Product Management is among the most challenging disciplines in the business world because of its interdisciplinary nature. Product Managers need to be knowledgeable in Product Design, Business Economics, Consumer Psychology, User Experience Design, Project Management, Law, and Marketing. And because no one can be an expert in all of these fields, Product Managers must be master collaborators. Most of all, successful Product Managers must step back and ask hard questions of themselves and their team members. Here are the eight most essential questions Product Managers must ask along the way to a successful product.
Who are the customers for this product?
As Product Managers, we need to research our customers and understand them deeply. Our goal is to identify and build buyer personas putting a fictionalized name and a face to key segments which will want and need our product. Persona development should always start with key demographics from third-party sources like Statista and the US census bureau. This data will identify segment trends. From the demographics, you can build out your profile. Explore financial, psychological, behavioral, and even aspirational aspects of your target market:
These are all questions that a good Product Manager asks about his customer – both today and in the future.
For established companies, fan pages on Instagram, Facebook, Twitter, and visitor tracking from Google Analytics can all provide tools that allow you to gain insights into your customers. Social media has a great deal of information about customers, a topic we explore at some length in our blog piece on Big Data Marketing. Facebook and Twitter allow even the smallest companies to engage with and listen to their customers along the way.
Finally, prospective customer interviews provide deep insights. What are the expectations your customers have for an existing product or service?
Adele Revella's book on Buyer Personas is an excellent guide for interviewing customers, understanding your buyers, and building personas that deliver successful new products if you're new to persona development.
Does our product solve the right problem for these customers?
History is replete with examples of products that solved the wrong problem. Blackberry kept improving its keyboard while the industry moved to on-screen solutions. Kodak didn't think digital photography would ever be a thing. Xerox owned PARC lab that gave us the mouse, ethernet networking, and the laser printer yet famously failed to profit from these disruptive technologies as it continued to focus on its core copier business. The broad "right question" breaks down into many little ones. These include:
The answers to these questions can only come from customers. Talk to them. I recommend two excellent books, Lean Startup by Eric Ries and Cindy Alvarez's Lean Customer Development. Eric provides the tree; Cindy the branches -- processes that will ensure you're building the right product for the right customers.
Are people motivated to buy and use our product?
To understand motivations, we first need to understand the kinds of motivation driving the use of the product. This knowledge will help frame the language we use in talking to our customers about their needs as we build the product. Extrinsic motivations push us to do things for monetary reasons or avoid punishment. Examples of extrinsically motivated activities include working, complying with legal requirements, or doing homework. Intrinsic motivations pursue personal growth, satisfaction, or out of an innate sense of duty. Good examples of things we do out of intrinsic motivation include working out, taking a not-for-credit course, or recreational skiing. Here are some additional ways of thinking about motivation and product:
Nir Eyal's book, Hooked, explains how to make products habit-forming by building triggers, actions, and variable rewards into them. Eyal's techniques are applied chiefly to software products like online games and social media like Facebook, Twitter, and YouTube. But brilliant product managers have figured out how to build these elements into various products, including employee communications and compensation planning. For more on Nir Eyal's addictive engagement strategies please see our blog piece on Creating Community On and Offline to Drive Marketing Results.
Will customers understand our product?
Remember trying to program a Casio Watch? Whether it was the Illegibly small directions or the completely counterintuitive button interface on the front of the watch, just thinking about that product can give us a panic attack. How many of your university lectures or work meetings were interrupted by errant alarms going off on people's wrists? Product designers must bake intuitive design into the product, but what is intuitive to many software developers or product geeks is rarely apparent to the actual users. Usability questions to ask:
Usability testing is a science unto itself.
To do it right, product managers need to become voyeurs. Usertesting.com and dScout.com, among other providers, allow companies to request anonymous screen-recorded, narrated tests of people going through a website or application. Another favorite, figpii.com, in the conversion optimization space, will enable you to follow heat maps of your website's users, highlighting places where consumers become derailed in the conversion process.
Will customers keep our product?
Many products, especially financial services, have high acquisition costs and depend on high customer retention rates to achieve profitability. Auto insurance is a great example. It can take as many as three years to earn back the acquisition cost of an auto insurance policy sold over the internet. Finding ways to identify people who will keep their policies and pay their premiums (and keep paying them) has become necessary in many parts of the financial services industry. But customer retention is a challenge for all new products – from websites to online education to subscription products. Here are some questions we use to identify retention challenges:
The bottom line? Every product designer needs to study after-sales processes as hard as they think about those leading up to the sale. Personalized experiences and confirmation emails that ask customers about the buying experience and how we improve it can help with this part of the customer journey. Finding ways of thanking customers and bringing them back to you should be part of the initial product design.
Does our product have any legal issues?
Legal issues typically come in three or four flavors in the new product development world. They include intellectual property, product liability, customer contracts, and privacy.
In sum, if you're not sure about something, it's always better to be safe than sorry. Consult with a lawyer before releasing your product to the public. And when something does go wrong, take corrective action immediately.
How will we sell this product?
There are five ways to distribute a product. These include on your website, on distributors' websites, in your store, and through distributors' stores. Direct sales organizations like Amway, Primerica, and Cutco use direct salespeople. For most businesses, where you plan to sell your product (place) will drive the rest of the so-called marketing 4p's: place, product, pricing, and promotion (including advertising). We often refer to the 4ps as the "marketing mix."
A huge mistake made by many entrepreneurs was to confuse distribution strategies with product strategies. A product sold online, for example, is not necessarily a new product; it is merely an old product distributed in a new way. That said, various distribution strategies often confer advantages to the companies that use them. Online banks like Capital One or Ally Bank have no branch networks. This advantage allows them to pay higher interest rates than their brick-and-mortar counterparts. However, disruptive distribution models take many years to implement and require patient investors with deep pockets to develop. For example, it took Amazon.com 14 years to become profitable. No matter what distribution strategy you start with, don't ignore the opportunity to use other channels to sell your product. To do so, you will need to make your product partner-friendly by developing API and other system integration tools. Please see my article on Why Integration is A Digital Marketer's Superpower.
How will we make money?
This question is the most difficult to answer with certainty with a new product. It is also the most important.
Internet companies have disrupted traditional businesses by moving from conventional, pay-as-you-go sales models to subscription models. The rise of high-speed internet has been a boon to disrupters in the entertainment industry. Netflix disrupted Blockbuster Video Rentals by moving videos online and charging a monthly, all-you-can-eat fee to Netflix users, as did Spotify in music streaming. YouTube TV is streaming traditional cable television, and most entertainment manufacturers like Paramount, Apple TV, and Amazon Prime are developing direct subscription relationships with their viewers. Outside of entertainment, think of something that you use every day, and you may find a subscription model business disrupting it. Dollar Shave Club and Diapers.com (now part of Amazon) are two excellent examples.
Many different business models exist, ranging from the Subscription Model noted above to Distributor and Aggregator and Razor And Blade model and Software as a Service (SAAS). Investment Fund Alcor has created an excellent compendium of 18 different business models. Our favorite tool for thinking through a new business model is the business model canvas designed initially by Alexander Osterwalder of Strategyzer. The most important part of the message here is that you can be as creative with your business model as product design. Osterwalder uses the examples of Google Advertising and Xerox copies to make his case. Before Google came along, there was no such thing as pay-per-click advertising. And while no one ever wanted to buy a copy machine, most businesses were more than happy to put a copy machine in their offices and pay on a per-copy basis. The business model innovation was part of the new product development in both cases.
The business model canvas is an iterative process, as it is a meeting tool. The key to this process, Osterwalder advises, is to get out of the office and test hypotheses for how your product will make money. And do so iteratively, again and again, until you have defined your business model. His original YouTube video explaining the tool is worth the forty-five minutes, or so it will take you to watch it. For those who prefer books, Osterwalder has collaborated with David J. Bland on a series of books on Business Model Generation, Value Proposition Design, and Testing, among other topics.
Ultimately, It's About Answers
The late Harvard Business Professor and Disruptive Innovation author Clayton Christenson pointed out that about 95 percent of all new products fail. Asking the right questions and, more importantly, finding the answers to them could make your product one of the lucky five percent that survives!