Time to Value (TTV): Why accelerated value delivery is crucial for an attention scarce digital world

10 Understated Product Lingo's: Time to Value (TTV) [1/10]

Why should I not delete this app?

According to a research by Quettra within 90 days, an app loses about 95% of it's DAU, the first 77% of that - in the first 3 days.

Your customers expect an answer within the first-minutes, of downloading and using an application. How long it takes, for an app to start becoming useful, is then something to be measured and improved continually.

The Time to Value is an often understated product metric when compared to it's better known cousin's like MAU, Conversion-rate, or NPS. While retrospective metrics are important to identify and quantify success, forward looking metrics give product and business teams confidence and foresight over where, investment in terms of time and resources should be placed to connect product development with driving a particular business impact.

What is Time to Value (TTV)?

Answering this questions needs to be done in two parts, what is time, and what is value?

What is Value?

Put simply, in the context of an end user-facing product, value for the customer (value-creation) is focused on solving a problem or improving an aspect on life, for the final beneficiary of that product. It is not about cool and flashy features within an app, nor promotions and discounts of a product.

Where this often gets confusing, is within platform companies, which acts as an intermediary of the supplier-demand equation. A customer buying a pair of slippers from an E-commerce marketplace, would have found value through the usefulness of the slippers created by the listed-merchant, and separately, value from the convenience of product evaluation and checkout created by the E-commerce marketplace.

Value creation also needs to be bifurcated from value-extraction, which is the remuneration or financial-benefit to the provider of that service, in return for his/her efforts in solving that problem. In the context of the above example, the merchant extracts value (in the form of the selling price) from the users for producing the slippers, whilst the E-commerce marketplace, extracts a fee from the user for the convenience (indirectly through the merchant).

What is Time

In the context of a mobile-application, time (in TTV) is measured in 2 ways:

The time it takes from opening the app, to value-creation.
The time it takes from downloading the app, to value-creation.

Time to value, therefore refers to:

The amount of time in which a tangible benefit is transferred to the user, by the product, after first downloading it.
How long it takes for that value to be delivered, in each subsequent app session.

Why is improving TTV difficult to implement?

The main difficulty as to why the metric is relatively obscure, is based around the conflict of interest between businesses and users.

Using a fictional example of a fast-food restaurant (henceforth referred to as Wacdonald's), who has just created it's first online ordering app.

Mr Wac, the owner of the store, when deciding on which product to showcase on the homepage of his app, has three choices:

Showcase the least popular product to generate more demand for that product
Showcase the most expensive product to drive revenue and profitability
Showcase the product which is likely to be the customer's favorite (most valuable)

In option 1, having spent a significant amount of time marketing and perfecting the recipe, dedicating a part of the main-page of the ordering app to drive demand seems like a reasonable choice. That is similar for option 2, where revenue = price x quantity, and pushing the sale of the most expensive product, should theoretically contribute to increasing revenue isn't it?

The paradox of the customer

Only that isn't the case. A 2022 study by Bain indicates that most companies don't beat the rule of 40, where the sum of a companies growth rate (in %) and profit margin (in %) is greater than 40%.

While Wacdonald's could optimize on driving revenue growth through aggressive marketing of it's least popular product in option 1, the unit economics of revenue - cost reduces it's profitability margin. While revenue growth might be seen, those often come with a hefty promotional price tag.

The same rings true for option 2, where market skimming while indicative of a higher profit margin, takes a reductive approach on revenue, given the supply-demand effects of elevated prices on customer demand.

Then why do companies do that?

This really sits at the heart of the marketplace problem. Within every marketplace, there are good and back actors within the demand and supply equation. In an impartial marketplace, market-forces often corrects out low-profitability users (deal hunters) through elevated premiums, and on the supply side, the companies with a low value:price ratio often see lesser demand compared to peers.

The only problem is that, today's marketplaces are far from impartial. Accountable to growth targets, driving user-acquisition en masse through 'growth hacking' or promotions is one of the instruments to achieve those goals.

The same is true for the supply side, wherein natural selection, the inferior product should theoretically be washed-out of the marketplace. However, due to the incentive structure for marketplace, keeping these merchants on the platform settles into an important source of advertising-revenue.

Just give me my burger already

The fantasy of platforms riding in as trust-brokers have long since faded from public consciousness, the reality of them being independent companies with business productivity metrics is the new norm.

Sustainable businesses which have withstood the test of time, found ways to create enough value to justify extracting just enough.

And while tech has enjoyed tremendous fame - as the great equalizer, at it's very core, it's true purpose is of a vehicle to serve the customer their favorite cheeseburger - whether the cheeseburger is digital, or served with a generous beef patty. Then the question which still remains, is why make the customer queue when you can serve them their burger right away?

Being cognizant that the app fulfills its core offering first, before the added bell's and whistles, is a key step to ensure value is delivered as quickly as possible. How then do you begin introducing, and subsequently measuring and optimize for TTV?

How to incorporate TTV in your Product Roadmap?

Customer, Customer, Customer... Here's a video of Jeff Bezos saying "Customer" in a 100 different ways. If the once richest man in the world says the word a hundred times it's bound to be right, right?

Going back to the revenue equation, while it is not possible to directly change the quantity-sold overnight like price, it is very possible to influence it positively over the long run. An experiment by Google, showed a 40% increase in purchase intent when ads were served with intent signals. If Wacdonald's had chosen to pick option 3, the revenue equation in the longrun might have looked something similar to:

Revenue = Price x (Total impressions x 1.4 (Conversion Rate))

The second benefit we would see, is an increase to the NPS of the ordering app itself, due to the relevancy of the served content.

In essence, displaying what the customer wants, as quickly as possible, higher in the funnel, is the key to optimizing TTV. Each minute the customer spends being indecisive, is increase competitor risk and app-fatigue setting in. Here are some ways you can optimize TTV in your product:

Reduce friction to up-funnel checkout

While offering promotions and reward points to incentivize a customer to checkout, and serving promotional ads are common ways in which companies drive conversion, the journey from clicking an ad-banner to actual purchase is always disjointed.

Typically, a served ad on the app-homepage or performance marketing pages, leads a customer to a product listing page, despite an intent to convert on the advertised product. Taking the shorter path, and bringing the user directly to the variant selection or checkout screen, reduces not only the time for consideration and possibly drop-off's, but also the complexity of decision making (user-friction) in that process.

Aligning the technology and marketing operations to optimize in these high-intent areas, is a key driver for reducing the TTV, and learning from the one-click video homepage format, which had made the likes of video-streaming services, such as Netflix and Youtube successful in providing a seamless value delivery.

Bring your customer to app/web real-estate discussions

Often times app real-estate, especially those on the main pages are highly prized after, and reserved only for the platform core-competencies, high-visibility campaigns, and strategic business goals. When push comes to shove, tradeoff's often have to be made, which might come at the expense of the customer.

"Bringing the customer" to discussions involving these key touch-points, and advocating strongly to provide sustained relevancy for the customer, is key to trust-building - that the app is built for them in mind.

At a time where customers expect uptimes of 99.9% or more. Inconsistencies in the relevancy of a content, by over-weighting in promotional pushes or low-intent product, comes at the diminishing of trust for the content relevancy of the app - moving the decision criterion from quality and efficiency, to a purely discount hunting one.

While they can be complementary, much like how Google serves advertised search-results along side it user-relevant criterion, applications similarly need to bifurcate agendas; and their subsequent app real-estates accordingly - to prevent a decay of brand equity.

Treat your customer's time and attention like money

One of the key factors which makes Google's product the benchmark for user-experience(s) - is seamless elegance. Instead of showcasing a multitude of buttons and content; each fighting for the users attention, every action that a user needs to take is the absolute necessary.

Similar to the concept of "no wasted motion" in basketball, being able to cut right to the desired problem faced by the user, and suggesting the most relevant solution to them, is a hallmark of the high-standards and efficiency, in delivering value to users as quickly as possible, each time they use the app.

One interesting exercise is to count the number of steps it takes to reach a monetizable action in your app, and in each of these steps the number of CTA's - both relevant and irrelevant; a user is posed with during that process.

Threading the needle

Whilst delivering value faster in an attention scarce digital world, is no doubt critical towards sustainable growth, using a match to start a campfire, is always more difficult than burning up the entire box of matches.

In a highly saturated digital marketplace, where companies over-promote to edge out competition, focusing on long-term value creation and product led growth seems almost counter-intuitive.

It requires a fine balance, patience, and a consistent drumbeat. While tech has evolved rapidly in the last couple of years, business has not changed much since the time where we barter traded meat for a weaved blanket - it still and will remain a transaction which benefits both parties. Why stop now?

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Authors Note: I hope you enjoyed the first article in the 10 Understated Product Lingo's series, stay tuned to my next article, where I'll explore Product-Led Growth in greater detail.