Adjacent User Theory: How to Grow Your Product Beyond Product-Market Fit

This article delves into the Adjacent User Theory, a concept that helped Instagram and Slack achieve exponential growth beyond their initial product-market fit. The Adjacent User Theory identifies users who are aware of a product, possibly tried it, but struggle to become engaged users due to barriers to adoption. These are the users who represent the potential for growth beyond your current user base.

• It is vital to understand why Adjacent Users struggle to adopt your product and to build empathy for their challenges.
• Solving for the Adjacent User can capture the full potential of your product-market fit, leading to increased retention, acquisition, and monetization.

Why Solving for the Adjacent User is Crucial

Addressing the needs of Adjacent Users is critical for several reasons. It allows you to capture the full potential of your current product-market fit, enabling your product to reach its true potential. Moreover, solving for the Adjacent User has a compounding impact over time, not just for near-term cohorts but also for future generations of users.

• Unlocking True Product-Market Fit Potential: The gap between your current retention and the true potential of your product-market fit lies in the Adjacent Users. By addressing their needs, you achieve a more comprehensive product-market fit.
• Compounding Impact Over Time: Solving for Adjacent Users doesn't just impact near-term retention but creates positive ripple effects through your growth loops, influencing acquisition and monetization efforts.
• Shifting Focus to Future Audiences: While most product teams focus on existing users, the Adjacent User theory emphasizes understanding and addressing the challenges of your evolving audience. Failing to do so stalls growth, and your product never reaches its full potential.

Understanding the Adjacent User in a Visual Context

Imagine your product as a series of circles, each representing a user state, such as "Power User," "Core User," "Casual User," "Signed Up," or "Visitor." Adjacent Users are those "in orbit" around a circle, having an equal or greater chance of leaving than transitioning to the next state. They are stuck at the edge, unable to cross the threshold due to specific barriers.

Instagram's Adjacent Users

Let's explore Instagram's example. Users need to pass through several thresholds to become core users:

• Not Signed Up → Signed Up
• Signed Up → Activated
• Casual → Core Usage

At each threshold, Instagram identified a group of users who were hovering on the edge, struggling to progress. For example, if a user had more than 10 followers within the first 7 days of signing up, they had a 65% chance of becoming activated. However, there was always a segment of users struggling to build their audience. The reasons varied across user groups and changed over time.

Slack's Adjacent Users

Slack faced similar challenges. Its key user thresholds include:

• Not Signed Up → Signed Up (Acquisition Teams)
• Signed Up → Casual (Activation Teams)
• Casual → Core Free (Engagement Teams)
• Core Free → Monetized (Monetization Teams)

At Slack, a user who was active for 3 days out of the last 7 (3d7) had a 50/50 chance of churning or retaining the next week. This illustrated the need to identify and address the challenges of users on the edge of each user state.

Common Reasons Why Teams Neglect Adjacent Users

Several factors tend to distract teams from focusing on Adjacent Users, including:

• Power User Bias: Product teams, by nature, are power users of their own products. They tend to prioritize improvements based on their own experiences, neglecting the needs of those who are less familiar with the product.
• Inaccurate Personas: Personas often describe current users rather than the evolving needs of potential users. They can also be static, too broad, or not based on actual usage data.
• The Home Run Fallacy: Teams often overvalue "home runs" (targeting large markets) over "singles" (incrementally solving for existing user adoption problems). This leads them to neglect the potential of their current user base.

Identifying and Defining Your Adjacent Users

The first step in addressing Adjacent Users is to develop hypotheses about who they are and why they are struggling. This process involves:

• Visibility, not Perfection: The goal is to gain visibility into your Adjacent Users, not achieve perfect definitions. Start by laying out multiple hypotheses and iterate as you gather more data.
• Understanding Successful Users: Identify the attributes of your current successful users and analyze the vectors for expansion. For example, if your successful users are primarily women, explore how to attract more men.
• Data-Driven Insights: Begin with a bottom-up analysis of your data to identify areas where users are dropping off. This will guide your hypotheses about why specific user segments are struggling.
• User Research: Validate your hypotheses through user research, talking to potential Adjacent Users to understand their experiences and challenges.

Building Empathy for the Adjacent User

Knowing who your Adjacent Users are is not enough. You must understand why they are struggling. This requires building empathy, which can be achieved through several techniques:

• Be the Adjacent User: Experience the product from their perspective, using it in the same conditions and settings they do. This can involve simulating user flows, empty states, and other conditions.
• Watch the Adjacent User: Conduct usability tests with Adjacent Users to observe their interactions and identify areas of difficulty.
• Talk to the Adjacent User: Conduct interviews and surveys to understand their needs, goals, and alternative solutions they consider.
• Visit the Adjacent User: Observe how Adjacent Users use your product in their natural environments to gain insights into their workflows, constraints, and needs.

Sequencing Your Adjacent Users for Maximum Impact

The order in which you address different segments of Adjacent Users is crucial. Focus on segments that will lead to long-term value and growth. Here are some key principles for sequencing:

• Focus on One or Two Attribute Differences: Prioritize segments that differ from your core users in only one or two attributes. This allows for quicker validation and iteration.
• Strategic Alignment: Ensure the chosen segments align with your product's overall strategic direction.
• Solve In-House Problems First: Address the needs of users who are already showing up in your funnel before venturing into entirely new markets.
• Consider Growth Trajectory: While segment size is important, prioritize segments with strong growth potential even if they are smaller initially.

The Evolving Landscape of Adjacent Users

The characteristics of Adjacent Users are constantly changing, influenced by several factors:

• New Information: Experiments, new instrumentation, and user research constantly provide new insights, influencing your understanding of Adjacent Users.
• New Users Showing Up: As you solve for one segment of Adjacent Users, they may introduce new types of users through word-of-mouth marketing.
• New Value Props: Introducing new features or value propositions can shift the user experience, creating new challenges for Adjacent Users.

Key Considerations for Success

To navigate the evolving landscape of Adjacent Users, keep the following in mind:

• Understand "The Why": Always investigate the reasons behind experimental results, both positive and negative. This helps you understand the evolving needs of Adjacent Users.
• Continuously Improve Fundamentals: Constantly work on improving your fundamental flows, such as registration, activation, engagement, and monetization. These areas are constantly changing as your user base evolves.
• Regularly Recross the Cognitive Threshold: Maintain a proactive approach to understanding your Adjacent Users, regularly seeing the product through their eyes.

Conclusion: The Importance of Adjacent User Thinking

Successful products need to shift their focus from core users to Adjacent Users to sustain growth. By embracing Adjacent User Theory and continuously evolving to serve new user segments, companies can achieve sustainable growth and reach a broader audience. Remember, the key is to prioritize the right Adjacent Users, those who are most likely to contribute to long-term value and success.