How can you align product testing with your revenue model?

This question has a certain complexity and, therefore, I will share my opinion: Testing is the compass guiding your product to profitability; catching bugs early ensures a smoother user experience, translating directly to customer loyalty and increased revenue. Think of product testing as an investment in customer satisfaction – every glitch you find and fix is a coin in the bank of user trust, contributing to long-term revenue growth. A well-tested product isn't just a commodity; it's a market-ready gem that attracts and retains customers, forming the cornerstone of a sustainable revenue model.

As per my experience, there are two major factors which is important while doing product testing 1. Quality Assurance - Product testing ensures that a product meets quality standards, identifying and rectifying defects before release to avoid negative user experiences. 2. User Satisfaction - Through real-world testing, product testing validates user needs, aligning the product with user expectations and leading to higher satisfaction and positive feedback.

I've generally observed that testing with a subset of users allows PMs to identify potential issues and shortcomings before a full-scale launch, which is great to minimize the risk associated with a release. On top of that, the insights one gets from engaging directly with users while testing hypotheses ensures a user-centric approach (and could lead to a stronger market acceptance).

Product testing is crucial for validating the real-world relevance and effectiveness of your product. By gathering feedback from your target audience, you minimize the risk of developing off-mark products and ensure alignment with market needs. This process is key to enhancing product quality, usability, and performance, providing vital insights for iterative improvements. Essentially, product testing is not just about identifying issues, but about refining your product to meet and exceed user expectations, ensuring its success in the competitive market.

Why Product testing matters? The answer is simple. No one want to buy a product with bug(s). Product testing is ensure your product designed in right which customer expects and in good quality. Product testing includes engineering testing, product testing and production testing.

When speaking for new product launch it is important to decide if: - "for free" period and how long it will last (it's part of the investment) - use fermium model where you either introduce additional paid functionalities / services and lead user to upgrade plan or purchase services - long-term pricing strategy - if start with "for free" period / promotion, it should be very short - tier pricing model (usually 3 options with difference in f/cs included) Always think about the profit even if the cost for some initial period is part of the investment. Later in time it's more challenging to secure healthy profit. Rather have adequate pricing and provide discount at the beginning than later look for price increase / cost reduction.

This is a tricky question because: a) What customers value in the product may not align with what generates revenue (e.g: Google users value unbiased results, the revenue comes from someone paying for placement in the results). This can lead to a fundamental product conflict and too much focus on revenue could kill the product. b) Generating revenue often brings some friction to the product, and hence degrades the experience (e.g: The nudges to convert from a freemium plan to an annual subscription are always distracting to the user). It is therefore critical to start by jotting down your guiding principles or tenets, that call out what is "okay to do" and what is "not okay", and then work out the options within these principles.

I agree with @Pranav Bhasin's hierarchy of conceptualizing metrics. Where I focus with teams is in developing the underlying hypotheses of connection from the things you can measure to the reasons why you are measuring them. An impact map allows you to develop a solution hypothesis (we believe these THINGS address those NEEDS and if addressed will cause this OBSERVABLE CHANGE), as well as an understanding of the drivers of value (we believe if we cause or enable this CHANGE, we will realize this OUTCOME). You then focus your metrics on the OBSERVABLE CHANGES - as leading indicators of value, and on OUTCOMES - the lagging indicators of value.

The best way to achieve this is to define a hierarchy of metrics, in the following order: a) Input metrics: These metrics track the direct action of the user (e.g: Clicks on an action) b) Operating metrics: These metrics track how well the product does in helping a user accomplish their goals (e.g: Conversion in an e-commerce product). c) Output metrics: These metrics track the business value generated through these user actions. (e.g: Unit sales in an e-commerce product). d) Revenue metrics: These metrics track the revenue generated from these actions and associated costs. (e.g: GMS from unit sales, Cost of returns etc). Tracking metrics at these 4 levels allows you to easily associate user actions to the revenue output.

In my experience, there are two primary dimensions that you need to be concerned about: a) Is the user happy with the product? This is measured through a combination of user ratings, user feedback, NPS score and just having conversations with your users. b) Is the product effective in driving the desired outcome for the users? This is measured through the hierarchy of Input/Operating/Output/Revenue metrics, with continuous A/B testing to constantly optimize the product for improved effectiveness.