How to Prioritize Features
There are many skills necessary to help a startup succeed. Among them, one is so crucial that it became a requirement for every founder who wants to build a successful business. The ability to prioritize features. Knowing what to build can help keep your runway tight as you figure out the product market fit. But more importantly, it helps your startup gain steady progress before you reach profitability.
As a founder, you get feature ideas everywhere. From talking to your colleagues, customers, prospects, investors, or by looking at competitors. There's a sea of information you soak everyday. And you wish you have a magic wand that lets all your feature requests come true. Nobody has unlimited resources or runway. The ability to decide exactly the features that you need to build becomes very necessary.
In the following sections, I'm going to propose a framework that you can use to prioritize features.
Understand Current Stage of Your Product
Like a child, a product goes through a similar process from infancy to profitability, with many steps in between. You should evaluate which life-cycle stage does your company fit in. For simplicity's sake, a product goes through three major life-cycles:
- customer acquisition
- customer retention
To find out what stage does your company currently belongs in, try asking questions that can give you some clues. It works sort of like an audit:
- have we been steadily growing our customer base for the past few quarters?
- are we gaining more customers than we are churning customers?
- how much are we spending on acquiring a new customer?
- what activities are people doing within our product?
- are people telling their friends about our product?
As you find answers to these questions, you will start to the current life-cycle stage your company belongs in. If lots of users are referring your product and the burn rate is very low, there is no reason not to spend more money on sales and marketing. If your customer acquisition is high and people aren't coming back after the first week, work on your retention first. Each life-cycle stage requires different strategies that will affect what features to build.
Coming Up with Ideas
Once we've determined the current stage of your company, it's time to begin brainstorming ideas that fit the stage. If users aren't coming back after the first week, brainstorm ideas that will help with retention. Do people know what to do when they first sign into the app? Is the incentive clear for doing their first major action? Does their first experience match with what you put on the landing page? What is the next page most people are clicking on?
For example, your app requires people to add five books upon a successful sign-up. Are people leaving this page without adding any books? Can you re-design the page so that it is more intuitive to adding books? How about sending out emails the next day to remind them to add their first books? Come up with as many ideas as possible without worrying about the cost, feasibility and impact. We will discuss these things in the next steps.
If the idea seems too big, break it down into smaller, actionable items.
Estimate the Cost
For each idea that you've generated in the previous step, estimate each of their costs. Make sure to include any engineering hours and money if it involves profit share with a third party. This is a good opportunity to loop in an engineer on the team to help you come up with estimates.
Estimate the Impact
Use historic data from a similar feature or research online to find benchmark metrics. For example, the page immediately before an order completion is going to have a much bigger impact than the first page in the checkout flow. Changing text and button labels will have a bigger impact than testing new images.
Create Success Criteria
Come up with a list of success criteria for each idea so you know what you're aiming for. You don't always know how realistic your criteria are. But you should try getting into the habit of start thinking from the end and work backwards.
Prioritize Your Ideas
Pick the idea that costs the least and produces large impacts and has a set of clear success criteria. In the case where there isn't a clear winner, revisit each idea and determine which of its features you can drop for version 1. Adjust your success criteria and keep tweaking until you have a clear winner.