Polaris index of traditional industry

I intensively read two growth courses, three books on growth and data, searched 100 articles on Polaris indicators, and finally extracted three theoretical articles on Polaris:

What is Polaris indicator+How to make Polaris indicator+Application of Polaris indicator (establishing growth model)

This is the second part of the growth methodology of little things-how to formulate the Polaris index. This paper will explain in detail the methodology of making Polaris index, and combine two cases for practical application, hoping to help you.

The formulation of any index is inseparable from the attributes of the business itself. Therefore, it is most important for us to know our business, know our business value, and then find a suitable Polaris index to guide our business development and teamwork.

But before setting indicators, we need to ask ourselves two questions:

1. Has our product reached PMF?

PMF (product Markit fit): product market fit means that our products are really needed by users, can solve users' problems for a long time, and are continuously used by users. If the product does not reach PMF, it means that there may be a problem with the positioning or value of the product, and there is no need to increase the products that the market and users do not need. (PMF is not the key point here, so I won't go into details here, and I will post it separately later. )

2. What is our growth focus at this stage?

Understanding the current basic situation of our products will help us to better formulate the Polaris index. Can be considered in combination with our product life cycle:

Of course, different products will have their own characteristics and cannot be generalized. The above is only for increasing understanding.

After confirming these, you can start to formulate the Polaris index. So in the actual operation process, how do reliable alternative indicators come from? Besides patting the head, is there any scientific analysis method to help us think comprehensively?

A practical method for obtaining Polaris index in images;

The following will be explained in detail with reference to this figure.

Polaris indicators connect business objectives and user value, forming a closed-loop positive cycle, and ultimately serving the long-term healthy growth of business.

For example, Google regards search volume as the indicator of Polaris.

However, if the short-term advertising revenue is used as the Polaris indicator, it is impossible to pay attention to the user value and break the closed loop.

(This example comes from three classes "Full-stack User Growth Expert Training Program")

Standard 1: What is the core value of your product?

Can this indicator let you know that your users have experienced this value? The so-called core value is the pain point that products solve for users and meet the needs of users. For example, if the core value of an investment application is investment, then this Polaris indicator should be related to the user's investment. For a dating application, its core value is making friends, so the Polaris index should be related to users' making friends. Polaris index should ultimately be an indicator for users to successfully experience the value of products.

Standard 2: Can this indicator reflect the activity of users?

MySpace takes "total registered users" as the Polaris indicator, which is a cumulative static indicator and cannot reflect the current activity of users. The number of daily active users, weekly active users and monthly active users will be better, but the definition of "active" should also be deeply considered, not only depending on whether users keep logging in, but also whether users have completed the "key behavior" of using products.

Standard 3: If this indicator gets better, can it show that the whole company is developing in a good direction?

Polaris index should be able to reflect the company's operating conditions from a macro perspective. Even if you don't look at other details, you can get a general understanding of the company's development trend just by looking at this indicator. For example, for Uber, if only the number of registered drivers is used as the Polaris indicator, the passenger aspect is obviously ignored. Just because the number of registered drivers has increased and the number of passengers has not kept up, this does not necessarily mean that Uber's business has become better. Therefore, Uber's Polaris indicator should be able to reflect the balance between supply and demand between drivers and passengers, so "total number of rides" is a more appropriate indicator.

Standard 4: Is this indicator easy to be understood and communicated by the whole team?

The definition of Polaris index should not be too complicated. Generally speaking, it is suggested to choose an absolute number as the indicator of Polaris, rather than a proportion or percentage. For example, "the total number of orders" is easier to understand than "the proportion of orders whose order amount exceeds 100 yuan", and it is also more convenient for cooperation and communication between teams.

Standard 5: Is this indicator a leading indicator or a lagging indicator?

For example, SaaS companies may use the monthly fee income as the Polaris indicator, which is not a bad indicator, but it is a lagging indicator, because some users may have stopped using it for several months, but they are still paying the monthly fee. In this case, "monthly active users" may be a better leading indicator. The advantage of leading indicators is that you can see problems in advance and act as soon as possible. Because when users stop using the product for a few months, it is often too late for you to cancel the subscription to save the product.

Standard 6: Is this indicator an operational indicator?

Simply put, if you can't do anything about an indicator, it is equivalent to non-existence for you. The following are some examples of Polaris indicators, as shown in Table 2- 1.

It can be seen that the above examples of Polaris indicators are absolute values, which can reflect the activity of users, represent the core value of products and show the macro-management status of the company.

Finally, don't demand perfection, and don't try to do it in one step. Finding the Polaris index is not a mathematical problem with only one solution. Many indicators are related, so there is no essential difference in choosing one. Your goal is to find a key point that is most suitable for your team at this stage, so that everyone can work together in the same direction in Qixin's daily work.

After all, any methodology is to help you achieve your goals better. Polaris and invivo are good stars as long as they can lead us to our destination.

(The above standards are taken from Practical Notes of Growth Hackers in Silicon Valley. )

According to these six criteria, the final Polaris index was further screened out, but we still need to pay attention to:

First, don't rush it.

Looking for Polaris indicators is not a one-off event, and it takes time to understand users and products.

Second, the Polaris indicator is not absolutely unique.

There are correlations among many indicators, which can be used as the Polaris indicator at a certain stage of the company.

Third, it changes with time.

Polaris indicator represents the strategic direction of the company, and the change cycle should be in "years", so it is necessary to adjust Polaris indicator in time with the strategic changes and market changes in different stages of the company.

Fourth, consider adding important auxiliary indicators and reverse indicators.

If it is found that a single indicator can't fully reflect the company's operation, we can consider adding an important reverse indicator as a "check and balance indicator" (e-commerce: Polaris indicator =GMV, auxiliary indicator: order volume, reverse indicator: return rate). Since it has the function of guiding the direction, the direction must be the same, so we should try our best to control the number of indicators, and the more concentrated the better. Don't choose too many indicators, too many indicators will easily become careless; There is only one indicator, and it is easy to become narrow-minded and blindly move forward.

Fifth, it may be unreasonable.

We should always pay attention to whether the established indicators really bring positive feedback to the company and guide the steady development of the business. If there is a problem, we should examine whether the established Polaris index is really reasonable and adjust it quickly, and we should not take it lightly, thinking that the index will be all right.

Sixth, don't rely too much on the Polaris indicator.

Sometimes we pay too much attention to one point and ignore another. From a big perspective, we may ignore the changes in the market and rely too much on the Polaris index. We still need to know clearly the significance of Polaris index, that is, to know the development of our current business and open up new business. We can have goals and targets, but they may be different from this target. Therefore, we should not only pay attention to the Polaris index, but also always look at the wind direction from a strategic perspective.

Next, look at two cases to help deepen understanding.

The first step is to analyze business objectives and user value.

Baidu knows that the business goal is sustainable advertising revenue, and user value is to get valuable answers.

Find out the indicators of each link in the closed loop of business model and user value as the alternative indicators of Polaris index.

The second step is to select indicators with six standards.

Through the evaluation of six dimensions, there are uncertainties in the evaluation of one or more of the three indicators: the number of answers, the number of users and income, while the quality of answers meets the requirements in the evaluation of six dimensions, so it is the most suitable Polaris indicator for Baidu to know.

The first step is to analyze business objectives and user value.

The commercial value of Baidu network disk is sustainable membership income, and the user value is convenient cloud storage service.

Find out the indicators of each link in the closed loop of business model and user value as the alternative indicators of Polaris index.

The second step is to select indicators with six standards.

Through the evaluation of six dimensions, the number of paid services, the number of users and income are uncertain in one or more dimensions, especially the number of paid services is basically inconsistent. The file operation volume meets the requirements in the evaluation of six dimensions, which is the most suitable Polaris index for Baidu network disk.

(The above two examples are from Three Core Questions to Help You Use Polaris Indicators Correctly.)

Interested parties can see more cases:

1, Growth Case: Setting Polaris Index for Knowledge Planet

2. Song Xia, head of growth products of LinkedIn China: How does Polaris indicator drive user growth?

3. Develop Polaris Index and build a growth model-Pinduoduo.

If you can make the Polaris indicator well now, welcome to the third part of the growth methodology of small things-establishing growth models.

After the combination of the three theories, I will choose some products to disassemble according to methodology. I hope everyone can internalize the methodology summarized by predecessors into their own growth weapons.