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ICED Theory - Growing Infrequent Products

All products have a natural frequency of usage:

  • Daily - Slack, Zynga, Facebook, etc.
  • Weekly - Uber, DoorDash, Zoom, Credit Karma, etc.
  • Monthly - Uber, Credit Karma, ISPY, DoorDash, etc.
  • Quarterly - Everlane, Lovevery, etc.
  • Yearly+ - Zillow, TurboTax, Thumbtack, Opendoor, Carvana, etc.

Reforge calls this the Use Case Frequency Spectrum. Products that have natural frequencies of more than once per month are within the "Habit Zone" because it is easier to build a recurring habit with the user. Products that are infrequent (less than quarterly) are in the "Forgettable Zone" because it is easy for the user to forget about your product due to the low frequency for the use case.

Use Case Frequency Spectrum

A big problem I've observed is that a lot of people try to apply the same tactics and strategies of frequent products to infrequent products. There are two reasons for this:

  1. Most modern product and growth strategies originated in companies with frequent products (Zynga - Games, Facebook - Social, etc)
  2. Infrequent products are treated as a bug as opposed to a feature

As a product leader, I have invested the last decade managing infrequent products across the domains of property (PropertyGuru), taxes (Intuit), and peer-to-peer payment (PayPal). My experiences over the years taught me that managing infrequent products is a difficult affair, and I developed a fascination for it.

Take, for example, the core definition of product-market fit. It posits that you've reached PMF when users are retained over a period of time. How does this definition apply to infrequent or episodic products that might be designed to only be used once a year or even less?

In part 1 of this series on infrequent products I'll cover:

  1. The unique problems you'll face with infrequent products
  2. An intro to the ICED Theory (Infrequency, Control, Engagement, Distinctiveness), a framework to grow infrequent products

In part 2 of this series, I'll apply the ICED framework to a few different examples. For deeper access to detailed case studies and strategies like these, become a Reforge Member.

About the Author

Vivek Kumar

Vivek Kumar

Vivek has spent more than dozen years managing low frequency products such as taxes (Intuit), payments (PayPal), and proptech (PropertyGuru). He was part of the exec leadership team that took PropertyGuru to an IPO while scaling its revenue 7x over a period of five years. He was also part of the founding team of Amazon India.

A special thank you to Ravi Mehta, EIR at Reforge and former product leader at Tinder, Facebook, and Tripadvisor for his support in creating this. Ravi is also the creator of the Reforge Product Leadership program.

The Challenges of Growing Infrequent Products

Managing an infrequent consumer product can be difficult, as the window of interaction is limited. (Andrew Chen has detailed some of these challenges within the dating space.) When customers use a product only once or twice in their entire lifetime and then never return, it becomes challenging to:

  • Gain knowledge on the users and product in such a short duration
  • Monetize users well
  • Establish a sustainable acquisition engine
  • Turn the product into a viable and scalable business

Over the years, I have struggled with numerous aspects while addressing the nature of infrequent products. To my disappointment, the internet does not offer much guidance and I had open questions, such as the following:

  1. How do I conduct customer research in a transactional domain? Can I truly uncover the pertinent pain points, given that they surface infrequently?
  2. How do I establish a viable business with an enviable growth rate?
  3. How can I avoid excessive expenditure to secure users for my products?
  4. How do I grasp precisely what goes through my users' minds during the hiatus between their successive use of the product?
  5. How is retention conceptualized in the case of infrequent products? How can lifetime value be defined for some of these products?

Upon maturing as a product leader, I began documenting my observations of companies all across the globe to detect the patterns in their growth strategies. Although every business has its own modus operandi, I began to identify similarities between well-performing companies and created the ICED Theory—a framework to unleash growth in infrequent products.

ICED Theory

The ICED theory presents a mental model to help address the challenges faced by infrequent products and facilitates the crafting of a growth-oriented approach. ICED represents the various dimensions of an infrequent product:

  • I = Degree of Infrequency
  • C = Degree of Control Over the User Experience
  • E = Degree of Engagement Before, After, and During The Transaction
  • D = Distinctiveness of The Product
ICED Theory for Growing Infrequent Products

For any infrequent product, we can plot each of the dimensions on a spectrum. To grow infrequent products, we deploy strategies to move from the left to the right side of the spectrum for any of these dimensions.

ICED Dimensions to Manage

Let's dive into each of these dimensions in more detail.

Degree of Infrequency (I)

Customers’ ability to relate to an infrequent product may decrease over a period of time, resulting in the need to constantly attract new customers. As Lubomir Malo writes in his blog, “When a customer engages with your product, they form an experience. Assuming it's a positive experience, as time passes, the customer's ability to recall this product may decrease over time."

Product Recall by a Customer

The more infrequent the product, the poorer the product recall by the customer. Further, the degree of infrequency informs key business decisions, such as monetization and the cost of traffic acquisition. For example, for a highly infrequent product, leaning toward a higher ticket size for increasing monetization is appropriate, given the limited interaction with the customer over a lifetime.

Infrequency is a spectrum. In the case demonstrated below, you will see that categories such as properties (Zillow) are characterized by a high degree of infrequency, whereas travel (Expedia) has a lower degree of infrequency.

Infrequent Spectrum

Degree of Control (C) Over User Experience

Providing an end-to-end experience ensures customer delight; delighted customers lead to greater WOM and retention, in addition to enabling increased monetization. However, offering a complete experience is challenging when the product is infrequent and the relevant experience occurs outside the product. Here are some examples.

Control Over Experience Spectrum

TurboTax allows users to file taxes entirely within the product. It makes complex tax filing simple for customers. Hence, TurboTax boasts a high net promoter score (north of 70). During my time at Intuit, the desktop line of TurboTax enjoyed an enviable retention rate of over 90% year-on-year, and the business witnessed growth., on the other hand, has no means of controlling the job interview experience—the most critical component of the job-hunting process. Having only partial control over user experience, this product can delight customers only during the job search process. Inability to control the experience end-to-end makes winning the job seeker’s loyalty challenging.

Degree of Engagement (E) Before, After, and During the Transaction

In an infrequent product, higher engagement ensures customer loyalty in the form of retention or advocacy. Engagement is determined by three things:

  1. How complex a transaction is
  2. Degree of touch
  3. Predictability of retention

Let's walk through these three individually

Degree of complexity

During a transaction, the degree of complexity influences the extent of customer engagement. In their well-researched book The Effortless Experience, authors Matthew Dixon, Nick Toman, and Rick DeLisi contend that decreasing a transaction's "perceived effort" could dissuade a customer from being disloyal. In other words, reducing the effort invested will reduce churn. Generally, the higher infrequency, the more the complexity which requires more customer involvement to arrive at a decision. Products such as property tend to have a complex transaction process.

On one end of the spectrum is Zillow—the property-buying platform where a customer may take six months to a year to complete a transaction, since property buying entails a high-involvement, complex purchase. On the other end of the spectrum is PayPal, where the nature of transactions is easy because it does not require much effort to send money to someone.

Complexity Spectrum

Degree of touch

The second aspect of engagement concerns whether a product requires single touch or constant touch. User reviews on Tripadvisor serve as an example of products with a single touchpoint. While making travel-related decisions, customers read the user reviews and decide accordingly. Once the decision is finalized, the customer may lose touch with the product until they travel next.

Degree of Touch Spectrum

Stitch Fix, on the other hand, exemplifies a constant-touch product. Every time users wear the clothes bought from Stitch Fix that make them look good and fit them well, the value of Stitch Fix is reinforced. (Note: Stitch Fix is not completely infrequent, as the infrequency is contingent upon user behavior. The assumption here is that approximately half of the brand’s customers buy clothes once in every six months).

Predictability of retention

The third aspect of engagement concerns the extent to which customer retention can be predicted. The spectrum of infrequent products ranges from those that have predictable retention to those that do not.

Predictability of Retention Spectrum

On one end of the spectrum are products such as Indeed, where predicting when someone will seek a job is difficult. On the other hand, tax products are used annually; therefore, predicting and measuring customer retention is easy for such products.

Note: The following important terms warrant clarification.

  • (In) Frequency refers to the gap between the transactions in a user's lifetime. Increasing the frequency benefits the product with the increase in penetrability. For example, Glassdoor is well known for its company reviews. Users may visit Glassdoor during the job change, which will be, on average, let's say, two to three years. Furthermore, not everyone in the market is looking for a job simultaneously (low penetrability). To reduce the hiatus between visits, Glassdoor has salary information prospected regularly (increase in frequency). Salary information appeals to anyone who is working, whether looking for a job or not (increased penetrability).
  • Engagement indicates how immersed the users are during their interaction with the product before, during, and after the transaction. Engagement in the scope of ICED theory is emblematic of lifetime retention. Managing the degree of engagement affects active retention; that is, how often the customers will return to purchase the product. Furthermore, good active retention influences lifetime retention. For example, crafting a customized sports shoe at Nike requires a fair bit of immersion and involvement at the user's end during the purchase. The transaction may involve multiple visits before they purchase a pair, and these return visits are viewed as active retention. When the customer is delighted every time they wear their shoes, it increases the chance of future purchases (lifetime retention).

Distinctiveness (D) of the Product

In an infrequent product, the story registered in the user's mind governs a strong brand recall that can, in turn, increase customer acquisition or repeat acquisition.

In the case of infrequent products, a highly distinctive product such as Airbnb stands on one end of the spectrum, with a non-distinctive product such as Expedia on the other end.

Distinctive Spectrum

The distinctiveness of Airbnb’s value proposition leads to the brand enjoying a strong recall among its customers and non-customers alike. It enjoys a whopping 67% direct traffic.

On the other hand, non-distinctive OTA offerings such as Expedia primarily rely on search engines and paid traffic. Failure to be distinctive and the infrequency of transactions can ultimately strain customer acquisition.

In the next section, we will explore the importance of ICED theory and how exactly it aids the management of infrequent products.

Importance of ICED Theory

ICED theory helps fuel the growth of infrequent products.

When used with other growth and product frameworks like growth loops, ICED theory provides a path to achieving product objectives of GLEe (Get big, Lead, and Expand).

Let's take a look at the concept of product-market fit. In the case of frequent products, the product–market fit is measured through retention — that is, the core activity’s repeat transactions.

Definition of Product Marketing Fit for Frequent and Infrequent Products

In the case of infrequent products, product–market fit is a function of market penetration because, unlike frequent products, the time gap between transactions is wider. Therefore, the quantification of repeat transactions is not an appropriate indicator of market fit for infrequent products.

The table below demonstrates the critical distinction between the approaches for frequent and infrequent products. I will delve deeper into the definition of product–market fit for an infrequent product in a separate blog.

ICED Theory looks at infrequent products. Our Product Strategy program dive deep into the strategies for the different types of product market fit expansion and helps you think through users and scale. Get a free template on Identifying & Evaluating PMF Expansion Opportunities from our exclusive program content.

Free Template - Identifying & Evaluating PMF Expansion Opportunities
Importance of ICED Theory

Running an infrequent product business necessitates a holistic understanding of all aspects of the business—from the industry structure and the business model to the end-user experience delivered by the product. ICED theory offers an integrated approach for navigating all of these aspects for infrequent products.

ICED Theory decreases the key frictions associated with an infrequent product.

Attributes of an Infrequent Product

Most high-value infrequent products are not of use to everyone in the market at the same time. For instance, not everyone is looking for a job at the same time. Hence, the product’s penetrability may face a bit of friction. Similarly, influencing customers to use some highly infrequent products is difficult.

Extending the above example of job hunting, it is not easy to influence someone to look for a job. Therefore, even if a customer has a satisfying experience, the referral loop may not be effective in most cases. ICED theory eases this friction by increasing frequency and making the product penetrable.

Non-Penetrable vs. Penetrable

ICED Theory builds resilience against macroeconomic factors.

Infrequent products can be classified into two categories—those that are naturally immune to economic cycles and those that need to develop resilience. Most infrequent products, such as those in the domains of education, health, and taxes, are naturally resilient. Then there are products that change with the ebbs and flows of the economic cycles. Increasing frequency is one of the means to build resilience against macroeconomic factors. The more frequent a product is, the better equipped it will be to withstand economic cycles.

Take WhatsApp and Google Search as examples—these products are not affected by macroeconomic factors. Highly infrequent products have a high order value, and this increases the susceptibility to macroeconomic factors. For example, property markets perform well when the economy is booming. Similarly, in a receding economy, they are negatively affected. ICED theory will facilitate the building of resilience against macroeconomic factors.

Macro Factors Resilient vs. Non-Resilient

ICED Theory helps with deliberate decision-making involved with high-ticket items.

Purchases can be classified into two categories—impulsive and deliberate. Most high-ticket items entail high involvement purchases that require deliberate decision-making, for example, a house. ICED theory aids deliberate decision-making by providing solid engagement support throughout the customer journey.

Impulsive vs. Deliberate

Strategies for managing the I, C, E, and D dimensions to achieve growth.

As a reminder, after mapping each of the four dimensions of ICED theory on a spectrum, the aim is to move from the left to the right side.

ICED Dimensions to Manage

Transitioning toward the right end of the spectrum is not easy, but doing so has a number of effects:

  • Strong customer loyalty, which includes heightened retention and advocacy
  • Improved organic acquisition
  • Greater control over and successful delivery of growth outcomes for business
  • Increased market penetrability that strengthens the product–market fit

To enable progress along the spectrum, we will employ strategies to manage each of the dimensions. In the next part of the series, we will explore some of these strategies across the ICED framework. To get the post, subscribe to the Reforge blog here, or follow me on LinkedIn or Twitter.

Overview of ICED Theory

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Disclaimer: I’m a PropertyGuru employee, but I’m not posting on behalf of PropertyGuru or in an official capacity as a PropertyGuru employee.

Vivek Kumar