Strive not to be a success, but rather to be of value.— Albert Einstein
Value for user (as opposed to value of a user) is a critically important product concept. It’s at the bottom of product/market fit, growth, revenue and basically much more. Few things help products more than injecting them with lots and lots of value. The product can be buggy (Early Microsoft Windows), user experience can suck (early Facebook’s mobile app), your marketing budget may be zero (early Google Search) and yet high-value will attract customers your product and make them use it again and again. On the flip side if you can’t demonstrate value early and clearly, no one will stick around to try your product a second time.
We intuitively know what value is, but finding a formal definition is surprisingly tricky. Economists, marketeers and designers all came up with somewhat different takes on it. This is the one I like to use:
Value comes from addressing underserved needs.
Which begs the question — what do people and organizations need?
A good place to start is Maslow’s hierarchy of needs:
Maslow mapped out human needs from the basic to the exalted. For our purpose we can group those into three categories— Functional needs, Social needs and Emotional needs. Every product and service addresses one or more the three categories, but is usually more dominant in one. As you read this imagine a 3-dimensional axis and consider how your product scores on each type of value.
- Functional value — Functional value comes form helping users complete jobs or tasks. This is the most easy to understand type of value — whether you need to purchase a book, find information online or furnish an apartment, there are products and services out there that will help you get the job done (BTW, did you just think of Amazon, Google and Ikea? That’s no coincidence — these companies excel at functional value). As techies we tend to over-focus on functional value, but it’s by no means the only type of value or even the most important one.
Functional value = Help me get things done
- Social value — We are social animals and care deeply for our place in the social ladder and what others think of us. Social value comes from addressing social needs — cultivating ties and networks, building status and recognition, gaining social acceptance, projecting the right image, etc. Social networks are obviously the power-tool here. They capitalize on our need for social acceptance — likes, comments, shares, in a world built less around traditional social structures (the village/neighborhood, the extended family, the nuclear family). Social value is often not obvious or even fully conscious, but it can play an important role in product choice. No one buys a $10,000 Rolex just because it is accurate and reliable (functional needs) — a $30 Casio G-Shock is far more accurate and reliable and has many more functions. The Rolex, however, is loaded with social value. In the simplest terms it makes us look good to others —more elegant and attractive, successful and belonging to the upper echelons of society. These can make the $9,970 premium worthwhile to some people. The takeaway is that making our users look good is a major win, yet we almost never think of our products in these terms.
Social value = Help me look good, gain social acceptance
- Emotional / Psychological value — this type of value comes from addressing people’s needs to feel good. If it was up to us we’d spend a lot more time playing Candy Crush Saga, lying on the beach, reading a good thriller or watching TV. There’s no real functional value in these activities, but they are important — relaxation, happiness, escapism… There are massive industries built around emotional needs — gaming, media, entertainment, travel, sports, but any product that manages to inject fun into its workings stands to gain value. Other emotional needs include: a sense of self worth and meaning, personal growth, aesthetics, and spirituality. Going back to the watch example, we definitely may derive pleasure from the beauty and mechanical elegance of a Rolex, irrespective of what others think. The watch also sends us those same implicit signals that it sends to others, enhancing our sense of self worth and reassuring us that we’re doing well.
We also have emotional needs that are not about ourselves: protecting the environment, helping those who are less fortunate, saving endangered species… All things being equal, a product that is environmentally friendly, and is helping children at risk, is of higher value than one that is not.
Emotional value = Make feel good
If you’re selling to organizations it may be useful for you to know that they have exactly the same three categories of needs and values. In many senses their needs are stronger and failure to address them may mean downsizing or death.
Getting value wrong (We all do it)
Imagine that you just launched that highly anticipated new app or product feature after twelve months of hard work. Against all odds user reaction is underwhelming — retention is low, usage and growth are abysmal, revenue non-existent. What happened? Most likely one of the following:
- Not enough value — More often than not we’re addressing a need that doesn’t exist. Research has shown that product teams tend to overestimate the benefits a product will bring and the severity of the problems it solves. Our users are different from us and often perceive the value gained by a product differently. Right or wrong, what their opinion is what matters.
- Not enough value compared to the cost the product incurs — Costs are a broad topic and probably require another article. For now it’s important to understand that there’s more than one type of cost. Psychologist B. J. Fogg’s “six elements of simplicity” is a good model: Time, Money, Physical effort, Mental effort, Social deviance, and Deviance from routine. It is just as hard for us to guess perceived costs as it is to guess perceived value. Consider the fate of Google Glass. Whatever value it brought didn’t compensate for the high social deviance cost it incurred — making the user look nerdy/weird, potentially intruding on other people’s privacy.
- Not enough value compared to alternatives — Unless you’ve stumbled on a brand new need (very unlikely), you’re first and foremost competing against whatever the user is using now. If you’re developing a mini-drone that takes selfies, you need to compete with selfie-sticks, which are cheaper, simpler to use and to carry, more reliable, and better understood. Inertia and fear of the new push people to stick to what they know and understand (early adopters are the exception). The only way to get them to jump over is to present them with far better value/cost ratio. A selfie drone needs to do more than just take somewhat better pictures.
- The users didn’t understand the value or are “change-averse” — Product teams somehow find this explanation the most plausible and spend long cycles trying to “educate users” to the value of the new product or feature. Even worse is trying to nag users into using the product again in the hope that the second time will bring enlightenment (it’s worse because now your product detracts value). Unfortunately these solutions very rarely work as the real problem is almost always one of insufficient value. That’s not to say you shouldn’t help users discover the value, but it’s much better to show than to tell. The value should be evident in use from the very first moment, ideally without having to go through a five-step on-boarding flow.
Building for value
For me this is the most important function of product management. Here are my top recommendations:
- Research , research, research— Learn early how correct your value/cost assumptions are. Do they really have this pain? Is it going to make a big difference to have this feature. The answers are often surprising and unintuitive. The best way to do this in the early stages of the product is through direct interviews, user research and MVPs. Later smoke tests, large-scale studies and A/B experiments are key.
- Create a “value map” — what they wish to achieve (functional, social and emotional jobs), what hard about them (pains) and what would be a great outcome (gains) — a great tool for this is Strategizer’s Value Proposition Canvas.
- Use value Metrics — You can get a sense of value indirectly through metrics like satisfaction and price sensitivity, or directly using answer surveys, interviews, A/B experiments and so on. Pirate metrics reflect the value users find in your product through the funnel. Ultimately your North Star metric should be about value delivered to the market.
- Manage the value life cycle — Understand how value perception changes over time. What people like on day 1, on day 7, day 14 and on day 90. This may have important implications for your product, for example you may wish to promote some features or capabilities in later stages of use.
- Map competitors and alternatives — Find what perceived values and costs users find in competitor and alternative products. Most important is what people use, not who is your most direct competitor. This will give you an idea what will get people to switch.
- It’s not all functional value — Look for opportunities to address Social and Emotional needs. We’re not thinking of those nearly enough and they can make or break your product. Slack was a game company that pivoted and found a way to make inter-company communication fun. Those elements of social and emotional value were key to the success of the product in a sea of boring corp chat systems.
- Instant magic — The most crucial moment to demonstrate high value is at first encounter aka The Magic Moment, aka The Aha Moment. Show, don’t tell.
- Stay “value positive” — Don’t suck more value than you give. We dislike people that are needy and are constantly asking for things. Products and services are no different. Be patient and ask them to do things for you later, after you gave them lots of value.
- Demonstrate high value — Consider reminding users what value they’re getting in subtle ways. For example some travel sites graphically show that they are scanning and sorting through other travel sites’ offering to find the very best deal. Research shows that this made users appreciate the service more.
- Don’t trust NPS — Satisfaction is correlated with value, but they’re not one and the same. Net Promoter Score is a very iffy metric, full of questionable assumptions. You should never trust it as the only/primary value metric.
Focusing of value simply means tuning into the way people think of your product: what benefits I gain (functional, social and emotional)? What is it going to cost me(money, time, physical and mental effort, deviance from social norms and routines)? Is this the best bang-for-the-buck? Armed with this knowledge we stand to build better and more relevant products, and actually make a difference in the lives of satisfied and loyal users.
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