Working on product strategy is an iterative process. In the beginning, you reveal the bigger things that need to change in your current strategy (for example, some companies I work with understand that they need to solve a different problem than the one they are currently solving, or address a different market segment). At this point, the importance of the process is very clear. But as the iterations continue, the refinements become more and more contained. It’s almost inevitable that at some point, someone – usually the CEO – would ask why it is important to continue refining even the finest details. I wrote this article to answer that question.
The Product Strategy Process
The first impact of a new product strategy is usually not on the product itself. Instead, it’s on the sales pitch. Since a product strategy outlines the problem you are trying to solve for your customers and explains your unique value proposition, it translates naturally into a sales deck. Being lean, we want to validate the new strategy quickly, and the best and most effective way to do it is usually to try the new pitch on the real pipeline. It doesn’t involve heavy development and brings everyone relevant to the discussion early. When I recommend this to the startups that I work with, it usually translates to having senior people on the calls with customers (because that’s how startups work), trying out the new pitch, and feeling it themselves.
At this point, they are usually happy. The new pitch typically works much better than the older one (which in many cases was not built with a product strategy in mind, but rather a more generic company strategy). The CEO and top sales executives see progress and as a result shift their focus to the next step which is delivering the new/updated product strategy, namely updating the product itself to support this new strategy. The interaction with the CPO at this point gets back to plans and when can certain features be ready.
While the execution side is important, and the CPOs should definitely come up with a delivery plan, my recommendation is to not let go of the product strategy just yet. As the rubber hits the road and you engage in deeper discussions with customers, you learn new things all the time. If you revisit the product strategy even after one month, you will see that many of the things written there are not 100% accurate. That’s the nature of our work – we start with what we know, go to the market to validate it, and then get back to the strategy for refinement.
One of the things that the participants of the CPO Bootcamp get to practice is how to navigate this organizationally. How to move from discussions on features to discussions on strategy and direction, and get all relevant stakeholders on board.
But wait, if the pitch works, why is it important to get back to the strategy and refine the problem and value proposition? If it works, who cares if it’s not 100% accurate? Well, my perspective is that you should care and that it can have an immense impact as you move forward.
Funnel vs. a Relay Race
Everyone is familiar with the marketing and sales funnel concept: you get as many leads as possible at the top of your funnel, and as you go through the various stages in it, some leads stay behind and don’t move on to the next stage. You can measure conversion rates, and use them, for example, to understand how many leads you need entering at the top in order to be able to meet your end goals. You can also improve conversion rates by looking at what it takes to move from one stage to the next and optimizing that – for example, simplifying the registration process in B2C or better lead qualification in B2B.
The funnel concept works well in large numbers. But when you look at it from the individual customer’s perspective, it’s not a funnel at all, it’s more like a relay race. For an individual customer to get to the end of the funnel, the baton should be passed perfectly across all stages of the funnel. If the baton falls somewhere in the process, they will not become a customer. From an individual customer’s perspective, it’s all or nothing, not a statistical calculation of conversion rates.
So what does it take for the baton to pass perfectly across all stages of the funnel? The tactics I mentioned earlier that companies use to improve conversion rates help, of course. But they are not enough. Working on these tactics without working on the end-to-end process can only get you so far.
In Business, Passing the Baton Is an End-To-End Process
Many articles have been written about business lessons we can learn from relay racing. Most of them focus on the importance of proper handoffs between the various people working with a single customer over time, and of course the obvious “we win as a team or lose as a team” perspective.
One major difference though between relay racing and the business world is that in relay racing each runner needs to be coordinated only with the runners before and after them – the ones you need to directly interact with when passing the baton to and from you. In business, and in product specifically, this is very different. Everyone involved – either personally or as a department contributing to the process – must be coordinated with everyone else to be able to acquire and retain a single customer.
Here is a general scheme of how it works (this is for B2B which is usually more complex in this respect than B2C since it involves more people): marketing needs to bring in leads who have the specific problem the product can solve. Sales need to work with them to establish the product’s unique value proposition (which should address that same problem they were pitched about earlier), the product – when eventually tested or used – needs to deliver on all the promises made in previous stages, and the price requested needs to fit the need and available budget for that specific problem.
For a lead to become a happy customer, all of the above need to work perfectly together. If the problem that the lead thought the product is solving is different than the one it actually solves, they will not become a customer. If the value proposition is not exactly what they need, they might continue the process, but they will most likely not become a customer either.
Even if the pitch works well in terms of getting your leads to the next stage of the funnel, it does not guarantee that they will get to the end of it and become customers – and not because the product didn’t deliver on the promise. An inaccurate pitch might create misleading signals. In fact, it might harm you since you will be working hard on leads that would never convert to customers, but you will discover it only in the final stages of the funnel, after a significant investment of time and effort.
How Product Strategy Helps
The goal of the product strategy is to clearly define the problem that the product solves and its unique value proposition. The problem needs to be a problem worth solving, which means it is prevalent enough, has a real need behind it – one that customers can and will pay for, makes sense for the business in terms of revenue forecasting against the available budget customers would have for this problem, and one that is important enough and can be explained to all stakeholders in the sales cycle (especially relevant to B2B where the buyer and the user are often different people who need to be convinced separately).
It is only by considering all of these together – end-to-end and how they impact each other – that we can conclude that the problem we are talking about in the first stage of the funnel is actually going to take us all the way down to a prospect converting into a happy customer. If you stop refining your strategy when the beginning of the funnel shows positive signals, you might be leaving gaps in the story, that will only be revealed towards the end of it, but could have been discovered earlier.
Moreover, the problem you talk about at the beginning of the funnel sets the expectations for the rest of it. So if it is not 100% accurate and addresses the customer’s real need, you might find yourself in a very unhealthy situation: you might have a good product, that actually answers a real need the customer has, but since you weren’t able to talk about it clearly at the beginning, the customer now sees you in a different context and consider the product using different criteria, one that the product is not necessarily a good fit for.
By the way, some talented salespeople will be able to overcome this barrier. They can take a lead who came for one problem and convert them to consider another problem. Some customers will like your product so much that it doesn’t matter which problem you talked about when you first met them. But to truly succeed, you cannot rely on these cases. You need it to work smoothly at scale. And for that, you need a product strategy that is accurate to the details, and connects all the dots start to end – so that when marketing is talking about a specific problem, you set the ground for the baton to be passed smoothly all the way up to a happy customer.
In the CPO Bootcamp, the participants are going through that process exactly: looking at the product across all stages of the sales process and creating a detailed product strategy for their product and company, with my help. Interested to learn more? All the details are here.