Product Management For Version 1 Products: Creating Something from Nothing

What I’m Covering Understanding customer needs Prioritization and maximizing ROI on engineering resources Validating your product concept UI design Usability testing Will post slides to slideshare.net/dan_o Copyright © 2009 YourVersion

My Background Education BS, Electrical Engineering, Northwestern MS, Industrial Engineering, Virginia Tech MBA, Stanford PHP, MySQL, JavaScript, XHTML, CSS, UI design 18 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 startups CEO & Founder of YourVersion, real‐time discovery startup Copyright © 2009 YourVersion

How is developing a v1 Product Different from developing a Later Stage Product? With a v1 stage product, you have WAY MORE uncertainty about: Who your target customers really are Which customer needs you should address How to best meet those needs What product design works best These are qualitative learnings/decisions Quantitative is also valuable (later) Copyright © 2009 YourVersion

Problem Space vs. Solution Space Problem Space Solution Space A customer problem, A specific need, or benefit that the implementation to product should address address the need or A product requirement product requirement Example: Ability to write in space NASA: space pen (zero gravity) ($1 M R&D cost) Russians: pencil Copyright © 2009 YourVersion

Problem Space vs. Solution Space Feature Level Problem Space Solution Space (user benefit) (feature) Gmail Make it easy importer to share a link with my friends Design Design Design #1 #2 #3 Preview with User can edit Allow me to Design checkboxes before import reuse my email #1 No No contacts #2 Yes No #3 Yes Yes Copyright © 2009 YourVersion

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 © 2009 YourVersion

How Do You Prioritize User Benefits and Product Features? Need a framework for prioritization Which user benefits should you address? Which product features to build (or improve)? Importance vs. Satisfaction Importance of user need (problem space) Satisfaction with how well a product meets the user’s need (solution space) Copyright © 2009 YourVersion

High Importance + Low Satisfaction = Importance of User Need Opportunity High Competitive Opportunity Market Not Worth Going After Low Low High User Satisfaction with Current Alternatives Copyright © 2009 YourVersion

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 © 2009 YourVersion

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 © 2009 YourVersion

Prioritization and Scope Customer value is only half the equation How much engineering effort will it take? Need to consider value and effort (ROI) Ruthlessly prioritize: rank order Be deliberate about scope & keep it small It’s easy to try to do too much Strategy = deciding what you’re NOT doing Break features down into smaller chunks Smaller scope → faster iterations → better Copyright © 2009 YourVersion

The Art of Estimating Customer Value for a Particular Product Idea For any product idea, the Customer Value it creates is higher: The higher the importance of the user need The lower the user satisfaction with the status quo The higher the # or % of users to which the idea applies The more frequently the product idea will be used by users Copyright © 2009 YourVersion

Case Study: Product Validation Summary My consulting client, CEO of TrustedID, had an idea for a new product Team: me, CEO, head of marketing, UI design consultant 4 weeks from 1st meeting to validated product concept Paid prospective users $1,500 ($75 x 20) 1 round of iteration on product concept Copyright © 2009 YourVersion

Case Study: Product Validation Developing Product Concept Product Concept was a “marketing report” that let consumers more directly control the direct mail that they receive Concept was fuzzy with various components, so we broke it into 2 different “flavors”: #1 “Shield”: Service to reduce/stop junk mail #2 “Saver”: Opt in to receive money‐saving offers Within each concept, got feedback on modules that mapped to a specific user benefit Worked with UI designer to create paper mockups of pages for each concept (5 pages each) Copyright © 2009 YourVersion

Clustering Potential User Benefits to Create Product Concepts “Shield” Concept “Saver” Concept Reduce Find out what Money Compare Social Junk Mail “they” know Saving Yourself Networking about you Offers to Others Save Marketing Trees Report Marketing Marketing Score Profile Copyright © 2009 YourVersion

Case Study: Product Validation Recruiting People Telephone recruit of prospective customers Wrote screener using intuition for psychographic segmentation Wanted users who work full‐time & use internet Fit for opt‐in concept: use coupons, Costco membership Fit for anti‐junk mail concept: use paper shredder, block caller ID Recruiters used screener to recruit Scheduled 3 groups of 2 or 3 people to discuss each concept for 90 minutes Moderated each group through the paper mockups to hear their feedback Copyright © 2009 YourVersion

Case Study: Product Validation Findings on Concepts &User Benefits “Shield” Concept “Saver” Concept Reduce Find out what Money Compare Social Junk Mail “they” know Saving Yourself Networking about you Offers to Others Save Marketing Trees Report Legend Marketing Marketing Score Profile Strong appeal Somewhat positive Low appeal Copyright © 2009 YourVersion

Case Study: Product Validation Learnings from Research Learned that “Shield” (anti‐junk mail) concept was stronger than “Saver” People didn’t like many of the “Saver” concept components Learned users’ concerns / questions about “Shield” concept Refined “Shield” concept: Removed irrelevant components Improved messaging to address user concerns / questions Validated revised “Shield” concept with quick 2nd round of tests No customer concerns Clear willingness to pay Copyright © 2009 YourVersion

Case Study: Product Validation Summary 4 weeks from 1st meeting to validated product concept Cost $1,500 to talk with 20 users ($75 each) 1 round of iteration on product concept Identified winning concept that users are willing to pay $10/month for Trimmed away non‐valuable pieces You can achieve similar results Copyright © 2009 YourVersion

User Benefits vs. Ease of Use Q: If two products equally deliver 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 © 2009 YourVersion

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 Recommended reading: Jesse James Garrett’s “Elements of User Experience” chart, free at www.jjg.net Copyright © 2009 YourVersion

Elements of User Interface Design Consists of Three Distinct Elements: Information Architecture Structure and layout at both site and page level How site is structured (sitemap) How site information is organized (site layout) How each page is organized (page layout) Interaction Design How user and product interact with one another User flows (e.g., navigation across multiple pages) User input (e.g., controls and form design) Visual Design “How it looks” vs. “What it is”, often called “chrome” Fonts, colors, graphical elements Copyright © 2009 YourVersion

The Value of Usability Testing Critical to talk with customers 1‐on‐1 Gain better understanding of Usability issues with your product Customer needs and problems What alternatives customers are using, pros & cons of each, customer preferences QA: use cases & bugs you haven’t seen Really a “user learning” session Make test as real for user as possible Copyright © 2009 YourVersion

Typical Format for Customer Session 5 ‐ 10 min: Ask questions to understand user needs and solutions they currently use 30 ‐ 50 min: Usability test Non‐directed as much as possible When necessary, direct user to attempt to perform a specific task 5 ‐ 10 min: Wrap‐up Answer any user questions that came up Point out/explain features you want to highlight Copyright © 2009 YourVersion

Dos & Don’ts of Conducting Usability Do Explain to the user: Their usability test will help improve the product Not to worry about hurting your feelings “Think Aloud Protocol” Ask user to attempt the task, then be a fly on the wall Ask non‐leading, open‐ended questions Take notes and review them afterwards for take‐aways Don’t Ask leading questions “Help” the user or explain the UI (e.g., “click over here”) Respond to user frustration or questions (until test is over) Get defensive Blame the user Copyright © 2009 YourVersion

Define the Equation of your Business “Peeling the Onion” Advertising Business Model: 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 Conversion Rate Copyright © 2009 YourVersion

How to Track Your Metrics Track each metric as daily time series Unique Page Ad New User … Date Visitors views Revenue Sign‐ups 4/24/08 10,100 29,600 25 490 4/25/08 10,500 27,100 24 480 … Create ratios from primary metrics: X / Y Example: How good is your registration page? Okay: # of registered users per day Better: registration conversion rate = # registered users / # uniques to reg page Copyright © 2009 YourVersion

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 © 2009 YourVersion

Adding Metrics and Feedback to your Product Process Site Level Business Product Prioritized Plan Objectives Objectives Feature List Scoping Feature Level Requirements Design & Design Code Test Launch Develop Metrics & User Optimize Feedback Copyright © 2009 YourVersion

Optimization through Iteration: Continuous Improvement Measure the metric Analyze Learning the metric Gaining knowledge: • Market Identify top • Customer opportunities to improve • Domain • Usability Design & develop the enhancement Launch the enhancement Copyright © 2009 YourVersion

v1 Product Management Cheat Sheet Truly understand your customer needs Get clear on your value proposition Prioritize your feature set based on ROI Validate your product concept with users Launch v1 Talk with users 1‐on‐1 and get feedback Learn and iterate Copyright © 2009 YourVersion

Great way to stay on top of your interests Real‐time discovery engine Discovers new, relevant content tailored to your specific interests News, Blogs, Tweets, Webpages, Videos, Products Bookmark and share via email, Twitter, Facebook Launched in Sep at TechCrunch50 Free iPhone app Check it out at www.yourversion.com Copyright © 2009 YourVersion

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Product Management For Version 1 Products: Creating Something from Nothing

by Dan Olsen

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