Value paths is a framework that is concerned with healthy, sustainable growth. It prioritizes the path that users take to achieve value with a product, rather than product design only.
Check out our related article on "Three Pillars of Healthy Growth" to learn more about how to produce steady, reliable growth for your product.
What are Value Paths?
Value paths are a way of thinking about revenue generation within the SaaS sector. Traditionally, user experience (UX) and product management have focused on user value, but generally in the context of the product.
For example, while developers talk about buyer personas or the user journey, they're often treated like vague concepts on the way to defining and measuring value by other metrics like customer lifetime value (LTV).
Value paths offer a different way of thinking about products. Essentially, it works by thinking less about the product and more about why a customer uses a product. On its face, this may seem like a subtle shift of perspective. However, in practice, it's significantly different.
Instead of thinking of an idea and aligning customers with the product, value paths take an alternative viewpoint. It examines the context or psychological needs that a user has that cause them to seek value in the first place. It analyses the outcomes of these needs and looks at product design through the lens of achieving those goals.
This thinking represents a departure from how we see products. Many developers pay lip service to the concept of delivering value for the user. Some even claim that it is their number one focus. However, their research, design, and analytics methods tell a different story.
Many of the traditional models that people use aren't concerned with measuring value in this way. They aren't measuring their user's needs and how they achieve their desired outcomes. They don't track how frequently each of these desires occurs. Therefore, they aren't connecting them with which paths generate the most revenue.
Instead, many developers seem to look at their product as an app, website, or SaaS. While they undeniably are those things, from a customer value standpoint, they are more than that.
For example, a messaging app is a product that helps users send messages. However, to users, they are a means to stay connected to friends and family. Their motivations are a connection with others, and the app facilitates that. That is the value path they take.
So to focus on value paths requires a different way of thinking about things. Value isn't really access to the product. Value is the correlation between a customer's need and the path they take to achieve a desired result or outcome that is facilitated by the product. They are related but wildly different standpoints.
Value paths are about building the bridge between needs and outcomes. The product is just one of the things that lie on the route between these two states. If your car is dirty and you'd like it to be clean, there is a clear path to that desired state. However, a car cleaning product is just one part of that journey. You still need sponges, water, know-how, and so on to achieve this state. And it's the same with software.
The cleaning product itself isn't what generates value for the users. It only becomes valuable in the context of how clean it makes the car. Additionally, the cleaning product might also have other contextual uses for the user. For example, you can use car cleaning detergents to clean different surfaces too. Therefore, they can become valuable within the contexts of cleaning windows, steel, bicycles, whatever.
In short, the car cleaning product doesn't need to be solely focused on creating a phenomenal, perfect detergent. Instead, they should be focused on forging a simple path for the user that allows them to get from the state of wanting a clean car to having a clean car. This process can take the form of sharing instructions, techniques, and other areas of expertise.
An application or SaaS company can look at things the same way by taking a holistic view of the needs and outcomes of users and finding a way to deliver value. One way to achieve this is through a digital adoption platform. Instead of focusing on which cleaning agents work most effectively, they can explore how user onboarding software can empower users to use the app as a solution.
Too often, companies are overly focused on the product. And don't get us wrong, the product needs to be great to be helpful. However, the ultimate test of product value is which outcomes it helps people achieve. A product can theoretically be useful in a specific scenario, but it's not beneficial unless it supports people changing their situation.
What are Customer Outcomes?
While concepts like customer value and customer outcomes are used liberally, it's not always clear that developers understand what a commitment to those values actually entails. Take a step back and think about concepts in the context of your own organization.
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Does your product development think about design in this way? Are you considering the contexts in which your users are engaging with your product? Instead of reflecting more generally about what your product can do, are you acknowledging the path from a need to an outcome for which users are selecting your product?
Using a value path framework involves aligning product states and users states. You need to understand the context within which people meet your product. What need or situation are they in? What do they want to achieve? Why is it they are accessing your product to change their need into an outcome? How can you leverage your expertise to help them move from one state to the other? These are the questions you need to ask to offer a value path.
You can easily map this framework onto a customer funnel. Take a customer funnel with four different stages: signups, trials, conversions, retention. Then look at this process from the customer's perspective. It starts with a need (signup) and ideally ends with the outcome (customer retention). Each stage where you experience drop-offs in numbers can correlate to someone diverging from their outcome, for whichever reason.
Going back to our car cleaning analogy. If you've mapped this path and realize that customers are dropping off at the trial stage because they don't have a sponge at home, this presents a problem. But what happens if your cleaning product instead comes bundled with a sponge? How will this affect the number of people who move from trial to conversion? Value paths need to be able to recognize where friction occurs and find ways to facilitate the outcome.
Value paths focus on the causal lines between needs and outcomes. By understanding how these relate, you can shift from designing for the product to designing for the process your users are engaged with.
Again, the design, look, and feel of a product is important. But it's the sequence of actions that users take to achieve their outcomes that need to be prioritized. The big question that developers need to ask themselves is, "how well are we doing at helping customers turn these needs into outcomes?"
Once you start thinking in this way, you realize the limits of traditional approaches. Breaking the customer funnel down into steps like trials and conversion assumes that these stages accurately represent their journey. However, a value path allows and helps you recognize that there may be several smaller, invisible stages between trial and conversion.
By recognizing the value path, you can better support your customer to achieve their outcomes. Again, a digital adoption platform or user onboarding software can act as a means to teach users the skills they need to reach their goals.
Traditional user journeys often face criticism for oversimplifying the user process. Often the metrics tell us more about the company's goals than they do about the user itself. Focusing on the value path helps developers see the steps within the steps.
Instead of leaving things up to the user, this more granular approach allows you to address and solve the various obstacles involved in user dropoff.
Who Needs Value Paths?
For many companies, the connection between user value and business value is broken, or at least faulty. Too often, business value is something that is only focused on at a C-suite or board level. This disconnect can be seen across the various metrics that executives and team members use to measure success.
Let's look at this with an example. You have a financial budgeting app. Users achieve their goals and value by managing their money better. They do this, and the hurdles they jump to achieve savings at the end of the month fall into the value path domain.
However, instead of taking this approach, many businesses are just concerned with amassing users and getting them to a certain point where they stick around. Often this leads them to try to force users through the funnel, with scant regard for whether various metrics correlate with long-term revenue.
In some ways, this situation is understandable. Revenue realization also lags behind the design. When changes are implemented, it takes time for feedback (in the form of revenue) to be observed.
However, value paths are a solution to this issue. By tracking outcomes, you can reliably align business and user outcomes. Value paths can transform revenue into a leading indicator.
Again, thinking that what your company offers as a product is too narrow. It should be more than that. Thinking in terms of value paths acknowledges that a product is only valuable and relevant within the specific context of what outcomes the user is trying to achieve. The product is never valuable on its own.
Trying to make a product more valuable is something of a fool's errand. The developer does not determine value: it's determined by the user. Two people can use the exact same product and achieve vastly different outcomes. One can achieve success, while the other might fail at their objective. Is one of them right about their different opinions of the product value? Or is there something more complex going on?
Instead of saying "what we offer is a great product," developers should think more along the lines of "what we offer is a path." Additionally, the value of the path can only truly be determined by how it helps achieve outcomes.
So, take our example of the two different users with different outcomes from the same product. Understanding the approach each user took can be instructive. What did the successful users do that helped them achieve their outcome? Can we implement that into our product design? Can we demonstrate that approach with user onboarding software to help all users achieve this type of growth?
Causation Over Correlation
Within the SaaS industry, people say that user behavior is not something developers can control. We can nudge them slightly to take the behaviors we want — i.e., behaviors that are typically correlated with revenue. In essence, the more we encourage them towards these behaviors, the more revenue grows.
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This thinking is the result of a product-centric mindset. Customers don't define value as having access to a product. They see it in terms of the results it helps them achieve. Developers need to start thinking in these terms because these are the motivations that drive users to become paying customers or subscribers.
If you're unsatisfied with the correlations between revenue and user engagement, value paths are for you. It focuses on causation, not correlation. So, instead of assuming that the best you can do is nudge behavior, think about why a user has turned up at your door. If you understand where they are and what they want to achieve, you can design a path to help them hit their outcome.
Of course, you should note that the intent of value paths is never to manipulate or control the users. The aim is to provide an offering that speaks to their desire to achieve outcomes. From there, helping them achieve value turns them into committed users.
Too many products focus on finding hacks or shortcuts that make their product addictive. But these short-term fixes are miles away from understanding why your user churn exists in the first place. Instead of fine-tuning a product to be a tool in the customer's path from their need to an outcome, this strategy papers over the cracks.
Frequently, people think of revenue all wrong. They consider product engagement will lead to revenue. But instead, they should be thinking about the things that make revenue occur. So instead of forcing engagement and hoping that translates into customers or subscribers, take a step back and look at what makes people become revenue generators: It's value.
In a way, this is more of a focus on how you are generating revenue rather than the actual revenue you are generating.
User Churn
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Net user churn is a useful metric. But it's limited. Knowing when a user churns is far more instructive. Additionally, knowing why they have churned — in the context of their value path — is something that is very actionable.
By looking beyond net churn, you can get to something more meaningful. As we said, you lose most customers at the early stage. This churn happens for a variety of reasons. However, once customers pass a certain point — it could be 2-3 months — they are far less likely to leave.
Breaking churn down to these discrete moments in their value path can give you much better feedback. By focusing on this early attrition, you can see what is causing friction. It may be that you are requesting excessive details, the forms are too long, or it could be that the process of helping users find value is inadequate.
User onboarding software can address many of these issues by helping users learn on the job via product tours, product walkthroughs, tooltips, and so on. If you understand why people have downloaded your product, you can get them on the value path. And from here, hopefully, they will reach their aha moment and become long-term users.
Why are Value Paths Important?
Making the best product with cool features is great. But there are plenty of products like this that have failed. One of the most convincing arguments for using value paths is that your customers deserve better.
Users are motivated by different things. They can have wildly different outcomes in mind when they use a product. Understanding what these outcomes are and designing your app so they can achieve them is your value.
If you are promising your user an outcome, you need to be focused on getting them there. When you understand what outcomes your users want, you can build your app to deliver satisfaction across various states they exist in.
There are several ways that app design can factor user intent into their process. Dynamic opening screens that predict why the user might be using your product at that time and date (i.e., what outcome they desire) can go a long way toward creating a seamless experience.
Again, this is about sequencing the path in a way that acknowledges the user's goals. Understanding customer states and what they are looking for is essential. Hoping that users figure it out on their own means you'll retain a certain type of user. But what about the users who need a little help? Are they being lost in the early stages because the app isn't dynamic enough to accommodate them?
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You need to give your users the tools to navigate their value path. On some level, they know what they need to get their outcome. Your app needs to help them with that in an intuitive way, not cause friction. Clear the trees for the value path, don't put obstacles in the way.
Cover Photo by Markus Spiske on Unsplash