Practitioner’s Guide to Product Strategy

Building products that help customers achieve the outcomes that they desire over the long term is hard. Jeff Bezos has a great quote on basing your strategy on things that do not change. This quote captures the essence of strategy and long term planning.

Here are few elements that product teams should consider while building products:

Product_Strategy - Pandith Jantakahalli

What to build? is determined by three critical elements — outcomes that customers want to achieve, other alternatives that help customers achieve the same outcome, and your point of view.

Customer outcomes: It is best to define customer outcomes using a vocabulary that a customer would use. While it is typical to place emphasis on functional outcomes, it is crucial to identify emotional, and social outcomes. Functional outcomes can be defined by understanding the customer’s context, situation and constraints. Emotional and social outcomes can be defined by understanding motivations, where and how much energy the customer is expending to achieve the desired outcomes today, and “skill” level of the customer. Ask what will make the customer successful, before asking what will make your business successful. (Note: It is important to ask the latter question as well)

Alternatives for achieving the same outcome: In order to understand what to focus on while building your product, it helps to understand how the customer is achieving the outcome today. Pay attention to what they are dissatisfied with, and if the dissatisfaction is on an important attribute. You may observe that the customer is using multiple products to achieve the desired outcome, or that the alternative is not in the same “product category”.

Point of view: is crucial to the success of your product as it determines the scope of your product and your approach to helping the customer reach an outcome. For example, you may decide that project management is all about enabling better communication among all stakeholders. Thus focusing your efforts on enabling frequent and timely communication, rather than including support for Gantt charts.

It is useful to define every interaction with your product as “the product”. User guides, support interactions, blog posts, interaction on community forums constitute the product. Prioritizing each of these interactions for focus and attention will immensely impact success of your product.

Building what you decide: is especially hard with a steady stream of distractions that are typical in any business. A really “big” customer will sign-up if we build this feature now, lets build this really small/cool feature — it will take only a few hours. Product principles and sequencing decisions help rein in these distractions.

Product principles: While goals and metrics help communicate what to focus on and measure progress, they are weak in communicating what actions need to be taken at an operational level. This is where product principles are helpful. They help with alignment and cohesion of activities across different stakeholders by providing guidelines for action. Product principles must be anchored around customer outcomes and your point of view. Good principles includes how the user should feel before/while/after using the product. They enable faster decision making while ensuring alignment. Instagram has very clear principles — make every picture beautiful, make it super fast to upload a photo, and make it super easy to share photo across different platforms.

Sequencing: When to build a functionality/feature is as important as what to build, as it critically impacts the pace at which business outcomes are achieved. Good sequencing decisions take into account —limiters/enablers, impact, effort required, and any compounding benefits. Evaluating trade-offs in sequencing decisions is crucial — what is the impact of doing multiple small features vs. one large feature, should we focus on projects that drive more traffic when activation rates are low?

While customer acquisition is usually considered to be part of market strategy, I’m including this to highlight how product strategy informs customer acquisition and how feedback from customer acquisition informs product strategy.

Acquiring customers is greatly dependent on positioning, power of emotion in the customer’s decision making process, and your company’s strategy in tackling objections against using/buying your product.

Positioning: Position based on your point of view, and attributes that are important to customer (but poorly served by alternatives) for maximum impact. Good positioning evokes strong emotions and motivates the customer to take action. Positioning greatly impact pricing of your product. iPad’s positioning and anchoring around netbooks is a great example of effective positioning.

Power of emotion in decision making: A rational approach (based on utility and logic) to selling your product has a limited appeal among prospective customers. People find it extremely difficult to take action in the absence of emotion. Tapping into the motivations and true emotions of the customer are crucial for acquiring new customers.

Tackling objections: Customers do not just buy your product, but they switch to it from an alternative. Hence, it is important to make this switch as easy and painless as possible. For example, if you are building a ticketing system, make it is easy to import tickets from their current system. Leverage existing behaviors instead of asking prospective customers to create new ones. For example, Google Sheets retained formulas on Microsoft Excel and focused on improving the collaboration features. It is also important to focus on eliminating/reducing negative emotions like anxiety. Free 30-day trial, no questions asked returns policy can help reduce such emotions.

Measuring if customer outcomes are being delivered: Feature usage is a key indicator in determining if customer outcomes are being met. Feature usage consists of two important parts — reach (how many users are using a feature) and frequency (how often a feature is being used by a user).

It is important to establish baseline metrics for reach and frequency (for each feature), and run projects to improve these metrics on a continuous basis. If a feature does meet the expected metric or is not being adopted, the 5-whys technique is helpful for understanding the reasons and taking corrective action.

Reach/Adoption: Feature adoption can be improved by measures like building awareness, educating users on how it can help them, and suggesting the feature at an appropriate time. If feature adoption continues to remain low and is not helping customers achieve the outcomes that they desire, it is best to kill the feature. Killing features, simplifies the product and provides a great deal of flexibility in making decisions in the future.

Frequency: Frequency of feature usage can be increased either by resolving issues that prevent usage or by extending/modifying the scope of the feature. Nir Eyal’s hook canvas is a great framework for improving frequency of feature usage.

Staying relevant: A product can stay relevant by helping users become successful at what they are trying to accomplish and tracking any changes to customer outcomes and important attributes over time.

Badass users: Enable users to become experts at what they are trying to accomplish by growing their skills, and providing the necessary motivation. Design your product so that cognitive resources of the user is expended on what they are trying to accomplish, and not in using your product.

Tracking changes to important attributes and customer outcomes: As time passes it becomes increasingly important to track any changes to customer outcomes, and any changes to attributes that are important to the customer (It is possible that entirely new attributes become important to the customer). As building these enhancements are crucial, it is important to say no to items like “short term wins” (or distractions), establishing parity with a competitor’s feature set.

Summary: Product strategy should be guided by the goal of helping users become successful by achieving the outcomes that they desire, and focusing on important attributes that do not change.

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The little Spark with great promise – Inaugural #PNMeetup on Pricing for Enterprise Sales

When a bunch (around 45-50, I didn’t keep the count) of Product enthusiasts – with experience accumulating into decades – gather at a single place to share their learning on specific topic in a compact & well-moderated session of 2 hours, it’s worth every bit. That’s how I felt coming out of the inaugural session of #PNMeetup – Pricing for Enterprise Sales: Specific & Important Topic, Quality Participation, Richness of Experiences, and Quality Conversations.

The location, Hauz Khas Village in New Delhi, carries a constant buzz and energy. Very apt for a meet-up like this. Kunzum Travel Café (Thanks for being a great host for the event!), should be happy because participants used up every nook & corner of the place. Many of us had to settle down on the carpet with no more sitting or standing space left! Of course, the snacks & coffee was great too. But, that’s not what everyone coming in was specifically looking for (especially since the last 500 yards got harder to make with the traffic and parking situation ;-)).

We were looking for some great (practical, experience based, relevant) conversations and takeaways on Pricing. And, there was plenty of it, coming from speakers as well as from the participants. As much as is possible in 2 hours of time, that is, also thanks to some great moderating & counter-questioning by Arvind Jha during speaker sessions, and Rajat Garg & Vivek Agarwal in the un-conference session.

Tushar Bhatia, Founder of Saigun Technologies, set the tone for Enterprise Products Pricing by sharing his experiences on Pricing Strategies and Sales tactics. Tushar emphasized that Pricing is not a linear decision, but a complex process and subject to assessment from multiple parameters. He also differentiated the Pricing Strategy from Sales Process. Pricing, as per him (in the context set of Business Planning, Scalability, Consistency, Standardization, and a reflection of the Value Proposition) is a guide at broader level, while on sales tactics front, one should be willing to consider the customer & geographic circumstances as well. The decision matrix for Pricing decisions typically is pretty complex, and a product undergoes multiple iterations of pricing models

Pricing for Enterprise Sales
Pricing for Enterprise Sales – Tushar

before arriving at the sweet spot. However, various types of customers may need to be assessed in their own contexts when deciding on a deal pricing, especially in the traditional Enterprise Sales scenario.

Tushar also emphasized that the Enterprise Licensing deals should consider not only the product pricing, but also the other costs (such as, hardware) and provisions (such as, for Product Support). The considerations on TCO are critical, because the customers assess the products, not only functionally, but also very critically from an operational viability perspective in longer term. Tushar also laid out few questions that need to be answered while deciding the pricing model. The detailed presentation from Tushar on “Pricing for Enterprise Sales” can be found here.

The discussion, then, veered towards the product pricing strategies in areas such as Telcos, serving also as a cue for Tarun Anand (CTO & Co-founder at Semusi) to pitch in and provide his perspective. He shared his experiences in working with the big Telcos on working out product strategies and pricing models. They tried out various pricing models, in partnership with Telcos especially, and had mixed results over time before arriving at something that seemed to work. However, pricing remains a volatile when dealing with the larger partners and in more complex ecosystems, such as Telcos.

In Tarun’s experience, one needs to ascertain that the partners in the ecosystem are ready to take your product to the market if that is the expectation. It is also important to ensure that the pricing terms & conditions are clear, and you are able to hold the customers as well as partners accountable in the operational limits as much as you can. After all, you want to focus on running the business and do not want complications of financial & legal nature. In the context of Pricing and products strategy, in areas such as VAS, as per Tarun, one needs to be very careful. “VAS is dead” in his words! 🙂

Tarun also emphasized “there are takers for product at ANY price point”. One need to clearly understand whom one wants to target, and also understand that it’s not only a question of moving the pricing point up & down in inverse proportionality with the volume of customer base. There are various triggers for the pricing, one of which is the “premium value perception”, and also the fact that once you move into a market with a particular price point, increasing it later on is almost impossible without hurting your customer base and overall strategy.

App Pricing Tactics
App Pricing Tactics – Prashant

The heat in the Mobile Apps makes the App Pricing a very sought after topic, and that’s where Prashant Singh (Co-founder at Signals) came in and provided a good framework for the high level App pricing approach. There are two clear distinct possibilities – Free & Paid. Complete Free, as per Prashant, directly leads to an Ad based model for revenue that shouldn’t be a preferred model as such for most app developers. In fact the question is not whether to go Free or Paid. Question is when is the user ready for monetization. “You hit when the iron is hot, as simple as that”, Prashant says.

Prashant provided a high level framework to judge which approach should be adopted by the App Developers, based on the two parameters: “App Life Span” and “Time to Realization of Value”. Based on a combination of the two, one can decide on the high level strategy (Portfolio/Platform/Utility/Device Embedding/Brand Apps…) and Pricing model (Advertisement, Paid, Transaction based, Freemium, Development level, and so on). Check out this presentation – App Pricing Tactics for more details.

One key point that drew interest was around the Price Point for App at the launch time. Contrary to the normal belief, Prashant says, one needs to launch the app at a price point that is higher than the Median price point for the App store. That provides the App Store an incentive to showcase the App, and it is important since App Stores control the downloads more than the “content” or “quality”, at least until critical mass. Growth Curve of the app can be maintained around Median and depending on the value prop of the App, the baseline pricing can be used at sustenance phase. Another strong point of view from Prashant came around the Advertisement model, which as per him is the last to be considered. And if Ad model is considered, his advice is to “not” let the control away – “Always have your server in loop”.

While all the content and discussion, and few laughs in between, served well to our appetites, snacks were served amidst a quick “Unconference” session moderated by Rajat and Vivek. We discussed and debated on some great points. I’m finding it harder to capture every bit here and I don’t want to be partial to only what I remember right now! I hope that if you attended and are reading this, you would be able to add your takeaways in comments section! 🙂

Overall, I had a great time. The highlight of the session, for me at least, was the richness of experience and passion for products. And I met some really cool folks! Many of us hung out until later in the night and continued the conversations, which is a great sign. A small impetus can go a long way, and I’m very excited that Avinash has triggered this spark that all of us as a community have to fuel into a passionate ecosystem around products. Great initiative, ProductNation! Looking forward to the next edition on Jan 19th 2013!

PS 1: And, there was a cake-cutting for Avinash on his Birthday! Great gesture!

PS 2: Some Tweets from the session!

Be a part of the journey to Product Nirvana!

There has been a huge upstart in the number of product companies in India in the last 12 months. 700% is the estimate according to Zinnov Consulting. Most of them, as one keynote speaker at the recently held NASSCOM Product Conclave 2012 said ominously or more from experience being in the Silicon Valley, “will fail”. Why startups fail can be due to any number of reasons but the chances of succeeding is unarguably high if employees get product management right! So, what is Product Management? It is the art and science of creating the right product for the right user at the right time and in the process create a successful business! It is the functional domain which asks the questions what products do we build, who is it for, why do they need it, will they buy if we build it and how will the product work?

India Product Management Association (IPMA) is a voluntary, grassroots organization that is dedicated to helping product management as a function grow in maturity and capability all across the country. It is mostly focused on IT products for now. IPMA is organizing, in its second year after launch, the flagship annual event which brings together industry veterans to speak about various product management topics. This year’s theme, built on the confidence in the growth of product companies is, Journey to Product Nirvana! Journey to Product Nirvana takes the attendees from dissecting the nuances of product management across platforms and products to highlighting successes to sharing advice on specific challenges!

All this in a few hours with networking over lunch on Saturday December 8, at Microsoft office on Lavelle Road, Bangalore. The highlight of the event is the keynote by Ram Narayanan, a product management veteran on “Building customer centric product strategy”, a craft, very few get it right! The event also features Mukund Mohan, Pallav Nadhani, Pinkesh Shah, Saran Chatterjee, Sanjay Jain, Sarit Arora, Dhimant Parekh etc on panels.

IPMA has chapters in Bangalore, Pune and one more coming up in New Delhi soon. Visit for details or better yet register for this annual event before the limited seating runs out:

The event is sponsored by Confianzys and Tally Solutions and hosted by Microsoft.


Product/Market Fit and Why Startups Should Care

Most successful products go through two distinct phases 1) product/market fit 2) growth/scale. There are a large number of startups that fails before achieving product/market fit and therefore, it is important to understand what is it and why it matters.

What is product/market fit?

Product/market fit is a phase where you try to establish that you are in a good market and have the right product to satisfy the market. Generally it involves developing a deep understanding of customers, running several experiments and iterating product several times to create the right fit between customer needs and your product.

It’s amazing how imporatnt the concept of product/market fit for startups is and how often it is ignored. Focusing on growth before achieving product/market fit can be counter productive for startups. Therefore, it is critical to know when you have achieved it and when to start focusing on scale.

How do you determine product/market fit?

So how do you know that you have achieved product/market fit? Which metric or target you focus on?

Sean Ellis’s definition is perhaps most objective definition for determining product/market fit. Sean devised below survey:

How would you feel if you could no longer use [product]?

1.     Very disappointed

2.     Somewhat disappointed

3.     Not disappointed (it isn’t really that useful)

4.     N/A – I no longer use [product]

As per Sean if more than 40% of your customers respond that they will be “Very disappointed” without your product then you have product/market fit. You can find more about Sean’s definition in this post.

Famous VC Mark Andreessen describes a more subtle method. As per Andreessen, you can always feel when product/market fit is happening. Your product usage would be great, customers would be happy, key metrics would grow consistently so on and so forth. More about it here.

Product/market fit is essentially having an engaging product that users find valuable. This can be measured by metrics that are critical for consumer engagement. Take social networking products for example. Key indicator of engagement is what percent of registered users use the product every day and every month. A good standard for engaging social networking product is that at least 30% of registered users are MAUs and at least 10% registered users are DAUs. So it is safe to assume product/market fit when you hit those metrics. Exact metric differs based on nature of product but the essence remains same that how engaging and valuable product is for consumers.

How to achieve product market fit?

1) Focus on engagement features

Typically features fall into one of the below quadrants:

Prioritize features that improve engagement and retention and de-prioritize every thing else till you achieve product/market fit.

2) Experiment and iterate fast

Iterate quickly through features using build-measure-learn model that Eric Ries describes in The Lean Startup.

The core idea behind build-measure-learn feedback loop is to consider product development as an iterative process of learning while minimizing the time through the loop. Many startups fail because they build product on assumption that they know what customer wants. Build-measure-learn model requires you to constantly test your assumptions by quickly building features while constantly measuring to determine how those features are resulting in real progress.

Finding product/market fit is an iterative process but bottom line is to establish key metrics that define product engagement and focus on those metrics relentlessly. Anything that doesn’t contribute to moving those metrics upward is not important before product/market fit.

Original Post By Rajat Garg, BubbleMotion and can be accessed here.