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Quora: When does high growth not imply product/market fit?

Answered originally on Quora here.

Question: For online/mobile consumer services, in what scenarios does high organic user growth not imply product-market fit?

There’s been a bunch of recent examples of products that grow quickly but have little to no retention/engagement.

The reason is that in this context, you can think of products as having 2 main components:

  • Distribution tactics: This is the viral loop – the flow within the site that generates invites, embeds, links, or otherwise exposes new users to the product. Example, for Skype, you can through to a process of inviting and build your addressbook – this generates invites.
  • Product experience: The actual usage patterns of the product. For Skype, that’s chatting or talking over VOIP.

In the case of Skype, the viral loop easily flows into the product experience – as a result, you have a nice product that’s both viral and engaging. This is the good case.

Let’s talk about the dysfunctional cases though:

Viral design patterns that don’t make sense for a product
Sometimes though, you end up with a viral loop that’s pretty different/weird compared to the core product experience. For example, there’s a few design patterns that have been viral in the past:

  • Filling out a quiz and comparing yourself to others
  • Sending a gift or a poke to a bunch of people and then asking the recipient to poke/gift back
  • Finding friends and sending invites
  • Getting a notification saying that someone has a crush on you and making you fill out email addresses to guess the crush – these emails then generate the next batch of notifications
  • … and newer patterns like the Social Reader design pattern on Facebook, or something like spammy low-quality SEO content, which isn’t viral but is the same kind of idea.

(Note these are less effective these days since they’ve been played out – I write about the idea of people becoming desensitized to marketing here)

Because finding a really effective, working viral loop can be rare, sometimes people build a viral loop and then bolt a product onto it. This can be done in a haphazard way that shows a lot of top-line growth but fails on retention/engagement.

Disjointed viral + product experiences
The problem that sometimes, after completing the viral actions, the experience of then using the product is too disjointed, and users bounce right away. For example, you couldn’t put a “find your friends” invitation system in front of a search engine. It doesn’t make any sense. Search engines aren’t social.

The way you could validate this was happening is just to look at the underlying stats past the top-line growth:

  • After signing up, how many users are active the next day? Or the next week?
  • How many users bounce after the initial viral flow?
  • How aggressive is the viral loop, and do you allow the user to understand and experience the underlying product?
  • How well does the viral loop communicate that it’s part of a larger, deeper product?
  • Does the viral loop makes sense within the context of the product? Does completing the viral loop make the resulting product experience better?

I would look at any new product and ask the above questions to understand what’s going on. In the success case, you have a lot of retention and engagement, and the more viral the product, the stickier it gets. And ideally the design of the viral loop is very “honest” as to how it fits into the rest of the products.

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