As a Product Manager, are you delivering the right value to your customers? Or are you just a backlog manager doing whatever the Sales team or Top Management requests?
Every Product Manager (and most likely any Product Team member), has already been through many discussions about what customer value is and what should be prioritized next.
Unfortunately, we all know how tricky these discussions can be. And the winner of most discussions should not be the ‘gut feeling’ or HIPPO (highest-paid person’s opinion).
It is key for a company success to have an agreement or guidelines on what is customer value and how to prioritize work. For that reason, I have put together a guideline on how to support Product Teams to deliver the right customer value. But, let’s start with the basics:
What is value
There are various interpretations of what is meant by value. The best summary that I could create is ‘Delight customers so they come back, stay loyal, bring more revenue, and share their positive experience with other potential users’. Of course, we should always keep costs in mind.
Delivering the right customer value — 5 focus areas
Create direction with a Product Team Vision
First of all, apart from the Company Vision, each Product Team should have a defined Vision aligned with the rest of the organization. Product teams without a Vision are usually just small feature factories developing whatever comes next from top management.
This Vision should be the desired state that the product team wants to reach within 1–5 years. Also, it needs to be connected to the product or set of features they are responsible for, enabling the team in deciding what to do next. Some examples of product team vision are:
E-commerce payment product team: Our customers can find their favorite local payment method
Logistics product team: Our logistics process is fully automated, being based only on parameters
Suggested reading material: INSPIRED, by Marty Cagan.
Know your customers
Hopefully, we all know that it is all about delighting our customers. For achieving this, each Product Team needs to understand who are their customers and what is their behaviour around their features.
Knowing the customers as best as possible is key for the Product Team to derive new initiatives that deliver the right value. Some behaviors that we can try to verify:
What is the job that the customer needs to get done?
Are they using our feature?
How and how often?
Why they are using the feature?
Would they pay more?
How do they react if we do a specific change?
Suggested reading material: Value Proposition Design.
Be data-driven with Key Performance Indicators
Each Product Team should have key performance indicators that they continuously measure and improve. Those KPIs need to be aligned with their vision and product scope.
It is crucial to understand that KPIs are somehow all connected. You basically cannot really improve one KPI without also affecting others. So most changes are basically a trade-off between 2 or more KPIs.
For example, if you want to increase the conversion rate of your e-commerce, you might have to affect prices, costs, and/or basket sizes. Some other examples of KPIs are usually related to acquisition, conversion, retention, tech performance, and lastly costs.
Suggested reading material: KPI for dummies, by Bernard Marr.
Objectives and Key Results
Short or medium-term objectives and key results should be defined with the aim to drive KPIs and the company vision forward. The essential part is to make objectives that inspire and give direction and key results that measure progress toward the objective.
Sometimes OKRs might come from top management, due to strategic decisions, but in most scenarios, the product teams should participate on those definitions. If product teams are closer to OKR definitions, they will surely be more engaged on delivering them.
Suggested reading material: Measure What Matters, by John Doerr.
Product Initiatives
Finally, initiatives are the concrete work that product teams are going to be focusing on. Basically, an initiative needs to affect all or at least one of the items below:
Move the team closer to their Vision
Improve customer overall experience
Improve KPIs that the team is responsible for
Help the organization achieve or get close to their Objectives and Key Results
Some examples of initiatives:
E-commerce payment product team: Enable Paypal as a payment method
Logistics product team: Automate additional truck request based on fulfillment center demand
Suggested reading material: The Value Engine, by Value Rebels.
That is my take on what is value and how to deliver the right ones. Each of the 5 areas deserves articles and even books! What is your take on value?
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