Ratio Bias
A cognitive bias where people judge the likelihood of an event based on its relative size rather than absolute probability. Important for understanding user decision-making biases and designing systems that present information accurately.
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“product assessment”
Proportionality Bias
The tendency to believe that large or significant events must have large or significant causes. Important for understanding cognitive biases in decision-making and designing systems that present accurate causal relationships.
TAM
Total Addressable Market (TAM) represents the total revenue opportunity available if a product or service achieves 100% market share. Essential for understanding the full potential of a market.
Expected Utility Theory
A theory in economics that models how rational individuals make decisions under risk by maximizing the expected utility of their choices. Essential for understanding decision-making under risk.
Smoke Testing
A preliminary testing method to check whether the most crucial functions of a software application work, without going into finer details. Important for identifying major issues early in the development process and ensuring the stability of digital products.
Churn Rate
The percentage of customers who stop using a product or service during a specific time period. Essential for understanding customer retention and identifying areas for improvement.
Reference Dependence
A cognitive bias where individuals evaluate outcomes relative to a reference point rather than on an absolute scale. Essential for understanding decision-making and consumer behavior.
AARRR
Acquisition, Activation, Retention, Referral, and Revenue (AARRR) is a metrics framework for assessing user engagement and business performance. Important for product managers to understand customer lifecycle and optimize business growth.
Zero-Risk Bias
A cognitive bias where people prefer the option that seems to eliminate risk entirely, even if another option offers a greater overall benefit. Important for understanding decision-making and designing risk communication for users.
Outcomes Over Outputs
A focus on the results or benefits of a project rather than the activities or deliverables produced. Crucial for ensuring that efforts are aligned with achieving meaningful results.
Empirical Rule
Also known as the 68-95-99.7 Rule, it states that for a normal distribution, nearly all data will fall within three standard deviations of the mean. Important for understanding the distribution of data and making predictions about data behavior in digital product design.
ROI
Return on Investment (ROI) is a performance measure used to evaluate the efficiency or profitability of an investment or compare the efficiency of different investments. Crucial for assessing the financial effectiveness of business decisions, projects, or initiatives.
Allais Paradox
A decision-making paradox that shows people's preferences can violate the expected utility theory, highlighting irrational behavior. Important for understanding inconsistencies in user decision-making and designing better user experiences.
Turnover Rate
The rate at which employees leave a company and are replaced by new hires, often used as a measure of organizational health and stability. Essential for understanding workforce dynamics and designing strategies to improve employee retention.
Optimism Bias
A cognitive bias that causes people to believe they are less likely to experience negative events and more likely to experience positive events than others. Crucial for understanding user risk perception and designing systems that account for unrealistic optimism.
Staffing Ratio
A strategy used to determine the proportion of various SMEs needed to support a pipeline of work. Important for optimizing resource allocation, enhancing efficiency, and ensuring teams have the appropriate support based on design demand and complexity.
Interaction Cost
The effort required for users to complete a task or interaction within a system. Essential for optimizing usability and minimizing user effort.
Annual Recurring Revenue
A metric that shows the revenue that a company can expect to receive annually from its customers for subscriptions or services. Essential for understanding business performance and growth potential.
Prioritization Matrix
A decision-making tool that helps prioritize tasks or projects based on specific criteria, such as impact and effort. Essential for effective project management and resource allocation.
Pessimism Bias
A cognitive bias that causes people to overestimate the likelihood of negative outcomes. Important for understanding user risk perception and designing systems that address irrational pessimism.
Social Benchmarking
The practice of comparing one's performance, processes, or practices to those of peers or competitors to identify areas for improvement. Important for understanding relative performance and identifying best practices for improvement.