Chapter Three: Focusing on Outcomes Over Outputs

Sonja Martin, a product manager at tails.com—a Direct to Consumer business offering tailor-made dog food via a subscription service—and her team were tasked with improving a core business outcome, customer retention. While tails.com had many happy subscribers, they found that customer retention during the first 90 days of service was a critical indicator of long-term retention. Sonja’s team set out to improve retention measured at the 90-day mark. However, they quickly ran into challenges.

Even though they started with a clear outcome, Sonja’s team struggled to measure the impact of their product changes. As her team experimented with how to improve short-term retention, they found they had to wait 90 days before they could evaluate the impact of their ideas. As a result, they revised their metric to 30-day retention in an attempt to speed up their experiment cycles. This was also too long. They wanted to experiment week over week. So again, they changed their metric to 5-day retention. However, they were concerned that 5-day retention might not be a leading indicator of 30-day, 90-day, or long-term retention. So, while it allowed them to experiment faster, they weren’t sure if they were driving their business outcome.

During their customer interviews, Sonja’s team uncovered two primary factors that led to customer churn. First, not all tails.com customers understood the value of tailor-made dog food, and, second, some dogs simply didn’t like the food. Sonja’s team realized that they could prevent churn, and thus increase retention, if they focused on increasing the perceived value of tailor-made dog food and if they increased the number of dogs that liked the food. Their customer interviews helped them identify two product outcomes that were more actionable—they could measure their impact on both metrics right away, and they believed if they drove both, they would, in turn, drive their business outcome of increasing retention.¹¹

Sonja’s story illustrates many of the challenges that arise when shifting to an outcome mindset. It’s not as simple as choosing a metric and running with it. Teams tasked with a new outcome often have no idea how to measure that outcome, how to impact it, or even if it’s the right outcome to be pursuing. Lagging indicators like 90-day retention make it hard to measure the impact of fast experiment cycles. Product teams often have to do some discovery work to identify the connections between product outcomes (the metrics they can influence) and business outcomes (the metrics that drive the business). This chapter will help you translate business outcomes into product outcomes you can deliver, negotiate appropriate product outcomes with your leadership team, and determine when to set learning goals versus performance goals.