Alex Lopes

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3 Prerequisite Questions To Make Smarter Product Roadmap Decisions

Getting involved in a startup at the ground level can be exciting, fueled by coffee and adrenaline (and restless nights). As you launch your child (product) into the world, it’s euphoric to see the market respond and your company begin to grow. It doesn’t take long before customers are suggesting improvements and your team is dreaming about new iterations.

If you’re feeling strategic, your team may even put together a roadmap to document plans for product development. But with all the energy and ideas, how do you prioritize, given the fact that you can’t build it all? The part of your ongoing success depends on your ability build the right features.

So how do you decide where to focus? After all, your product strategy is the leading indicator of your growth rate, affecting your ability to grow into a big company. Here are 3 prerequisite questions questions I’ve used in B2B product management. The answers to these three questions will help you to make smarter product roadmap decisions.

Question #1: What is our buyer’s job responsibility?

“People don’t buy a quarter-inch drill bit. They buy a quarter-inch hole.” So the saying goes. You may spend a lot of time thinking about your product, but your customers are focused on the job it performs. They are concerned with how it impacts their day-to-day work and business. So when making product decisions, learn to say no to features that don’t impact the job responsibility of your customer.

But you can’t just stop at the job responsibility. You’ll have to apply the metrics filter as well. “Does your product move the needle on the metric that your customer gets judged on for that job responsibility?”

Let’s see how this applies in a real life scenario by taking a digital marketer. A digital marketer is responsible for lead generation, and their metric for success is the number of marketing qualified leads generated online. They need to increase that number month over month.

The digital marketer will need line of sight between your feature set and how it impacts the metric for which they get judged. So when you’re prioritizing problems that need to be solved in your product, you’ll need to make sure that the problem is preventing the digital marketer from achieving the metric (marketing qualified leads goal) for the job responsibility that they oversee.

Pro Tip: One trap that some product teams fall victim to is making up job responsibilities and metrics. Don’t do that. If someone (1) isn’t assigned to that metric, and (2) isn’t actively trying to hit that metric, then there is no metric. The company doesn’t see this job responsibility as a priority, and thus, your customer won’t get promoted or fired based on how the metric you’ve selected performs. And your product is DOA.

Question 2: What is our market type?

After forcing yourself to clarify the job responsibility and metric that your product impacts, your attention should then turn to clarifying your market type. Steve Blank came up with this concept, and you can learn more about it here.

A market type answers the question, “where do I get my customers?” That’s one of the most important questions for a product, because it gives you a strategy to get paying customers (the ultimate form of product validation). I’ll quickly go over the four market types, and then share some lessons learned.

New Market

You may have entered a brand, new market. The great news is that there’s likely few competitors, but the challenge is that many companies have not budgeted to solve the problem you address. Optimizely is a great example of a company that approached A/B Testing before many customers had planned to spend on this effort. So smartly, they focused their money on educating their customers on this market.

Challenge: market adoption

Existing Market

There’s already a group of competitors for your product. Your customers used one of these solutions before they found you. According to Steve Blank, you’ll will typically need three times the ad dollars to go up against the “big boys” in an existing market.

Challenge: differentiation

Resegmented Market

You may be a part of an existing market, but you’ve resegmented the customer population and found a way to stand out. Perhaps you specialize in mobile customers or small businesses or nonprofits. You found your niche among the major players. This is a great technique in fast growing markets because it shows you where buyer concentration exists and you can differentiate yourself from the competitors.

Challenge: niche strategy

Clone Market

A clone market is something that has worked overseas, and you’re bringing it your region. This is in many ways like a new market, and your greatest obstacle is cultural adoption. You’re goal is to figure out how to localize. Baidu is the “Google” of China with over 70% search engine market share.

Challenge: localization

Lessons Learned

Going into a new market sounds appealing because there aren’t any competitors. However, there aren’t any customers either. And you don’t know how long it will take for customers to adopt your product.

Instead, focus on resegmenting an existing market. To find a market to resegment, identify a company that has recently IPO’d (or is on track to do so). That market is indicative of the following characteristics:

  1. the market is growing / large
  2. there are segments that are underserved
  3. there is a clear answer to where you’ll get your customers
  4. you can tell people who you’ll become when you “grow up”

Once you know your market type, you’ll be able to evaluate whether or not your roadmap is helping you with your challenge associated with that market type.

Question 3: What metric are we trying to improve internally?

Third, you want to make sure that your roadmap is aligned with your company’s immediate goal. There are three metrics that your company will be focused on moving at any time: new customer acquisition, retention, or ACV (annual contract value).

New Customer Acquisition

If your company’s new revenue growth rate is not as desirable as they would like, then their focus will most likely be on acquiring new customers. Here, you’ll want to identify target customers with the right job responsibility that don’t consider purchasing your product category. Then you’ll want to identify critical problems that they have that your product can solve.

You’ll want to spend your time going to conferences and doing a lot of discovery interviews. And half of your time should be talking with prospects.

Retention

If your company is acquiring customers at a fast rate, but churning above what they are comfortable with, then their focus will be on keeping existing customers. You can look at ways to increase the switching cost, or you can help your customers become more successful with your product.

You’ll want to spend most of your time talking to customers that cancelled or expanded their contract with you due to usage. You’ll also want to do a lot of customer visits to watch customers use your product.

ACV

If your company has scaled well, then to hit their upcoming goals, they need to close bigger deals. Only bigger deals will move the needle. Here, you’ll want to understand the “total product” that your customers need OR figure out how to move upstream so that you can sell to larger enterprise customers.

If you choose enterprise, then look at your biggest accounts, and try to get more of them. Start building security features that enterprise buyers need and only offer them at your highest tiered plans.

If you choose to build out the “total product,” then go interview your existing customers on question #1, and build out other product functionality that they can use alongside your product to hit their job responsibility metric.

Conclusion

Product development at a startup can feel overwhelming and ambiguous. You could go so many different directions and meet so many different demands. As you plan your product strategy, though, you need to be laser focused on the product changes that will drive the biggest growth for your company. Consider what your customer actually needs to accomplish, how they solved this problem in the past, and how you can align your roadmap with your company’s internal metrics for the greatest growth. Product development is a big driver in company success, so you want to make smart product roadmap decisions to support your growth goals.

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