Using in-product behavior to uncover Beneficial Outcomes

The key axiom that Value Paths is built on is, "EVERY time somebody uses software, it's because they're trying to change something about their situation external to the product or offering itself."

Your software business is driven by people engaging with your offering. But what CAUSES people to engage? We call the out-of-app changes that drive engagement (and hence drive your revenue) Beneficial Outcomes.

The danger we see, therefore, is when companies decide that an in-app behavior is inherently motivational to users. The in-app outcome becomes the company's north star and the working theory becomes "the more people we can get to this in-app outcome, the better off our business will be."

Sometimes, and this is the worst case scenario, the in-app event isn't even a usage milestone (like "create a template" or "use the commenting feature"), it's engagement-based (like "improve day 3 return visits"). That's not how you want to nurture the relationship.

Enough data crunching will reveal that users who continue to engage with the product or users who come back on day three are more likely to convert. But vague correlations like that blind companies to the real causal patterns that are driving their business.

If users are doing something, it's because that something matters to them. The key is to figure out why. And the why is always outside of the product.

This isn't an easy truth to face because "outside the product" comes with a lot of complexity and not enough control. But the general way that you attach these bigger whys to revenue is to get a better understanding of how many people actually received help with the thing that they came to you for help with. How often do the people who say, "Yeah, I'm here to organize my invoices" actually got their invoices paid? And how reliably did that value loop create revenue for you?

From: VPP Episode 04 (50.06)