5 Metrics to Measure Value Honestly

A good product or service’s heart is related to its value. Articulating value is, however, not that easy. It’s much easier to measure efficiency, cost, lead times, and profit. However, none of these really tell you how much value you are providing. They just tell you how efficient you are at producing something, not that you’re producing something that users value.

What is Value?

To measure something, you first need to understand it. From my perspective, you can’t separate value from good design. After all, Apple has been one of the most loved and most profitable brands globally due to its focus on design rather than features. Essentially, value—and sound design—is good problem-solving, or more positively phrased, solution-finding. It’s about uncovering needs and finding a way to meet those needs.

Apple made computers available to the general public who wasn’t computer literate, while all the competitors at the time required specialized skills to use and maintain computers. The value they created was to give computing power to the average Joe. No longer did they have to rely on expensive consultants for basic things.

Amazon, another giant success, provides value by making it easy to get anything, anywhere, and at a reasonable cost. With most people having a 9 – 5 job and very little time to drive around searching for goods in different shops, they make shopping from the comfort of your home possible and remove the friction of complicated checkout processes with their famous one-click checkout. All are delivered to your doorstep within hours of placing the order.

Attributes of Value

With these examples in mind and using the circular economy as the foundation, the core attributes of value include:

1. Needs

The first attribute of value is needed. What do people need? What problems do they experience? Where is the friction in the process?

Most companies want to hear good news and focus on customer satisfaction. This is, of course, important, but it doesn’t tell you what the needs are that allow you to create even more value. To uncover needs, you have to be willing to hear what customers don’t like, even if it is out of your control.

2. Re-usability

The second attribute of value is the frequency (rather than number) of use. How regularly do users use your product or service? Do they use it once a year, once a month, or every week, or do they return daily and refer it to a friend because it’s so good?

The value of an item increases the more it is used. Many companies focus on adding new features and products without considering the frequency of use. In software development, as many as 80% of features in complicated systems are expected to be unused. That means all the effort and resources that went into the feature were wasted.

3. Lifetime

This brings me to the third and final core attribute of value, namely the length a product remains usefully alive. The longer a product remains useful and wanted by the users, the more valuable it becomes. Consider antiques, for example, which become more valuable the older they get.  Apple again demonstrates how building robust computers rather than the disposable assets created by some competitors increases the perception of value.  Most users are willing to pay more for a Macbook because they know it will last for decades.

Honest Metrics

Taking these attributes of value into consideration, here are my recommended measurements to know the value you’re producing, honestly:

1. The emotional experience of the user

Rather than asking customers how happy they are with your product, ask about their level of frustration while using it. Add an open-ended field to ask which feature specifically and what about it frustrated them most.

The more frustrated you are, the lower the value; the more relaxed you are, the higher the value. This would tell me whether you’re solving the right problem.

2. The Frequency of Use

Using some form of analytics, evaluate how frequently all the features are being used. Focus on completion rather than starting. A feature can only be considered “used” if the process has been completed.

How regularly do people use the feature? It’s not so much about the count of uses over time than how regularly they come back to use that matters.

3. The Lifetime of the Product/Feature

Think of the Volkswagen Citi Golf, which was officially unveiled in 1975. In South Africa, where I live, Volkswagen stopped producing it only in 2009, making it the longest and most efficient production plant in car manufacturing at the time. While most car manufacturers replaced or upgraded their models, the Citi Golf remained unchanged and in high demand for decades.

Measure the duration from releasing it first to production to the date that it is retired or discontinued. How long does the product remain helpful?

4. Waste

In the circular economy, the less waste there is, the more cost-effective the product being produced is.  Measuring the amount of waste in the production process thus directly relates to the product’s value, as it decreases the cost of production.

How much waste does your product produce?

Focus on one key measure, as measuring everything will dilute the context. In software development, the biggest waste is the number of unused features, as the key input is knowledge workers.

5. Choice

Finally, would you recommend it to a friend? People often use products because there is no alternative, especially in a corporate setting.

Take Jira, one of the most used (and thus successful) task management tools available, which is probably the most disliked tool by those who use it. To reflect the sentiment held by most users, there was a tweet a few weeks after Elon Musk bought Twitter that fired a large portion of the employees and shut down some microservices, which resulted in service disruption, saying, “@Elon I dare you to buy Jira.”.  People only use it because they’re forced, not because it’s valuable.

If people were given a choice, would they use your product? Would they recommend it to a friend?

Images courtesy of Depositphotos