Product management is at the heart of any modern business and today’s product managers need to have incredibly strong quantitative skills and intuition to build products or features that customers will find truly useful. They must focus on quality outcomes and not quantity of output.
This brings us to the four goals of product management :
- Acquire
- Activate
- Retain
- Monetize
What do each of these goals involve?
1. Acquire
Acquisition refers to building products or features to acquire new users , such as Hotmail’s famous email signature, or Dropbox’s referral program. If you are lucky, your product is inherently viral, and you can optimize interactions within the product to boost new user acquisition. However, even non-viral products can use referral programs and other acquisition hooks for boosting acquisition.
2. Activate
Activation refers to minimizing user churn during onboarding and the first few hours/days. Activation goals include reducing friction when onboarding users, introducing them to the value proposition of your product and getting them invested in your product early on.
Standard activation techniques involve reducing complexity in onboarding, reducing unnecessary forms, and helping the user perform relevant initial activities in your product, such as sending their first message, inviting their first friend, uploading their first photo, shooting their first zombie, or importing their address book.
3. Retain
Retention refers to reducing user churn after the first few days, once the customer is actively using your product. Retention activities are meant to increase user lock-in by:
- Increasing frequency of use
- Increasing total time spent using your product
- Increasing the cost of migrating to competing products
- Increasing daily dependence on your product
- Involving the user’s social network and leveraging network effects
- Integrating into other tools and processes that the user needs
- Using behavioral psychology tactics such as variable rewards, artificial scarcity, the Zeigarnik effect, and loss aversion
Beyond developing new features for your product, other initiatives on your product roadmap can also impact retention , such as usability of existing features, uptime, responsiveness, and resource consumption.
4. Monetize
Monetization refers to maximizing revenue from your user base. It involves building capabilities that users will be willing to pay for, or that will generate revenue through other means such as ads. Particularly for SaaS businesses, monetization should not negatively impact the user experience. Freemium pricing, free software trials, and “one-time only” pricing models are all examples of monetization initiatives.
Conclusion
Ultimately, everything you do as a product manager must impact one of these four goals, ideally the one that is most relevant for your business right now. As a corollary, anything you build that does not meaningfully move the needle on one of these goals is a waste of time and money.
As a product manager, your routine comprises a ‘rinse and repeat’ cycle of the following four steps:
- Pick your goals: Decide which of the above four goals are important to your business in the current cycle.
- Discover: Discover changes you can make to your product that result in the highest return on investment for the selected goals. These changes can involve building a new product, a new feature, or improvements to an existing feature.
- Develop: Move from concept to action to deployment.
- Measure and Optimize: Measure the impact of your changes on the goals you picked and optimize their implementation until you achieve the desired outcome.
The thing is, many product managers spend a disproportionate amount of their time on development (80% or more!), and very little on the other essential steps of the cycle.
As a best practice, it is recommended to spend roughly 50% of your time on picking goals and discovery, 20% on development, and the remaining 30% of your time to measure and optimize. The result is that product improvements you work on are better tuned to your customers’ needs, and you have more time to optimize how they are implemented for maximum impact on your desired goals.
Minju Kang is a 4thyear student at the University of Waterloo and an incoming Associate Product Manager (APM) at Loblaw Digital. She was formerly an Associate Product Marketing Manager (APMM) at Microsoft within Azure. She also has experience in scaling product user cases at TD Bank and Overbond (fintech).
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