The Making of a Product Management Case Study

Monzo, a fintech start up approaching Unicorn status, is a Product Management case study in the making. While it is easy to pick successful businesses and look backwards, self-selecting the examples you want to make the case of what you should do, Monzo is the opposite. They are still in the start-up phase and by monitoring their progress you can see how these practices work in the real world. By looking and monitoring Monzo, you can also learn how to differentiate successfully your offering, regardless of the industry.

Truly customer centric

What differentiates Monzo from other tech start-ups is that although they are clearly data driven they are even more customer driven. I became a fan of Monzo’s strategy by starting as a customer and seeing that they were truly customer-centric. Living on the Isle of Man, it is often a challenge working with financial institutions, as we are not part of the UK or EU. While setting up a debit card with one of Monzo’s competitors, Revolut, was an exercise in frustration, Monzo clearly had its team focused on creating a good user experience. Rather than a multi-day response to chats from a CS rep based in a low-cost location (the Revolut model), Monvo offered near real time support as I was trying to navigate setting up from the Isle of Man. This customer focus secured me as a loyal customer – and advocate – at a time when I was looking for a long-term fin partner. Monzo is now my card of choice even though there offering is feature-wise like Revolut. Given the importance of engagement and retention on LTV, this was a wise investment on Monzo’s part.

Product strategy based on making customers life easier

From a product development and management point of view, Monzo is somewhat unique in that it focuses on eliminating friction from customers’ daily life rather than adding a list of features. Monzo sent to its customers a blog post from its CEO about its plans for 2019 and what struck me was that most of the new features they will test were aimed at reducing or eliminating (in Blue Ocean parlance) rather than adding:

Automatically compare utility options, such as energy providers, so the customer does not have to go to price comparison sites
A way to get a mortgage or refinance with less paperwork
Centralizing a customer’s loyalty schemes and reward programs
Offering different types of insurance without complex terms and conditions
Help building and tracking a customer’s credit score, as most customers do not know how their credit scores are calculated (and the credit agencies are not transparent)

What is particularly thought-provoking with these features that they are considering is not that they are innovative but that they make the customers’ life easier. They are not trying to be the coolest start-up; I did not see the words AI, crypto or VR anywhere in their roadmap. Instead, Monzo is focused on eliminating hurdles their customers face in their daily lives.

Great FTUE and simple UIUX

Another area where Monzo excels is its first-time user experience (FTUE) and user interface and experience (UIUX). When I first signed up for Monzo, I found its FTUE unique in that they turned a potentially negative experience into a positive and viral moment. When I first applied for Monzo’s debit card, they apparently were experiencing rapid growth and there was a delay in completing the KYC (know your customer) process and delivering physical debit cards. Rather than ask you to endure the delays, thus immediately decreasing your satisfaction, Monzo placed me in a queue with specific information on how many customers were ahead of me and when I would receive my card. They then allowed me to jump ahead by recommending Monzo to friends (which I did), and immediately updating how many people were still ahead of me in the queue. Even before becoming a customer, they turned me into an advocate. They then created a positive feeling by giving me control and visibility into the process.

Beyond the initial experience, Monzo has a very straightforward user interface, it is very easy to navigate and learn how to use the features. You never need a tutorial or help, the product is designed to allow you to determine quickly how to conduct transactions.

Monzo reminds me of Uber, where upon opening the app anyone can figure out how to request a ride. Creating a simple UI, however, is more difficult than creating a complex AI. Any designer can build a UI with 100 options, nested in menu after menu. Reducing those options requires a deep understanding of the customer journey and where the customer is getting value as well as hard decisions on what to include and what to delete.

The UI is also consistent with the product approach described above on making the customers’ life easier rather than just providing them with more options. If the product team simply added feature upon feature, then even the best UI designer would be unable to keep the app’s user interface clean. With alignment between the product and design team, Monzo can focus entirely on removing complications from its customers’ lives.

Lessons

The strategy that Monzo is pursuing provides many useful practices for companies in other parts of the tech space, gaming, gambling, etc. Rather than trying to differentiate yourself from competitors by adding fancy bells and whistles, look at ways you can make your product easier and simpler than competitors (again, more difficult than just adding a new game to your offering). Also, ensure that everything is aligned to your strategy with your customer. If you are trying to provide a fast, clean experience, then not only should the product team develop consistent features, but your support team should focus on creating a complimentary experience and your design team should ensure the app reflects this focus.

Key takeaways

Monzo, a UK based FinTech start-up, is a future case study in product management best practices. By looking and following Monzo, businesses in other industries can learn how to differentiate their offering.
Key to Monzo is a product strategy focused on making its customers lives easier rather than adding glitzy features.
Monzo is successful by aligning its entire business on making a customer’s experience simple, from product features to the first time user experience to the overall user interface through customer support.

How to add features that your customers actually want

One of the challenges successful game developers face is what features to add to the product. With a successful game, you are not in panic mode but you also must deal with the reality that in a free-to-play product you need to keep players engaged or you will become the next Trivia Crack. The fundamental issue is adding features that are useful and fun for your existing players, that enhances their enjoyment of your game.

Keys to adding successful features

There is an excellent post by Casey Winters that highlights three keys to building features that enhance a successful product:

The new feature must retain players. The feature itself retains the player and you do not have to drive players artificially to it from other parts of the game. For example, if you add Blackjack to your social slots application, it works if players engage with Blackjack and then come back to play it regularly. You can use the same retention metrics (D1, D7, D30 and CURR) to assess if a feature is working as you do to look at an app.
The feature can drive its own use at scale, you do not need to create a plan to build adaption. To use the Blackjack example, if you integrate it in your lobby players will try it without forcing you to run specific campaigns.
The feature must improve KPIs of your core product. To use the blackjack example, it needs to improve either your overall retention or monetization.

The last point is critical to success. I used to be at a game company where product managers regularly presented analysis of their features and bragged about the great performance of the feature. Overall, though, the company’s games continued to lose players (DAU) and monetization per player (ARPDAU) was also decreasing. While the features appeared to perform great in a Powerpoint, they actually were costing the company money because they drove lower overall performance.

How to add features that improve LTV

While you may infer from the previous sections that you should only integrate features that appeal to everyone, the opportunity is to segment your players and build features to appeal to target segments. If you limit yourself to only adding features that are accretive to everyone, you have a small pool to pull from.

Given you already have a successful game, by definition your players are already enjoying your product. While there may be opportunities to add features everyone enjoys, you have a bigger set to choose from if you also identify features that may appeal to a subset of your players. This is particularly powerful because this feature can appeal to a segment that is likely to churn and keep them engaged or a segment that does not monetize and prompts them to spend. Conversely, it could only appeal to the ½ of 1 percent that are VIPs but given how much they spend could have a great impact on revenue

If you are building a feature that appeals to a specific segment, then you must be careful not to violate the third key to creating a successful feature, you do not want it to impact negatively overall KPIs. The way to achieve this balance is by positioning or displaying the feature only to the target audience. This can be done as an AB test, where you only surface the feature to specific players. It can be achieved through targeted CRM (in-game banners, push notifications, email, etc.) that is only sent to players in the target group. Surfacing a different UIUX to players who you want to engage with the feature can also accomplish the same goal. The key is maximizing how much the target audience uses the feature and minimizes how much other players see it.

Using the blackjack example yet again, we can illustrate how it could help a social casino game. Overall, slots monetizes much better than blackjack. It is a faster game and many blackjack players will play in a way so they lose very few chips. If you added blackjack to a successful slots game and promoted it across your player base, you probably would get great engagement as a lot of people love blackjack. It would, however, drive some players from your slots to blackjack where they are likely to monetize at a lower rate. If you were looking at how it would impact overall performance, then, you would say blackjack is a failure.

If, however, the blackjack game was not in the main lobby but embedded deeper in the game and you then drove players who were likely to churn (maybe you have a nice machine learning algorithm that can identify these players) to blackjack, it would engage some of these players. They would then come back regularly to play and rather than churn some would monetize. Thus, you would have a successful feature that helps the overall product.

Add features that help your game

Although it sounds obvious, when building your product roadmap you need to dive deeply into each potential feature and identify how it will improve KPIs of a target segment. Effectively, how will it solve a problem for you or your player (user churning, user not spending, etc.). The bigger the problem, the higher the priority.

Key takeaways

The key to adding new features to a successful product is ensure the feature itself retains players, can generate its own use and helps the overall KPIs of your game.
You must avoid features that seem to perform well when reviewed in a vacuum but actually hurt the KPIs of the game.
You can achieve launching a successful feature by targeting your players and then only showing or promoting the feature to players who will benefit from it.

Maybe your competitors are not that smart after all

Key takeaways

While it is important not to underestimate your competitors, you also should not consider them perfect.
Industry leaders often maintain their position due to certain core factors and their other initiatives can be flawed, do not assume everything they do is right.
Simply because a competitor decided to pass on an apparent opportunity does not mean they made the correct decision, they may have misjudged the opportunity and left an opening for you.

Maybe your competitors are not that smart after all

I have repeatedly said and written to not underestimate your competition (most recently here), but experience has shown me that you also should not overestimate them.

Success does not equal omniscience

One mistake we often make is to think industry leaders are perfect. Several years ago I worked for a top-5 social game company (okay it was Playdom as most of you have access to LinkedIn). We were very envious of the leading game company at that time, Zynga. Everything they seemed to do, from new products to new features to marketing, worked. Almost always when we identified an initiative at Zynga it inspired a similar initiative. In fact, when I wanted to pursue something, I found it was best to wait for Zynga to try it and I could then easily get internal support (conversely, if Zynga was not doing it, it was usually a non-starter).

Fast forward a few years and Zynga acquired Spooky Cool Labs, where I was Chief Growth Officer. Although the bloom was off the rose at that point, I did have a chance to speak with some Zynga veterans who were there when I was at Playdom. What I learned was that many of the initiatives that “inspired” us were considered disappointments at Zynga. There were several key drivers for their success but not everything worked well, or even worked at all. Sometimes the success factors overshadowed the failures and other times they did not even initially realize the initiatives were net-negatives.

While I have had the fortune to work at both the hunter and the hunted, I have also seen many companies over-estimate the market leaders in various industries. Most automakers copied GM until they saw that GM was on the verge of bankruptcy. Foreign airlines copied US ones’ yield management pricing until the US airlines needed government aid. The list is almost endless of industry leaders leading the competition off a cliff.

Don’t assume they know more

A recent experience highlighted another mistake of over-estimating the competition. A few weeks ago we launched a new feature in one of our products. The offering was not unique; it was largely common sense for any social casino. We actually knew that our two largest competitors had considered the feature and it would have been quite easy for them to implement.

Although our feature was not a huge effort, we delayed it and spent a great deal of time looking at possible downside because our competitors had not tried it earlier. We believed they clearly knew the market and obviously wanted to optimize revenue. Finally, we decided that we might as well try it, it seemed like to good an opportunity to pass on.

When we launched the feature, we saw a 21 percent increase in revenue (through an AB test). The uplift has settled in the 10-15 percent category but given the limited effort we consider it one of our greatest successes of the year.

We still do not understand why our competitors have never launched a comparable feature (even after talking to a person who worked on a comparable feature at one that was never launched). More importantly, we now know we should not place too much credence in a competitor’s decision not to try something (feature, new product, etc). We are still conscious if a competitor scales back something they have launched as that decision is probably based on the traction that they have witnessed but we are also conscious that they are no more omniscient than we are.

Moving forward

While it is never good to underestimate your competitors – they have many smart people trying hard to succeed – you also should not assume they are perfect. Even the most successful are probably doing some things wrong, and their success may cover up the mistakes. And while they have also looked at the market and talked to customer, they do not always come to the right conclusions on the best way to move forward. It’s why competition always leads to better products and companies. Look at the competition, but also make decisions on all the information you have available.

The principle of paramount product quality

While everyone discusses the importance of growth and companies continue to spend millions on marketing, they are often neglecting the biggest shift in product success in the past one hundred years, quality. Most understand the benefit of good online product reviews and its impact on sales, but this understanding usually generates efforts to game the review system. In truth, the underlying quality of the product is now the key driver of success and growth.

Fifty years ago, it was the gurus of Madison Avenue, glamorized in Mad Men, that meant the difference between failure and success. Pan Am became a leading airline through great marketing rather than a differentiated product, General Motors dominated the global automotive market through great promotions and ads, Crest became the top toothpaste through fantastic branding, etc.

Now, regardless of how brilliants your growth team is and how often they post on growthacker.com, your success will largely come down to the quality of your product. More accurately, you will not be successful without a great product (you can still fail with a great product and poor growth/marketing).

Why product quality has become paramount

The need for a great product is the result of virtually unlimited online product and service reviews. When people are considering a purchase, not only do they see the messaging from the vendor but they cannot avoid feedback from other users. If you are considering buying a new razor, the cool new features and catch jingle are likely to get you interested, but if the razor has 1.5 stars with a glut of negative reviews saying the product is worse than a razor half the price, you most likely will not try the razor. This effect is not only present with a consumer good but any product. Why buy a book that everyone says is filled with plot holes or a car that most people say they would not buy again. Again, the marketing message is less powerful than the actual experience of users.

Not only physical products

Not only does the principle of paramount product quality apply to physical goods but it is even more important with digital goods. While growth marketing for apps has become an art and science, if the underlying app has two or three stars even Chamath Palihapitiya (the brains behind Facebook’s growth team) would not be able to gain traction. All the great virals and cool apps may drive people to the app page, but then when they see the rating and reviews they are unlikely to download.

Even the retail environment has been rocked by this change to having a great product. Years ago, restaurants could survive by having a terrific location or being in a central tourist area. If they were in the right place, they could always attract new customers even if they had poor food and were over-priced. They would not get return customers but there would always be new ones. Hence the term tourist trap.

Now, if a restaurant aims to take advantage of customers, it will be punished by poor reviews on Yelp and TripAdvisor. Thus, the naïve new customers they have counted on will not materialize. Anecdotally, whenever I see a restaurant with three or less stars, I assume they will not survive. When I check back, most of them are gone within six months.

Changes who is important

The principle of paramount product quality also changes who your key partners are. In the past, many companies succeeded by focusing on the distribution layer. Having salesman in retailers promote your product over competitors was one of the strongest “growth” strategies. Carmakers spent more on their dealerships than on their product development. Even video game companies devoted the same resources to creating a great box as they did to create a good game.

Those strategies no longer work. A salesperson trying to drive a customer to the big new game that is actually not very good will have no credibility, as the customer is likely to check online and see the awful reviews. The car salesman who tries to sell the pre-owned Yugo will get laughed at when the little old man pulls out his phone and sees that the car should have been junked ten years ago. Even the retailer who charges for an end-cap display will not be able to convince retailers of bad products to invest in the marketing when people scan the bar code of the product and learn it is over-priced and does not work well.

Only the good shall survive

If you look at the companies that are thriving and growing, it is the ones that customers love. Tesla cars have universally great reviews, compare them with the reviews for Jaguars. Clash Royale from Supercell, the newest billion dollar game, has over 89,000 reviews averaging 4.5 stars. Airbnb, which has changed the hotel industry and is worth well in excess of $1 billion, also rates at 4 stars. The challenge is finding a successful product or service that does not enjoy great reviews.

Build a great product

While most acknowledge the importance of building a strong product, the necessity of having a great product to success is not yet understood universally. Building a great product should no longer be one slide on your Powerpoint or a nice to have element of your strategy, it needs to be the central focus. You need to devote the same or more time and resources to your product, not just at launch but continually keeping it great, if the other elements of your strategy are to succeed.

Key takeaways

The plethora of user reviews of all products and services has the formula for success, no longer can you rely on great marketing, distribution or branding.
The fastest growing and best performing products now are also best of breed, whether Clash Royale in the game category or Tesla in the car category.
From the start, you need to dedicate sufficient resources to product development, rather than just ensuring you have enough for marketing or distribution.

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Truly customer centric

Product strategy based on making customers life easier

Great FTUE and simple UIUX

Lessons

Key takeaways

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Keys to adding successful features

How to add features that improve LTV

Add features that help your game

Key takeaways

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Key takeaways

Maybe your competitors are not that smart after all

Success does not equal omniscience

Don’t assume they know more

Moving forward

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Why product quality has become paramount

Not only physical products

Changes who is important

Only the good shall survive

Build a great product

Key takeaways

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New features won’t change the key metrics

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