My name is Mickey Alon. I'm CTO and Co-Founder of Gainsight PX. I'm also the co-author of ‘Mastering Product Experience in Saas.’
In this article, I'm going to highlight the key differences between product strategy and product delivery.
Building a successful product strategy can be a bit of a headache! But I'm going to break it down into five simple, easy-to-follow steps to building a growth-driven product strategy.
Finally, I’ll show you how to use a cross-functional operating model to drive product strategy.
Key focus points include:
- What is a product strategy?
- What is product execution?
- Product experience trends.
- 5 steps for building growth-driven product strategy.
What is a product strategy?
Firstly, let’s just take it straight back to basics. What is a product strategy? More importantly, how can you align the company objective to your product delivery?
Well, think of it like this: Product strategy is actually a connecting tissue between your company objectives and mission. There is no product delivery without product strategy. Similarly, your objectives and mission statements might as well not exist without a product strategy.
Think about your own company objectives:
- Your company has a mission statement.
- They have objectives and measurements.
- Eventually, your company is going to be translated to a measurable business outcome driven by the overall mission.
What is product execution?
Product execution is about delivering a set functionality that will deliver user outcomes. Sounds complicated, right? Really, It’s about building a very competitive product. The very simple question you need to ask is, how will the product enable the company to achieve its objective?
Product experience trends
User behavior is changing, both in the B2B and SaaS Space.
They prefer to try before they buy. They want to self-educate, through usage. They want to see the product, understand how it delivers what it's supposed to deliver. They want to make sure it fits their use cases.
Bottom-up vs top-down
This is the bottom-up versus top-down approach. Sometimes the end user influences and takes the decision. There's a convergence between the chooser and the user here.
The end-user has to be happy to drive outcomes and ROI in order for you to keep rolling.
Ease of use
This is the factor that's becoming more and more critical, and it can be a vital part in the decision of the end-user. Modern consumers, especially if they're young, are busy and eager to get on with their day. Your product better not be an inconvenience.
This is moving towards a more consumption-based model. When you think about your product usage data, and the value it delivers, the pricing strategy is getting more and more aligned towards consumption.
You can’t separate this from the brand experience. So, when you think about the product delivering strategy, you always need to keep the brand experience in mind as well.
Product strategy trends
The key aspect here is that you’re shifting from a feature-focused approach to more outcome-driven solutions. These should always be supported, of course, by consumer product experiences.
We’re no longer a feature factory meeting deadlines. It’s about really looking at the customer and user outcomes and allocating some resources to make sure that your users are able to achieve their outcomes.
Customer engagement models
These require continuous proactive engagement. You're going to speak about how you can engage and message your users proactively as opposed to reactively. In other words, you’re not just responding to customer complaints and inquiries, you’re actively anticipating customer needs and delivering on them.
Pricing and packaging
When you build a product strategy, you want to align the pricing and packaging to what you deliver. You want to create a motion that will allow your customers to try and buy what they need and then expand with additional features.
Learn and expand
This is something that is becoming very critical to your product strategy. How are you going to build those features that tie not only into the product, but also the pricing and packaging strategy as well?
5 steps for building growth driven product strategy
Now, we’re going to discuss a couple of key growth business metrics.
Customer Acquisition Cost
CAC relates to the sales and marketing costs involved in acquiring new customers within a certain timeframe. As more and more startups emerge, you're competing more and more for the end-user and consumers. As a result, CAC is getting higher and higher. Your product can help you reduce that cost and accelerate time-to-value for customers.
Growth Revenue Retention
GRR is another very important metric. Because we are in a subscription model, you have to renew every year, so we are calculating the percentage of recurring revenue retained from existing customers, but that excludes the expansion revenue.
In plain English, it’s avoiding the leaky bucket scenario, meaning you might be taking on new customers, but you’re losing old ones in equal measure. Bad GRR indicates a leaky bucket and you need to really iterate and understand your GTM and product strategy. But a healthy GRR is not enough. You also need to think about…
Net Revenue Retention
Once you acquire a customer, you retain them. The third step is to be able to expand. NRR allows you to measure how well you are selling to those installers. Are you expanding?
Do users increase the usage and then revenue? And do you offer them multiple products, as well?
NRR just ties to the valuation of your company. In the the graph 👇 you can see public companies with fantastic NRR, where the revenue retention goal is between 120% and 130%. It's very very efficient and really tied to the way the product is delivered.
2. Product Usage Data
How can I better understand and make sure that my team is ready and prepared for building the right product for end-users?
Starting from instrumentation, it's critical to be able to collect product usage data at scale.
That's the number one task, and you want to make sure that everything you're building is becoming measurable. Part of your strategy is to make sure that you have the data and insights to drive your decisions.
So, you need to think about tracking user and account data feature usage. You want to enrich that data with revenue and customer lifecycle to better understand what’s working and what's not in your product. Then you need to integrate with cross-functional tools. That step is really important.
You can really tie those bookings and revenue to your product investments. Modern technologies like Gainsight will help you deal with codeless instrumentation.
Generating meaningful insights
You want to make sure that you're tracking those key features that drive the most value per metric.
If you’re trying to optimize CAC, you’re going to look at the trial experience. You’re going to look at the first 30 days, and the set of early value features that you expect users to engage with. You’re going to measure any friction point and make sure that you’re able to identify those with funnels. You need to make sure you can iterate and fix that, and just deliver that optimized experience.
You need to look at the full end-to-end product adoption and apply those same tactics of measuring features further down the adoption path. You need to make sure that you’re able to continue to learn to fix and deliver a better product.
3. Choose your tech stack
When thinking about delivering on strategies, you need to be thinking about the product roadmapping tool that you’re using. What’s critical to think about is, how can you plan, communicate and create those roadmaps relevant to your strategy?
So, there’s usually three levels of product roadmapping:
- The external stakeholders, which are your customers.
- The engineers. They need to understand the timeline and expected outcome.
- Stakeholder alignment. That might be your executive in the company.
Usually, that roadmap ties the company goals into your strategy within the roadmap. It will outline the set of deliverables and timeline to deliver.
The stack you choose for the roadmap is critical. You have to think about execution and delivery. Tools like JIRA allow you to monitor and track the execution and delivery, as well as user engagement.
Gainsight BX is a tool that allows you to increase the awareness of critical features. These can be your released features,onboarding features, or sticky features that make users come back.
Being able to measure, track and message users is a key part of your tech stack.
4. In-product messaging
And as we said before, you want to make sure that as a user, when I first login to your product, whether it's a trial or onboarding, it can deliver on basic functionality.
One of the tactics you can use is creating important guides and walkthroughs. You can create those checklists of guides that allow the user to self-serve. These are all things that will allow a user to experience value through the product.
Think about how your features are tied to your product vision. Also, are they tied to customer outcomes? Sometimes, in many cases, we see that users might not be aware of the critical set of features you have. Sometimes as much as 40% of your features are not getting leveraged and utilized by users.
They just don't know it exists. And you want to create that in-the moment-messaging to make sure that they're aware of that. Educate your users as they adopt your product.
You have a lot of usage data that’s coming in, and you want to make sure that you're able to research and ask users about the experience. You can share your strategy and roadmap and ask users for biodegradation. You can learn about what they need to use next as well.
User behavior can inform you in relation to your decisions, and optimize the outcome from the end-user. A successful product strategy turns into a successful product execution and roadmap. But you need to continuously learn and optimize over time.
5. Processes & alignment
The build, measure, learn methodology
Aim to create a dedicated process to turn your insights into tangible results.
If you look at the right side of the graph, you can see that in order to really retain and expand customers, you have to have a bucket of resources that are focused on growth. Growth means product engagement. It means that users are actually using the right set of features.
You might have delivered great features successfully, but now with more users coming in or more advanced use cases, the feature no longer delivers the value that they were planning to deliver. You want to have a faster cycle that’s very data-driven.
Product-led growth customer journey
Obviously, it is becoming a very widely-used strategy.
It's basically using your product and putting the product at the forefront of the customer journey. As you can see here, it creates a change in approach and you want to create this cross-functional alignment between marketing, product team, sales, and customer success.
As part of your strategy, you should create this operating model where you can align on key metrics that drive customer value and tie that to your product roadmap and strategy. So, how can you help marketing with customer acquisition?
Align and team up with a sales team in customer success to deliver the desired outcome. You need to have the processes in place to have the time to get that feedback.
Learn from the user experience. Learn about the customer outcome and ROI. When you're deciding about your product strategy and roadmap, you can tie that back to the feedback. Customers need to be renewing. Happy customers become loyal customers.
It's the customer that will actually increase the usage and spend with you.
Growth operating model
Misalignment in pricing and packaging with a product strategy can really block your company.
Aligning with your marketing activities and your product launch is critical. The metrics that they will follow is normally for qualified leads. Normally, we're learning about the buying intent by what customers do on my website, the things they download, and the interest.
The signals are there, but you want to add in those product signals to indicate when a customer is ready for conversation.
You want to democratize the data from your product to make sure that sales are able to see what's going on. They can increase the metrics they’re measured on: win rate, bookings and revenue.
With product success, the goal is really to establish a strategic partnership with your end customers, so you'll be able to drive business results. Teaming up your product with a success team is being able to build those adoption journeys that your product needs to deliver.
Driving customer outcomes and those key business metrics is a collaborative journey.
As the customer expectations change, customer success are the ones that are going to enable those customers and give you feedback. Teaming up with them is going to be key for your recurring revenue, success, and ability to expand.
With your product-led growth team, you should be able to deliver product experience and deliver business outcomes. It's not about new features, It's not about differentiated features.
We want a set of customers that see you're responsive to their requests and demands and that you're able to close the loop faster than your competition. These are not competitive differentiation goals, these are long-term roadmap goals.