Product Management Weekly - Issue #12
Weekly curated resources for product managers and strategists
đđ˝ Hello!
Hope you had a wonderful Thanksgiving break!
Welcome to another week of the PM Blog. This week we focus a bit more on Strategy and Leadership, alongside sharing some insightful articles on retention, product management and pricing strategy trends. Enjoy!
As always feedback is highly welcome, so please do let me know on how we can make this newsletter better via comments on this post. Thank you đđ˝
đ General
9 lessons from my 10+ years working in product (long post)
tl;dr; This is a gem from Reddit, which captures in details some keys aspects/lessons of Product Management. On a higher level this includes:
Always separate the problem from the solution.
Most people do not understand what your job is.
Learn how to adapt because real life is different from what they teach.
Your team is the most important factor for success.
Learn & improve from everyone & everything.
Get better at communicating.
Be nice to yourself.
Consistency over intensity.
Don't be a perfectionist.
(Bonus) Take risks and stay humble
The author also shares a spreadsheet template which can be use to define expectations from people/departments for product development, which helps not only in alignment but also might help in facilitating execution.
2021 State of Usage-Based Pricing
Article: https://openviewpartners.com/blog/2021-state-of-usage-based-pricing/#.YZ7FApDMJhE
tl;dr; Kyle elaborates the state of usage-based pricing across the broader SaaS market by surveying over 600 companies and goes into details where usage based pricing works and where it does not, and how can traditional subscription companies can quickly adapt to a usage model. The article reflects on that with the digital transformation post 2020, a lot of SaaS companies are moving to a usage based pricing model âto stay ahead of the curveâ, and this number today 34% higher than last year. In the market today usage based pricing follow predominantly two key models - `usage based pay-as-you-go` model and `usage-based subscription` model. Particularly in the infrastructural product space key players like GCP, Azure and AWS follow a usage based pricing model, and of late a similar trend is also seen across middle-tier and application software space as well, mostly driven by customers wanting to know the âvalue receivedâ. The article also highlight that usage pricing model might not work for everyone, especially if:
There is a high variability: Usage is highly variable or âepisodicâ in nature
Not tech-savvy customers: Customers wanting a simple buying experience
Taxi-meter effect: For cases when usage is discouraged when customers feel âthe marginal cost of consumptionâ
đ Product Leadership
How to Craft Your Product Team at Every Stage, From Pre-Product/Market Fit to Hyper-growth
tl;dr; The articles goes into details on what type of product management team is required for the stage of growth a company is in. Nikhyl describes in the article that the product team needs to be crafted based on the stage of the company, as a product mindset suited to one stage might not be best suited for other stages. Nikhyl stages/categories these stages as below:
Category 1: âDrunken walk." Companies or startupâs in this stage focus more on experimenting to find the right product/market fit. Product management is mostly tasked with creating the founderâs vision, and is its role is more of a âservice or project management functionâ.
Category 2: Product/market fit. In such a stage, productâs responsibility is to own collaboration and communication within the company along with ensuring product improvement catering to the needs of the customers. Such a stage is more focussed on execution and maturity as the company becomes more mature. Key stress should be put not only on acquisition and engagement but also ensuring âprofitability and sustainabilityâ i.e. is the customer acquisition cost (CAC) lower than customer lifetime value (CLV) to the company. Product is responsible for ensuring CAC < CLC to allow the company grow.
Category 3: Hypergrowth. Product teams in companies of this stage need to ensure a âstrategic roadmap, translating the mission and long-term vision of the companyâ to ensure we are both innovating as well as delivering value to the customers. This can be via a combination of expanding into multiple product lines or enhancing the current ones. Internally at this stage a new layer of leadership is often introduced for decision making. Key emphasis at this stage should be put into ensuring the core business lines are maintained as we open new product lines, and experiment as we expand into new business opportunities.
Category 4: Scale. Companies are more established at this stage and become a market leader. Product focus is more on sustaining growth and opening up new innovation verticals.
đ Strategy
Strategy and [Re]Organization
Article: https://rogermartin.medium.com/strategy-and-re-organization-dcb00b4c5923
tl;dr; Roger goes into organization structures, and describes how organizational structures have evolved since 1940âs
1940s: Organizational structures focussed on functional specialization
1950-1960s: Organizational structures organized by product lines with various product lines reporting to CEO
1970s+: Matrix style organizations came into being having at-least two axes: `product` and `function` which intersected at nodes across the company
Rogerâs argues that any organization of a consequential size today automatically has some form of a matrix structure, and it is normally up-to the leadership team on how to operate successfully within that matrix. Typically in organizations the general tendency is often to âthrow things over wallsâ, i.e. after completing individual part, pitch to people on the other side to do their work. The article stresses that reorganization more or less changes the focus (or re-focusses teams) and in turn moves the walls (the walls will continue to exist but in a different place in the organization) which are hindering faster progress.
Roger stresses that before any re-org, focus should be put to see if with the current org structure any improvements can be made to âquality of the conversations between managers at the organizational intersectionsâ, as re-orgs normally are expensive both from a cost and morale perspective.
But the desire to produce focus is what drives an organization toward a formal structure in which some people focus on designing the product, other people focus on producing it, still other people on selling it, still other people on keeping track of the finances, etc
đ Growth/Adoption/Retention
Why Customer Retention and Loyalty Are Lagging Indicators and What CX Metrics Can Be Used as Leading Indicators
Article: https://cxbuzz.com/industry-insights-news/why-customer-retention-and-loyalty-are-lagging-indicators/
tl;dr; Cori mentions in this article how customer retention and loyalty are mostly lagging indicators, as by the time a customers cancels or gives a lower detractor score (NPS score of 0-6) , it is usually pretty late to recover and retain the customer. SaaS organizations normally focus on a longer term metric - net revenue retention (NRR) which even though is a good way to define business success should not be taken solely into account for determining product success.
Cori suggests some recommendations which potentially Customer Success teams can leverage to pro-actively deduce customer sentiment:
Onboarding Milestones
Journey Status: How behind or stuck is the customer feeling
Time spent in a stage: Is some stage causing a lot of customer pain, which can potentially be impactful to other customers as well?
Milestones completed on time: Is the customer on-track/on-schedule during onboarding? This is a good indicator of longer term retention of the customer
Product Adoption
Login frequency: Helps define the re-use frequency
Sticky feature utilization rate: Are key features being used in the product by the customer and are able to drive value
Customer health scores: Helps determine overall customer engagement and thereby predict renewal rates
Power users: More power userâs potentially help drive more adoption
Customer Relationship
Customer Fit: Is the customer a poor fit or a good fit with the ideal customer profile
Tenure Length: Longer tenure customers might be more likely to stay with the organization
Using these leading indicators we can proactively determine problem areas and thereby detect future outcomes.
đ Design
Prioritize Quantitative Data with the Pareto Principle
Article: https://www.nngroup.com/articles/pareto-principle/
tl;dr; Another good article from nngroup discussing how to break down UX prioritization using the pareto principle.
The Pareto principle (also described as the "80/20 Rule") states that 80% of the results come from 20% of the causes.
Using such a prioritization mechanism, UX team can ensure:
Faster filtering through analytics data
Reduce scope, research and time to present analysis
Get impactful results potentially quicker
By focussing UX research and design efforts on areas which are both of organizational importance, and influence user metrics - âeven minor improvements to such vital areasâ can produce âdisproportionately powerful resultsâ.
đ Fun Learnings
Thatâs it folks!