Companies that develop, market, and sell products and solutions make strategic and ongoing tactical decisions. They decide what features to include in their products, what messages they will use to communicate the value of their products, what marketing tactics they will use, what prospective customers they will target, and many day-to-day choices. Whether or not these decisions are deliberate or ad hoc, most companies use some combination of the following ways of making product decisions.
(A downloadable "map" that summarizes the product decision landscape is included at the end of this article.)
Product decisions based on feature requests, focus groups, and what prospects and customers say they want.
Companies are selling products to make money by creating happy customers. With the “customer wants” model of making product decisions, you reach out to prospective and existing customers, since they’re the ones who will ultimately be buying your product. If you are able to deliver what prospects want, they are much more likely to buy your product.
To gain insight into what they want, companies listen to what prospects say during sales and customer support calls, tally up feature requests, monitor support and discussion forums, and conduct focus groups and surveys. A conversation with a customer might include explicitly asking her what she thinks of a particular feature idea, or she might offer her own feature ideas.
- Incorporates direct feedback from prospects and customers rather than speculation from inside the company about what they may want.
- Can lead to prospects becoming customers once you’ve implemented the requested features.
- Customers are experts on their own situations and challenges but don't know what they want, so you end up implementing features that don't provide value.
- Research shows that customers' hypothetical predictions about what they would buy are not reliable.
Product decisions driven by the next big deal in the sales pipeline.
- Increases the likelihood that revenue-producing deals will convert.
- Ties product decisions and priorities to revenue potential.
- Leads to scattered, incoherent value propositions for the product.
- Causes abrupt swings in product direction, eroding the morale of the product team.
Product decisions based on common sense and what's cool.
Disruptive and innovative products often come from visionaries who incorporate cool technologies and have an intuitive sense for what consumers want. Executives and members of the product team are themselves consumers and thus have their own personal opinions about the most effective ways to market and sell a product. Developers on top of the newest technologies see how they can apply the technologies to implement innovative product features. Since everyone in the company is a potential user of the product, they all chime in on what the best design and user interface is. In many organizations, these sorts of intuitions drive product decisions.
- Anticipates needs that prospects don't yet realize they have.
- Leverages internal knowledge and avoids expensive market research.
- Effective marketing often defies common sense. Despite the fact that we're all consumers, most members of the product team probably haven't studied marketing principles.
- Personal preferences and intuition often don't reflect those of the target market.
Product decisions based on prior industry experience and accumulated wisdom.
Some companies rely on employees with prior experience in a domain or industry to guide product decisions. Experience provides wisdom about a market and what works and doesn't work in an industry. Based on industry background, such as knowledge of the competitive landscape, customer needs, and existing technologies and practices, members of the product team make judgments about what features to include in the product and how to market and sell it.
- Reduces or eliminates the learning curve for understanding the customers, technology, competition, and needs in an industry.
- Brings industry connections and relationships that sales and development can leverage.
- May inhibit innovation and outside-the-box thinking. Most companies emphasizing industry experience in their hiring practices do not, as a general rule, innovate well.
- Provides no guidance for tackling risks and unknowns outside the prior industry experience.
Product decisions based on analyses such as Kano and A/B testing and documented as detailed product specifications.
To take the intuition and guesswork out of making product decisions, team members with a left-brained bent employ a variety of rigorous approaches and analytical tools to determine and document product priorities and marketing tactics.
For example, a member of the team may maintain a spreadsheet with candidate market problems to solve, or with all the proposed enhancements to the product, and rate them on various criteria. They base product decisions on the items with the highest ratings. Some more sophisticated product managers analyze customer preferences using Kano analysis, rating features in terms of the extent to which they evoke surprise and delight, satisfaction, dissatisfaction, indifference, or an erosion of overall perceived value.
In some cases, business analysts, product managers, or product owners will then compose detailed product specifications. Often, the individuals with analytical instincts will go far beyond writing epics and the basic user stories, and will delve into interaction design.
For determining the most effective marketing tactics, the team may use A/B tests and other data, seeing which ones work best in practice.
- Brings transparency and rigor into the process of making product decisions.
- Distills disparate data into actionable information.
- Can lead to products with incoherent and scattered value propositions.
- Ignores timeless marketing principles.
- Biased to product decisions with available data and to tactical alternatives that are easiest to measure.