Value–Action Loops in Growth
How Value Creation Generates User Decisions?
First principles and questioning what drives user actions/decisions (and especially what makes them do what we want; conversions), led me to develop this loop—which had helped me understand overall user psychology stages much better.
Users/people need motivation to do anything.
Motivation can come from a variety of sources, but the kind you can control and is already on your website is what I call value. When the value reaches an optimal point, users take action. Simple as this.
Let’s explore the loop a little; it’s made up of three parts:
Value Creation. Value you’ve generated for users.
Sufficient Value. Users change of mind.
Conversion. Monetization or Activation
Ideally, you want this loop to be interactive and balanced. Providing so much value without action/conversion (monetization or activation) reduces your chances of creating traction and establishing deeper relationships with users.
Conversely, if what you offer is not in balance with what you demand (purchase, email, etc.), your conversion rate will suffer.
Value-Action is a thinking model and can be applied to all kinds of things. It helps you find the balance for your different growth components, increase relevancy and conversions, and gain a better understanding of customer behavior.
Value Creation
Weather you’re creating information at any form including blog, tweets, podcast, etc. you’re creating a value. Same applies when you’re giving free trial account or competitive pricing. In any of these cases, you’re creating value—mostly for free.
Sufficient Value; The Bridge
Sufficient value occurs when the generated value for a particular user reaches to a certain point where conversion probability is optimal. In other words, the user will change their mind, feel fulfilled or begin trusting the brand; and this change in user psychology creates a conversion opportunity.
Sufficient Value can be met in two ways:
Friction/cost is/becomes low
Intent is/becomes high
Consider a blog; the value creation comes from your posts, while Sufficient Value comes from the belief that your posts are interesting/fruitful/helpful to them (intent increases).
Alternatively, in an online shop, Sufficient Value could be met once you have earned the trust of first-time users (friction decreases).
Action/Conversion
Users take action (giving information, paying, etc.) in exchange for extra value—which you’re offering.
For example, users may sign up on your website (giving information to gain partial access to your platform) or purchase a product (paying for a service or product).
What’s matter here is creating proper conversion elements to seize the opportunities in different user interest/engagement levels. You can use conversion elements at any stage of your user engagement, from activation to retention to monetization.
Conclusion
You need balanced Value-Action loops in your growth components.
Your Value-Action loops should evolve over time for users. More interaction (even better interactions), deeper relationship, more opportunities to seize.
Your loops can’t be broken in any steps. Companies often fail in taking the Step 3 to Step 1. Conversion isn’t a one-time event, so the flywheel must be always in motion.