Firefox toolbar.

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    CEO & Founder, YourVersion
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Transcript of "Good to Great: Achieving Product Excellence in Web 2.0 by Dan Olsen"

  1. 1. Good to Great: Achieving  Product Excellence in Web 2.0 Dan Olsen CEO & Founder, YourVersion Web 2.0 Expo New York Sep 18, 2008 Copyright © 2008 Olsen Solutions LLC
  2. 2. Overview Achieving Product Excellence Creating Customer Value Product Management Maximizing ROI on Development Resources User Interface (UI) Design Optimizing the Equation of Your Business Copyright © 2008 Olsen Solutions LLC
  3. 3. My Background Education BS, Electrical Engineering, Northwestern MS, Industrial Engineering, Virginia Tech MBA, Stanford PHP, MySQL, JavaScript, XHTML, CSS, UI design 17 years of Product Management Experience Managed submarine design for 5 years 5 years at Intuit, led Quicken Product Management Led Product Management at Friendster Olsen Solutions LLC, PM consultant for start‐ups CEO & Founder of YourVersion, Social Discovery start‐up Copyright © 2008 Olsen Solutions LLC
  4. 4. Who Are You? By show of hands, how many of you are Product Managers Marketers Other Business Roles Designers Developers Other Technical Roles Company size Early stage Middle stage Later stage / mature Copyright © 2008 Olsen Solutions LLC
  5. 5. What makes a Product Great? Great  Great Product = Good Great  Value to  Customers! Okay Copyright © 2008 Olsen Solutions LLC
  6. 6. Creating Customer Value Copyright © 2008 Olsen Solutions LLC
  7. 7. How do you Create Customer Value? By offering a product that: Provides benefits to customers Fulfills customers’ needs Solves customers’ problem Is easy to use At a good price Even “free” products have cost to user: time and attention, which is limited Is better than other alternatives Copyright © 2008 Olsen Solutions LLC
  8. 8. Types of Customer Benefits Money Save money (e.g., VOIP software) Make more money (e.g., affiliate programs) Time savings / convenience Finding desired information (e.g., search engines) Booking travel (e.g., travel sites) Communication (e.g., instant messaging) Emotional Control (e.g., Quicken) Feeling informed (e.g., news sites) Confidence / security (e.g., anti‐virus software) Enjoyment / entertainment (e.g., YouTube) Self‐expression (e.g., Facebook) Status Copyright © 2008 Olsen Solutions LLC
  9. 9. The Customer Benefits “Ladder” …which means one less thing to  Higher‐level worry about in my hectic life benefit (more abstract) …which makes me feel more in  control of my finances …which gives me a clear picture  of how much money I have Lower‐level Quicken makes it easy for me  benefit to balance my checkbook (more specific) Copyright © 2008 Olsen Solutions LLC
  10. 10. Olsen’s Hierarchy of Web User Needs (adapted from Maslow) Customer’s Perspective What does it mean to us? Satisfaction Increasing Usability & Design How compelling and easy to use is the functionality? Feature Set Does the functionality work? Absence of Bugs Dissatisfaction Decreasing Is the site fast enough? Page Load Time Is the site up when I want to use it? Uptime Copyright © 2008 Olsen Solutions LLC
  11. 11. Kano Model: User Needs & Satisfaction User Satisfaction Delighter (wow) Performance  (more is better) Need Need not met fully met Must Have Needs & features  migrate over time User Dissatisfaction Copyright © 2008 Olsen Solutions LLC
  12. 12. Importance vs. Satisfaction Ask Users to Rate for Each Feature 100 98 Great 95 84 87 90 Bad 86 85 79 84 55 70 80 Importance 80 75 72 80 70 75 65 60 55 41 50 40 50 60 70 80 90 100 Satisfaction Recommended reading: “What  Customers Want” by Anthony Ulwick Copyright © 2008 Olsen Solutions LLC
  13. 13. How to Elicit User Needs & Problems Need to understand your customers Talk to them Ask them what they like and don’t like Observe their behavior How can you do this with millions of customers? Quantitative research (i.e., surveys) Site analytics and usage metrics Still need qualitative input to hone judgement Customer suggestions, support emails/calls Best tool: informal, 1‐on‐1 usability sessions Copyright © 2008 Olsen Solutions LLC
  14. 14. Product Management Copyright © 2008 Olsen Solutions LLC
  15. 15. A Product Manager by any Other  Name Would Smell as Sweet Product managers are sometimes called Product marketing manager Program manager Project manager Label and definition of role can vary Based on industry or company Based on B2C (consumer) vs. B2B (enterprise) Based on stage of company Can be area of responsibility vs. actual position Copyright © 2008 Olsen Solutions LLC
  16. 16. Product Management is Critical Link in Value Creation Market Product  Development  • Current  Management Team customers • Prospective customers • Competitors Copyright © 2008 Olsen Solutions LLC
  17. 17. A Process View of Product Management “Inbound” Product “Outbound” Management Product Long Business Product Management Term Strategy Strategy Market/ Sell Short Business Product Product Term Objectives Objectives Development Service/ Support Copyright © 2008 Olsen Solutions LLC
  18. 18. PM’s Job: A Successful Product Know market and customer better than anyone else Translate business objectives and customer needs  into product requirements Be the clearinghouse for all product ideas  Identify, plan & prioritize product ideas to maximize  ROI on engineering resources Work with team to design and build a great product Evangelize product within and outside the company Keep the product team motivated Copyright © 2008 Olsen Solutions LLC
  19. 19. Maximizing ROI on  Development Resources Copyright © 2008 Olsen Solutions LLC
  20. 20. What does ROI Mean in a Product Development Context? Return on Investment (ROI) Investment = cost or resources required Return = “profit” gained from investment What is the Return (R)? Customer value created, which leads to: Business value created (revenue) What is the Investment (I)? Main investment = developers’ time Measured in developer‐days or developer‐months Copyright © 2008 Olsen Solutions LLC
  21. 21. Return (Value Created) Analyzing Product Ideas by ROI ? 4 Idea D 3 Idea A Idea B 2 Idea C 1 Idea F 1 2 3 4 Investment (developer-weeks) Copyright © 2008 Olsen Solutions LLC
  22. 22. Return (Value Created) Prioritizing Order of Ideas by ROI 8 7 Idea C 6 5 Idea B 4 3 2 Idea A 1 1 2 3 4 5 Investment (developer-weeks) Copyright © 2008 Olsen Solutions LLC
  23. 23. Can Improve ROI by Covering Key  “Product Thinking Steps” Efficiently Business Product Product  Site Level Strategy Strategy Strategy Roadmap Business Product Prioritized  Release  Planning Objectives Objectives Feature List Plan Feature  Scoping Level Product Product Design Requirements Design Code Test Launch Development Copyright © 2008 Olsen Solutions LLC
  24. 24. UI Design Copyright © 2008 Olsen Solutions LLC
  25. 25. Web 2.0 PMs Need UI Design Skills The Design Gap Many start‐ups don’t have UI designers Product managers often asked to fill the void Faster pace = less documentation Long‐winded MRDs and PRDs are dead Now: short specs with wireframes, wikis,  whiteboard UI changes can cause dramatic changes in  key business metrics: good and bad Copyright © 2008 Olsen Solutions LLC
  26. 26. The UI Design Iceberg What most people see and react to Visual Design What good PMs and Designers Interaction think about Design Information Architecture Conceptual Design Recommend reading: Jesse James Garrett’s “Elements  of User Experience” chart, free at Copyright © 2008 Olsen Solutions LLC
  27. 27. Elements of UI Design User Interface (UI) Design Conceptual Design: e.g. Quicken’s checkbook metaphor Interaction Design: flows and navigation Information Architecture: structure and layout Visual Design: graphical treatment, aka chrome Documents used Flow charts Wireframes (often black & white) Mock‐ups or comps (e.g., image created in Photoshop, etc.) Prototypes (interactive, e.g. HTML or Flash) Usability Testing Evaluating how easy your product is to use Can solicit feedback on product or design documents Copyright © 2008 Olsen Solutions LLC
  28. 28. Making UI Design Decisions Typical UI design question: “When using web pages, do users scroll down?” ‐ Yes ‐ No UI questions are never binary (yes/no)! Should be asking: What percentage of users…? UI changes impact your metrics Impact can be positive, negative, small, large Seek high‐ROI UI changes Copyright © 2008 Olsen Solutions LLC
  29. 29. Put Key Conversion Actions Above The Fold Landing Page A Landing Page B The Fold Key conversion action is above the fold Key conversion action is below the fold Copyright © 2008 Olsen Solutions LLC
  30. 30. The Fold: “Chrome” Takes Away Pixels Only 768 600 pixels pixels 1024 pixels Copyright © 2008 Olsen Solutions LLC
  31. 31. The Fold Isn’t Binary Either 768 px % of Users 600 px 1024 px Data courtesy of ClickTale Free trial at Copyright © 2008 Olsen Solutions LLC
  32. 32. Analyze User Screen Height Distribution to Select Design Height for Key Pages 100% 600, 100% 768, 92% 90% % of Users with Given (or Higher) Screen Height 80% 70% 60% 50% 40% 772, 38% 864, 29% 30% 807, 29% 1024, 20% 866, 25% 20% 1000, 20% 10% 1030, 5% 0% 600 650 700 750 800 850 900 950 1000 1050 1100 Monitor Screen Height (pixels) Copyright © 2008 Olsen Solutions LLC
  33. 33. Product Design vs. User Benefits Q: If two products equally deliver on the exact  same user benefits, which product is better? A: The product that’s easier to use ‘Ease of use’ provides benefits Saves time Reduces cognitive load Reduces frustration Not many companies excel at UI design ‘Ease of use’ can be differentiator Copyright © 2008 Olsen Solutions LLC
  34. 34. Optimizing The Equation of your Business “If you’re not clear on your objective,  you will probably never achieve it.” Copyright © 2008 Olsen Solutions LLC
  35. 35. Setting Clear Business Objectives: What are We Trying to Accomplish? Setting Business Objectives What is our business strategy? (long‐term) What are our business objectives? (short‐term) What business results do we want? Profit, Leading market share, User base growth,  Higher average CPM? Prioritization Need to prioritize your business objectives The buck stops with resource allocation Priorities can (and should) change over time Execution: even with best strategy &  objectives, execution matters Copyright © 2008 Olsen Solutions LLC
  36. 36. Identify the Equation of your Business “Peeling the Onion” Profit = Revenue ‐ Cost Unique Visitors x  Ad Revenue per Visitor Impressions/Visitor x  Effective CPM / 1000 Visits/Visitor  x  Pageviews/Visit  x  Impressions/PV New Visitors + Returning Visitors Invited Visitors + Uninvited Visitors # of Users Sending Invites  x  Invites Sent/User  x  Invite Click‐through Rate Copyright © 2008 Olsen Solutions LLC
  37. 37. Why Are Metrics Important? Many choices and decisions to make each day Product feature and design decisions Prioritization and resource allocation decisions Marketing and business decisions Having relevant data helps you make better decisions Let you know if your results are getting better or worse You can’t manage what you’re not measuring Copyright © 2008 Olsen Solutions LLC
  38. 38. Using Metrics to Optimize the  Equation of your Business What are the key metrics for your business? Where is the current value for each metric?  How many resources does it take to “move” each  metric a certain amount? Developer‐hours, Time, Money Which metrics have highest ROI opportunities? Metric A Metric B Metric C Good ROI Bad ROI Great ROI Return Return Return Investment Investment Investment Copyright © 2008 Olsen Solutions LLC
  39. 39. Track Metrics as Time Series Time series much better than ad hoc bulk analyses Track metrics daily One row for each day’s metrics Each metric is a column Unique  Page  Ad  New User  … Date Visitors views Revenue Sign‐ups 4/24/08 10,100 29,600 25 490 4/25/08 11,200 31,300 27 460 4/26/08 9,900 25,400 22 520 4/27/08 10,500 27,100 24 480 … Copyright © 2008 Olsen Solutions LLC
  40. 40. Making Metrics More Useful To facilitate comparisons over time Ex: Measuring how good your registration page is Okay: # of registered users per day Better: registration conversion rate= # registered users / # unique visitors to registration page Create normalized ratios of primary metrics:  A / B Often still need to look at A and B independently To see trends more clearly 7‐day averages: daily noise, weekday vs. weekend Monthly averages Copyright © 2008 Olsen Solutions LLC
  41. 41. Viral Loop Steps and Metrics % of users Invites per Invite sending sender click-through rate invites Fail Active Invite Prospective Click Conversion Users Users Event % of users Succeed who are Don’t active Click Conversion Users rate • Multiplied together, these metrics determine your viral ratio • Need to identify which metrics have biggest opportunity Copyright © 2008 Olsen Solutions LLC
  42. 42. Define Your Funnel & Ratio Metrics 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Sent Invitation Receive Invitation Open email Click link Register Delivery Open Click-through Registration Success Rate Rate Rate Yield Copyright © 2008 Olsen Solutions LLC
  43. 43. Sample Signup Page Yield Data Daily Signup Page Yield vs. Time New Registered Users divided by Unique Visitors to Signup Page 100% 90% 80% Daily Signup Page Yield 70% 60% 50% 40% 30% Started requiring registration 20% Changed Added questions messaging to signup page 10% 0% 1/31 2/14 2/28 3/14 3/28 4/11 4/25 5/9 5/23 6/6 6/20 7/4 7/18 8/1 8/15 8/29 9/12 9/26 10/1 0 Copyright © 2008 Olsen Solutions LLC
  44. 44. Optimization Through Iteration Measure the metric Analyze Learning the metric Gaining Knowledge: • Market Hypothesize • Customer oppty’s to improve • Domain • Usability Synthesize (design the enhancement) Implement enhancement Copyright © 2008 Olsen Solutions LLC
  45. 45. Doubling Number of Invitations Sent per Sender by  Adding Address Book Importer Copyright © 2008 Olsen Solutions LLC
  46. 46. Reducing Registration Process Abandonment Rate Abandonment Rate (7 Day Moving Average) Steps 1-2 80% 70% Abandonment Rate (7 Day Moving Average) 60% 50% 40% 30% Released 37% improvement New Design in conversion rate 20% 10% 0% 10/14/02 10/21/02 10/28/02 11/11/02 11/18/02 11/25/02 12/16/02 12/23/02 12/30/02 10/7/02 11/4/02 12/2/02 12/9/02 1/13/03 1/20/03 1/6/03 Copyright © 2008 Olsen Solutions LLC
  47. 47. Summary: Cheat Sheet for Building A Great Web 2.0 Product Know your customers and their needs Get clear on how you create customer value Ruthlessly prioritize product ideas by ROI Learn and apply UI design principles Define the Equation of your Business Instrument your site and track key metrics Iterate quickly and continuously improve Copyright © 2008 Olsen Solutions LLC
  48. 48. Questions? Copyright © 2008 Olsen Solutions LLC