The Art and Science of Product Pricing

Product pricing is a touchy feely subject, hence the following disclaimers for I get into it…

  1. There is NO one-size-fit-all solution to your pricing problem.
  2. Don’t look for a one time silver bullet for product pricing.
  3. Pricing varies drastically between verticals, products, company stage, etc.
  4. This article is meant to give thought frame work around pricing and not a meant to be a perfect solution to your product-pricing problem
  5. Hence read this article and make it your own for addressing your product-pricing needs…

Getting the product price right is one of those ever elusive goals that almost all product companies are after. Companies undertake product-pricing activity for many different reasons, for example:

  1. New product introduction
  2. Updates to existing product
  3. Changes to sales / revenue targets
  4. Changes to product costing
  5. Changes to competitive landscape

Just like other product related activities such as product management, product development, support, etc., product-pricing activity should also be given its due time, resources and priority. Without thorough data driven process companies will find themselves not convinced about product pricing and end up going to square one again.

Hence before beginning on the product-pricing endeavor, here are some of the steps that companies should think about.

Again, a word of caution before I delve into various aspects of the framework given below… this is a simple framework, and companies should pick up the pieces that are applicable to them, as opposed to strictly following the process. I’m not a believer in blindly following any framework and neither do I promote it. I encourage companies to study various frameworks and then pick the one that they believe will benefit the most for their specific situation and then look into the application of it. I recommend that companies should not look for silver bullet or ‘one size fits all’ approach cause there is none!

Having said that, the first step in product-pricing exercise is to really nail down the reason for undertaking the exercise. Instead of CEO, Business head, Sales head initiating the conversation, it’s recommended that once a quarter there should be a pricing check point. There are a couple of benefits of doing that:

  1. Sales head can provide you with the market pulse on the manner in which competitors are positioning pricing and customer input on pricing
  2. Product Marketing Manager can share insights on changes in competitive pricing.
  3. As a team, companies can determine the circumstances under which pricing needs to be looked into on emergency basis. For example recently airlines suddenly started cutting their ticket prices, telecom operators slashed priced of Internet usage, etc.
  4. Identify any data collection tools that need to put in place or updated so that right data is collected on ongoing basis so that it can be used for objective decision making.

The discipline of having these conversations periodically helps companies keep an eye out for any ecosystem changes that might force them to think about changes to product pricing. In case the company has multiple products or product lines that are related to each other, then it becomes even more imperative to have these periodic checks. Through these meetings companies should be able to nail down if product-pricing changes are required and if, yes, what are the reasons for those.

Pricing Process
Pricing Process


It always helps to keep track of various industry best practices around pricing. This is an ongoing exercise. It helps you in understanding the following:

  • Industry rules and regulations specific to the industry vertical that company operates in. For example recently SpiceJet was pulled aside by government for selling tickets for Rs. 1
  • Accepted pricing norms in the industry.
    • Who pays for what?
    • Acceptable price range
    • Things that can be included or excluded from pricing perspective
    • Pricing transparency norms, etc.
  • Pricing models that customer / consumers are familiar with and can relate to.

The idea here is to get pulse of the eco system and understand what’s working and what’s not.

Know thy Customers! Understanding your customers purchase psyche is extremely crucial. You should know atleast the following things about your customers:

  • Customer’s perception about value of the product category
    • Is it a must have or a nice to have?
  • Buying process: The end-to-end process that Customers go through as part of product purchase.
    • How are budgets approved?
    • Who is the buyer?
    • Who is the approver or approvers?
    • How do customers compare products?
    • How do they use the product?
    • Which features matter to them the most?
    • How long is the buying process?
    • How far in advance do customers plan the purchase?
    • Payment recovery once the product is sold
    • Objections raised by Customers in the buying process
  • Customer segmentation: All Customers are not born equal. Broadly customers can be grouped into various categories. This categorization or segmentation can help in creating pricing models based on Customer’s ability to pay for and use the product. For example:
    • Volume (High / Medium / Low)
    • Global (Users from multiple geos using product)
    • Number of users (High / Medium / Low)
    • Bargain hunters
    • Smart cookies

Each of these segments should be studied in-depth so that product offering and pricing can be tailored to them.

  • Data capture: Customer segmentation can be done successfully only if data is related to customers is captured by Sales, Support, Marketing and product teams. Without this data, Companies may be flying blind and not know what’s working for them and what’s not. Typically, the longer time window data companies have to work with the better it is. In case, the of new product release, this may not be possible, but then put the systems in place from day one so that the data is captured from the get go. Companies can use CRM systems, home grown systems, etc., but they must use some system. Otherwise the data is lost in emails and permanently lost when folks move on from organization.

Then comes the Competition, the ever changing and ever present force that impacts various aspects of your business, including pricing. In order to consider competitive impact, Companies’ should first know the following:

  1. Who is the core competition?
  2. Competitions’ geo presence
  3. Who is the secondary competition and beyond that?
  4. What pricing models do they have?
  5. How big is their product adoption?
  6. Feature comparison
  7. How long have they been around?
  8. Pricing model presentation
  9. How often does the competition shows up sales scenarios?

The key here is to really use the competitive information to figure out the real threat that the competition poses in Company’s grown strategy.

Companies should really have handle on the product costing. Many companies in the B2C space create product and put it out there based on the way their competition is pricing the product. They assume that the pricing is such that they will be profitable anyways after a while. But this approach is suicidal! Because companies then one day suddenly realize that despite of high product sales volume, they don’t have a lot of margin and to be really profitable, they would drastically need to change the pricing or increase sales or cut costs.  A number of books have been written on product costing and it’s recommended that Companies should work with certified cost accountant for getting a handle on their product costing.

Product pricing is also a function on Sales and revenue targets. This is part of the top down approach of product pricing. A company can decide that they have to reach a certain revenue goal and work backwards from there to come up with an approximate price of the product. At this point they may realize that they have to price the product much higher that what the market is ready for or the other way round. In either case, the Sales team needs to be always involved in the pricing conversation, so that they can bring their market knowledge to the table. At the same time it’s necessary to note that they don’t use pricing as the reason for not being able to reach their sales target.

Pricing Models and Analysis is the most fun part of the product pricing exercise. This is where all the data that has been gathered internally as well as from external market is used for determine product pricing. Here are some steps that should be taking as companies try to come up with pricing model:

  • Identifying the key-pricing drivers:
    • By users (Customer Types)
    • By organization
    • By product units
    • By transactions
    • By functionality

There can be many more. Ensure that pricing is in line with the value the Customer is getting out of it.

  • Impact analysis: Every time changes to pricing / pricing model are suggested, impact on the following should be taken into consideration before rolling out pricing:
    • Existing customers (to grandfather or not)
    • Sales and support process
    • Revenue and Sales target
    • Profitability
    • Product buying experience
    • Acquisition of new customers
    • Product Management
    • Product Marketing
    • Product Engineering
    • Billing related changes
  • Pricing models: When coming up with product-pricing models, ensure the following:
    • Easy to understand
    • Easy to explain
    • Easy to pay (annual payment option)
    • Relates price to value (value driven)
    • Room for Sales to provide discounts (introductory offer, seasonal discount, regular client discount, one time annual payment discount, etc.)
    • Enables differentiation (charging for unique value as opposed to commodity)
    • Has low barrier to entry of first time users (freemium)
    • Has options for attracting large prospects (future customers)

Note: Void the word ‘unlimited’ in the pricing model wherever possible. Incase ‘unlimited’ word is being used, then should be explained in the terms and conditions.

  • Scenarios modeling are very critical to really understand the impact of pricing and pricing models. To do this, take existing customers and future customers and find out before and after impact. For example with current pricing Customer was paying X with new pricing customer will pay Y. Create real looking pricing page, rate sheets to understand the visual impact. Perform this activity for every customer segment and analyze the impact. Be especially sensitive about the impact on the customer segment from which the company is making large revenues. If this segment is adversely getting impacted then, the new pricing might have over all negative impact on the revenue.

Pricing roll out is equally, if not more as, crucial as the pricing model itself. A lot of internal and external training needs to happen before new pricing can be rolled out. Consider the following as part of new pricing roll out preparedness:

  1. Overall roll out plan with departmental ownership.  Timing of rolling out of pricing changes is critical. Make sure that it’s not in or just before the time when you get the most orders (busy season, if there’s one for Company’s business). There is enough time to explain changes as necessary to the high value customers.
  2. Marketing:
    • Website
    • FAQ
    • Pricing collateral
    • Checkout process (if there is one used for online purchase)
    • Video (why is the change being made and how it impacts you – the customer)
    • A-B testing readiness
  3. Product:
    • Incase there are features that need to be added to ensure correct pricing
  4. Sales and Support:
    • Updating sales and support process
    • Training sales and support team
    • FAQ (internal and external)
    • Special process for High Value customers
    • Process for breaking the news
  • Email
  • Phone
  • In-person

5. Setting benchmarks: It is essential to capture benchmarks before rolling out new pricing, so that impact of pricing can be checked objectively. Here are some of the benchmarks to that can be captured:

  • Lead Generation benchmark
    • Number of leads / week / geo
    • Average deal size by vertical
    • Type of leads (lead mix)
    • Lead sources

6. Sales and Support Cycle benchmark

  • Time to close deals
  • Competitive references during price negotiations
  • Number of price discussions when closing deals
  • Feature usage by customers
  • Number and type of support queries

7. Revenue and process benchmarks

  • Revenue by Geo and by Vertical
  • Revenue by Customer segment
  • Changes to customer segment mix

Once the pricing is rolled out, either to pilot group, or to everyone, the impact of pricing must be tracked. There are a number of ways to track impact:

  1. Collect the KPIs and compare them against the benchmark
  2. Get on call / emails with customers to get their reaction
  3. Use the data from A-B testing to track change in customer behavior
  4. Take corrective measure as necessary
  5. Keep track of macro-economic changes as well, which may coincide with pricing rollout.

So before you take on the pricing exercise, ensure you the have time and resources to do justice to it…

Q&A with Sagar Apte, Founder & CEO, CarIQ – India’s first Connected Car Platform

CarIQ, started in August 2012, launched the product this past week. Car owners and enthusiasts can now get their hands on their very own CarIQ device by per-ordering it! CarIQ is one of the few Indian startups in the domain of connected cars, with primary focus on Indian auto market. This past week ProductNation interviewed Sagar Apte, Founder and CEO of CarIQ. In this conversation over coffee, Sagar explains about the birth of CarIQ, challenges of building Indian hardware startup, his vision and much more…

How did the idea of CarIQ into being?

Sagar ApteIt was the experience of my purchase of Hyundai i20 a few years ago, which made me aware of an acute problem. When I made the purchase, I knew what car, make, and model I wanted to buy. I knew what mileage to expect, I read reviews, and before I went to the dealer, the decision was already made. There was so much information available to help me buy. But I was not ready for what happened after the purchase. I had to set manual service reminders, I was not aware whether my car was performing as expected. I was apprehensive when I left my new ride parked for hours at open parking places. I just wished, – what if my car was a smart car and managed this for me? Wouldn’t it be cool, if my car could detect problems, remind me of service alerts, or tell me its location even if I was not in the car. That lead me to first investigate mechanical add-on to get this data until I realised that cars have computers, and those computers can talk. I can get data on performance, condition, and even potential unseen problems. That was it. I knew I had to harness this data to convert into meaningful insights.

How would you describe CarIQ?

Cars today are way more intelligent than their predecessors. They are self-healing, with data processing capabilities. Cars know which component is failing, they can identify how one is driving the car, they are aware of the road conditions, the weather, and even the fuel supplied. What they lack is a window to the world, where this data can be gathered and shared for intelligent decision-making. Imagine the possibilities of cars that transmit their data, collect information, and are able to direct the car owners to act on them.

Connected Car Ecosystem
CarIQ is India’s first connected car platform. With CarIQ, owners can remotely manage, monitor, and interact with their vehicle. Your (now) smart car, can understand its condition, review your driving pattern, and notify you of critical actions that need to be taken. Something as common as the head lights being left ON when parked, to something as critical as identifying a potential engine breakdown, is now possible. Your car will notify you to take action! There are 101 things your car wants to tell you. Start listening!

CarIQ is an ecosystem play where we are not addressing just bits of the problem such as vehicle tracking, or road safety. We are building a larger play between all the service providers to the car owners such as workshops, insurance, breakdown assistance, safety, and many more. Not many players are looking at a complete stack to address the various needs of this segment.

What are the key execution challenges you have faced?

Building hardware product requires a team that can work across domains. One needs hardware design engineers, embedded programmers, software engineers, right up to folks who can manage production, purchase, and customer support. Sometimes hardware problems simply need time to solve, and a lot of grit. At times, we were at our wits end on what was happening. Let me tell you one such incident. About 14 months back, our hardware was working well with BSNL but would not work with any other provider. It would randomly (at least that’s what we thought) catch signals. We later realised our office was on the 1st floor of a high-rise building with BSNL tower right on the top. We then made some changes to handle this and the problem went along.
CarIQ Product Render

We went through multiple iterations of form and fit to finalize the current device design.

What are your plans to get product adoption?

Hardware plays have to be carefully planned. One needs to plan for shipment, recalls, awesome after-sales support, and ability to serve customers with the best service. With the language barriers, telecom players with state-specific licenses, and certain courier players better suited for certain regions, one agreement won’t fit all. This means working with different players, and managing individual relationships. And that’s exactly what we did. We spent more than 18 months not only in research and development, but also working through various business aspects. We engaged with experts in industrial design, production, and shipping to put a plan in place that will not only scale, but also provide that awesome experience we want for our customers.

Can you give a sneak peek of your product?

CarIQ device is simple plug ‘n’ play. Even a smart ten-year-old kid can connect this to a car. You do not need to open the bonnet. Just open the door, look for a connector (OBD) near the steering wheel and connect the device. Once connected, the device intelligently understands the car it is connected to, and configures itself.

CarIQ Technology

The plugged-in device collects information from the car. This collected data is securely transmitted to the CarIQ platform, which then translates that data into meaningful information. These actionable insights, in the form of alerts, reminders, and insights are then displayed on our intuitive apps (iOS/Android/Web).

CarIQ MobileApp Features

Here are some of the features that CarIQ supports:

  • Critical alerts
  • Technical problems with your car
  • Service alerts
  • Battery monitor and health
  • ‘Headlight On’ warning
  • Location information
  • Statistics sharing on Facebook and Twitter
  • Social badges for driver, car condition, etc.
  • Towing alerts
  • Crash alert
  • Over-speeding alerts
  • Rash driving identification
  • Personalized tips for driving (based on your driving pattern)
  • Fuel economy
  • Download Entire car driving data

How do you see CarIQ evolving?
CarIQ intends to become ‘the’ player that will connect various players in the eco-system at large. The coming period is going to be important and exciting for us. We will be working with car dealers, insurance companies, auto manufacturers, telecom companies, and breakdown assistance providers. We will solve problems for various ecosystem players with focus on car owners, to bring a host of more features, which brings the ‘fun’ back into driving and car ownership. In parallel we are also planning to take the CarIQ offering internationally to geographies such as South East Asia and the Middle East. This will mean working and solving problems related to scale, hiring, and distributions.

Using small data in a BIG way

#PNSummit – Two Day Gathering of Practicing Product Professionals, 4th &5th December, Pune

These days there’s a huge buzz about BIG data. Everyone is now talking about investing huge in BIG data in a BIG way. But before we get all gung-ho about it and take the BIG data plunge, companies should try to figure out applicability of whatever existing data they have. This is especially true for Startups and SMBs who don’t have BIG budgets for BIG data.

With that thought, here’s how we at #PNCamp are using the small data we have to draw BIG and meaningful conclusion…

Participating Cities

Bangalore and Pune are leading the pack with Mumbai / Chennai trailing behind them. Do you see your city? Register today put your city on Startup map of India.

Business Model

B2B is leading the pack. Surprised?

Primary Customer Base

Startups and SMBs have now slowly started building products with primary focus on Indian marketplace. The local market focus enables these companies to be closer to their Customers and create products that address their business needs.

Number of EmployeesNumber of Employees

Companies with up to 20 employees are really interested in identifying ways to crystallize understanding of their customers and or rapidly grow scale their business. Hence, if you are a business with fewer than 20 employees, you will get to interact with bunch of your peers. And discuss way to find and grow your Customer base.

Learn more about #PNCamp at

Register today to become part of the movement that’s making India a Product Nation!

Some Takeaways from the #PlaybookRT on Effective Product Mgmt: Applications and Benefits for Technology Startups and SMB

The fifteenth #PlaybookRT with focus on Product Management was held at PubMatic office in Pune. It was led by Shrirang Bapat (VP Engg at PubMatic). Shrirang set the stage for RT by sharing the importance of ‘What NOT to do’ which comes from years of experience. To accentuate his point, he shared a story of introducing handhelds in the market beginning of 1997. Through this story he explained the importance and process of getting into customer’s shoes when defining the problem and designing the solution. The message was clear don’t be Tech arrogant! Be empathetic towards your customers. Understand their pain points and solve them by creating simple yet elegant solutions…

After the setting the tone for the RT, Shrirang formed pair of twos in which each person in the pair would introduce the other person by sharing the following information:

  1. Name
  2. What you do?
  3. What does your company do?
  4. What do you expect to get out of the RT?
  5. The person who had influenced the most?

This turned out be a great ice breaker session. Participants really got to know each other and understand each other’s perspectives. Answer to ‘The person who had influenced the most’ where interesting. Here’s what some participants answered:

  1. Founder of Toyota –  Kiichiro Toyoda
  2. Father
  3. Steve Jobs (3 nominations)
  4. Jack Welch
  5. APJ Abdul Kalam
  6. Mahatma Gandhi
  7. Wife
  8. Leonardo Da Vinci
  9. Rahul Dravid
  10. Cousin
  11. Kiran Karnik

The RT participants wanted to have a conversion of variety but related topics such as:

  1. Product Strategy for Go To Market (GTM) , especially globally
  2. Increasing product adoption
  3. Scaling UX and Selling in Indian markets
  4. Process for validating ideas
  5. Feature prioritization process
  6. Product globalization
  7. Implementation of Product Management practices
  8. Product Management in Start ups
  9. Product Management best practices
  10. Scaling operations and Product Management

After some deliberation the participants were divided into two groups:

  1. GTM (Mentored by Aditya Bhelande, led by Sandeep Todi and Nitin Seth)
  2. Product Management processes (Shrirang and led by Gaurav)

Each group got approximately 1 hour to discuss on the following lines:

  1. Define problems
  2. Measure problems
  3. Analyze key issues
  4. Provide specific examples
  5. Recommendations / Solutions

After about an hour leaders from each group shared their discovery with all the participants. Here’s the summary:


  1. Issues:
    1. Scaling globally
    2. Customer segmentation and market validation
    3. Spreading product awareness
    4. Customer discovery
    5. Creating trust with global Customer
    6. Solutions

Market Discovery

  • Better analysis of user  / customer traffic and leads
  • Competition presence
  • Availability of infrastructure for product usage
  • Language and cultural differences

Customer Discovery

  • i.     Web PR
  • ii.     Blogs
  • iii.     Local community

Building Credibility

  • i.     Local presence
  • ii.     Local employees / consultants (for example using commission junction ( or
  • iii.     Travelling and attending conferences
  • iv.     Customer case studies and having customers talk about the company

Product Management Process:

  1. Problems:
    1. Prioritizing features
    2. Poor UX
    3. Lack of cross functional collaboration
    4. Lack of Product orientation
    5. Managing roadmap
    6. Solutions:
      • When changing feature priority think about why. For example are you changing the feature priority to get a new customer or to retain the existing customer?
      • Create a balance between time and resources. Consider the impact of cost of change in direction. If a feature if 3/4th done, then are you better of completing the feature before changing the direction. Are you willing to give up that work that has already been done?, etc
      • When adding new feature think about technical challenges such as scalability and Customer facing issues such as performance impact.
      • Analyze if the feature is merely ‘gold plating’ or helping get new business.
      • Ask ‘Why’ to get a deeper understating of the customer / sales need to set the priority. Try to understand the impact of not building the feature.

These were some of the key take aways for the RT group that came from a very lively and engaging discussion. The group decided to meeting once a month to talk about various topics other than Product Management such as Sales and Marketing.

Are you asking the right questions?

Similar to the Chief Executive (CEO) of a company, a Product Manager should also question the process that goes into the creation of a product / service. Treating the organization like a living and breathing creature, a Product Manager should have in-depth understanding of the workings of its vital organs that are responsible for the following:

  1. Listening to external and internal business related signals
  2. Analyzing  the impact of the data signals collected from external and internal sources
  3. Taking appropriate actions based on impact analysis
  4. Measuring the effectiveness of the actions

If one or more of these vital functions are broken, then the organization cannot function at its peak capacity and may succumb to the dynamic business environment. One of the most critical questions to ask in any situation is…’What does it mean?’ ‘it’ could be an data point or an event or any other external  / internal stimulus. Then look at ‘it’ from different perspectives such as:

  • What does it mean from business perspective?
  • What does it mean from revenue perspective?
  • What does it mean from process perspective?
  • What does it mean from marketing perspective? Etc…

This line of questioning will help in the impact analysis across organization and take appropriate measure to react to the external stimulus.
This article focuses on ‘Listen’ and ‘Analyze’ aspect that has been shown in the virtuous cycle above.


A Product Manager should tap into and harvest as many sources of information as possible. Getting external business signals is not only a function of number of sources but also the frequencies with these sources are tapped into. It’s the continuous ‘chatter’ that really matters. Collecting information once in a while is not sufficient and may lead to incomplete information. Here are some of the questions that must be asked when validating the data collected from sources of listening

  1. What sources of data collection were used?

a. Internal

  • i. Customer service
  • ii. Marketing
  • iii. Sales, etc

b. External
      • i. Customers
      • ii. Competition
      • iii. Industry experts
      • iv. Company executives
      • v. Partners, etc

  1. How recent is the data?
  2. How frequently was this data collected?
  3. Which systems were leveraged to pull the data from? (e.g CRM)
  4. How many direct customer inputs does this data include?
        • How valuable are these customers to the business?
        • Which revenue and vertical segments do they belong to?
        • How frequently was the data processed and conclusions from that data refreshed?
        • Who has reviewed this data prior to being getting used in the road mapping process?

Inside Out Data Collection

Product Manager doesn’t necessarily have to wait for signals to come from outside. In order to be on the top of the game the Product Manager can also initiate ‘Inside Out’ process for getting the pulse of the market and business environment. For example during the process of building business case for new feature / product or when conceptualizing solution at the time of writing PRD, the Product Manager can reach out to Customers, partners and internal entities.

These are some of the questions that a Product Manager must ask of him / team in order to ensure inside out approach of data collection:

  1. How many customers were involved in PRD process?
  2. How frequently were the customers contacted?
  3. How many of those customers are expected to use the feature / product after it’s rolled out?
  4. How many customers are holding their breath for the feature to be rolled out?
  5. How many prospects are cancelling deals for the feature?
  6. In which revenue and value bands do these Customers fall under?
  7. How the does the actual customer interactions compare with planned customer interactions?

Other entities within the organization that can use the Inside out approach are Marketing and Sales teams. For example Marketing team can involve Customers in the process of creating case studies and white papers.

Analyze Impact (immediate, medium and long term)

Once the data is collected and processed the next critical activity is to analyze the impact of that on the various aspects of the organization. Understanding only the Product impact is not sufficient. A holistic organization impact assessment should be done. The impact assessment questions that follow can be asked to:

  • Assess the impact of external events such as a competitor make announcements or change in industry regulations, etc.
  • Assess the impact of features on roadmap, etc.

The goal is to really get a thorough understanding of the impact of external and internal events on the business.

  1. What is the revenue impact?
  2. What is the customer acquisition impact?
  3. What is the customer relationship impact?
  4. What is the new vertical (market) impact?
  5. What is the impact on strengthening position in the existing verticals?
  6. Impact on brand value of the company?
  7. What is the impact on employee skills acquisition?
  8. What is the marketing impact?
    1. Case study
    2. White paper
    3. References, etc
    4. How does the roadmap help plug competitive gaps?
      1. Fill gap
      2. Create gap
      3. How does the roadmap help displace competition?
      4. How does the roadmap help create though leadership?
      5. How does the roadmap differentiation from the competition?
      6. What Sales and Support changes need to be made?
      7. What Marketing changes need to be made?
      8. What changes need to be made to the Product development plan?

I’m sure most readers can add to this list of questions and make it even richer and actionable for Product Managers.  Remember the path to the right solutions begin by asking the right questions…

Leveraging Customer relationships as a Product Manager

There have been epics written on ways businesses should be:

  1. Identifying customers
  2. Acquiring new customers from competition
  3. Retaining customers
  4. Cross selling and up selling into existing customers
  5. Leveraging Customers for expanding business

For a Product Manager, who has to deal with many internal and external entities, Customer is by far one of the most business critical entities that he has to deal with. And rightly so, since it’s the customers who not only pay for your product but help in innovation, evangelizing product and most importantly give you the credibility to make the right product / business decision and the confidence to stand by it.

Every organization has different dynamics around customer management. Hence as a Product Manager, once you get into a new organization you have to feel your way into the customer management dynamics. Let’s focus on some of the common trends and techniques used for successfully getting a handle on building successful Customer relationships.

1. Identifying Customers:

One of the first and the foremost tasks is to identify the customer. There are two types of customer:

  • Internal Customer: These can be folks within in your organization who use your product or service to assist your external customer or use the product / service on behalf of your external customer. As a Product Manager you should give their voice a significant ear, since they can not only share their experience but also be a voice for external customer. Another benefit is that since they are part of your organization you can leverage them for beta testing, brain storming ideas, hand holding external customer and even for evangelizing products
  • External Customer: These are your paying customer. As a company you have made a promise to them for delivering a product / service and that must be kept. You should categorize the customers in terms of their value to the organization:
  • Revenue (current and potential)
  • Brand value
  • New market beach head
  • New geo beach head


2. Initial Customer Contact:

Initial customer contact is a crucial point in your relationship with the customer. Hence it is critical that you do all the necessary research on the customer account prior to the meeting whether it’s in person meeting or on the phone. The per-call prep can help you gain insights into customers:

  • Business
  • Current issues
  • Temperament


As part of this initial introduction to the Customer, you must establish credibility by highlighting your relevant past experiences and listen intently by being the fly on the wall. One the key things to remember is that as a Product Manager you must align and fit well into the Sales team dynamics, since they are typically the owner of the customer relationships.

3. Basic Ground Rules for Ongoing Customer Engagement:

Once your initial introduction is done, managing the ongoing customer contact is delicate balancing act. A customer managed properly can help take your product to the next level along with its revenue.

  • You must establish basic ground rules:
  • Reviewing meeting agenda with the sales team
  • Sending meeting agenda in advance to the customer
  • Follow through plan after the meeting
  • Set up meeting success criteria
  • You have to be careful not to overwhelm the Customer with long and frequent meetings since it can cause confusion and delay in reaching your goal. This is especially true when you and your Customers are geographically apart. Crisp, succinct and to the point conversation is critical for ongoing communication with any Customer.
  • Remember the Buddha story about teaching Nirvana to a starving disciple? As long as the disciple was starving, there was no way he would have been interested in learning about Nirvana. Similarly, focus on the immediate needs of your Customer before offering him advance solutions. Once you solve Customer’s immediate business problems, he will be interested in working with you since trust in the relationship is built.
  • It’s critical to set expectations when you have conversation with Customers. Typically, if you ask customers to share their pain points, they will open the floodgates and expect those pain points to be fixed immediately. Hence before asking the Customer to open the floodgates, you should make sure that you set the right Customer expectations so that Customer doesn’t loose interest and let down. No one wants to tell the same story again and again, especially if your organization is expected to fix at some point. This same principle goes for sharing product and services roadmap. You should help Customers understand that documents like these are for confidential and for directional purposes only.


These basic principles for managing customer interaction will vary based on geography, industry vertical, business model, company size, number of products, product life cycle, etc. But, if followed consistently will take your business to the next level by forging long lasting relationships with your loyal Customers…