Pragmatic Marketer Volume 8 Issue 2

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Pragmatic Marketer Volume 8 Issue 2

  1. 1. 8 2 2010 Is Your Product Launch Doomed? Measurement-Driven Product Management: Measure only what matters most Defining and Designing Technology for People Don’t Let the Sun Go Down: Techniques for sunsetting or retiring products and features Conjoint Analysis 101: Know how your market values your product
  2. 2. Executive Briefing The proven way to create effective product management and marketing teams. • Review key concepts of the Pragmatic Marketing Framework, the worldwide standard for product management and marketing. Business Marketing Positioning Plan Plan • Learn techniques leaders can use to accelerate adoption. Pragmatic Marketing Market Market Buying Customer Pricing Problems Definition Process Acquisition • Designed specifically for senior management. Win/Loss Distribution Buy, Build Buyer Customer Framework Analysis Strategy or Partner Personas Retention Distinctive Product Product User Program Competence Portfolio Profitability Personas Effectiveness STRATEGIC TACTICAL MARKET STRATEGY BUSINESS PLANNING PROGRAMS READINESS SUPPORT Competitive Product Launch Sales Presentations Innovation Requirements Landscape Roadmap Plan Process & Demos eaders ed In L te success of Tunpany CEOs creahy most fail) m w gy co (and Technology Use Thought “Special“ The How te chnolo Assessment Scenarios Leadership Collateral Calls Status Lead Sales Event ott Dashboard Generation Tools Support rman Sc vid Mee Myers & Da g Stull, Phil by Crai Referrals & Channel Channel Get a free e-book at References Training Support © 1993-2010 Pragmatic Marketing PragmaticMarketing.com/secrets PragmaticMarketing.com/seminars Call (800) 816-7861 to conduct this seminar at your office
  3. 3. The Pragmatic Marketer ™ 8910 E. Raintree Drive Inside this issue: Volume 8 Issue 2 • 2010 Scottsdale, AZ 85260 Pragmatic Marketing, Inc. 4 Conjoint Analysis 101: Founder and CEO Know how your market values your product Craig Stull By Brett Jarvis Editor-in-Chief How do you know what the market wants? What market Kristyn Benmoussa segments exist? What those segments prefer? What will they Managing Editor pay? In short, how do you know what trade-offs to make? By Graham Joyce using conjoint analysis, understand the trade-offs you should ————————————————— make by understanding the trade-offs your market will make. Interested in contributing an article? Visit PragmaticMarketing.com/submit 12 Is Your Product Launch Doomed? By Dave Daniels The process of introducing a product to market is a serious No part of this publication may be reproduced, stored in any retrieval system, or transmitted, in undertaking. Here are ten easily identifiable signs that help any form or by any means, electronic, mechanical forecast if a product launch may be in trouble. photocopying, recording or otherwise, without the prior written permission of the publisher. 18 Measurement-Driven Product Management: Other product and/or company names mentioned in this journal may be trademarks or registered trademarks of their respective companies and Measure only what matters most are the sole property of their respective owners. The Pragmatic Marketer, a Pragmatic Marketing By Mike Smart publication, shall not be liable regardless of the cause, for any errors, inaccuracies, omissions, or If you are a vice president, director or team leader for a product management other defects in, or untimeliness or unauthenticity function, one of the biggest challenges you face today is how to of, the information contained within this magazine. Pragmatic Marketing makes no representations, demonstrate the team is making a significant contribution to top line warranties, or guarantees as to the results obtained or bottom line targets. If you can’t measure your team’s effectiveness, from the use of this information and shall not be liable for any third-party claims or losses of any or if you are focused on the wrong metrics, kind, including lost profits, and punitive damages. your headcount and budget allocation The Pragmatic Marketer is a trademark of could be at risk. Pragmatic Marketing, Inc. Printed in the U.S.A. 24 Defining and Designing All rights reserved. Technology for People By Sean Van Tyne ISSN 1938-9752 (Print) We can only design solutions for ISSN 1938-9760 (Online) people when we have a deep, detailed About Pragmatic Marketing® knowledge of those people’s needs. We build upon our prior knowledge Creator of the world’s most popular product and experience to design and develop better products. Each new management and marketing seminars, Pragmatic Marketing has trained more than 60,000 technology generation of solutions improve based on market and customer feedback. product management and marketing professionals at 5,000 companies in 23 countries. As the thought- 28 Don’t Let the Sun Go Down: leader in the industry, the company produces blogs, webinars, podcasts, and publications read by more Techniques for sunsetting or retiring products and features than 100,000 every year. By Steve Johnson Pragmatic Marketing has been honored four times by Inc. magazine as one of the fastest growing private Sunsetting is the process of pulling a product or feature from the market when companies in America (2000, 2007, 2008, 2009), and the cost of development and maintenance exceeds profit. It’s a business in 2008 named a Comerica Bank Arizona Company to Watch. decision that should be easy to make. Understand the factors to consider when discontinuing product. Visit PragmaticMarketing.com to learn more. The Pragmatic Marketer • Volume 8, Issue 2, 2010 • 3
  4. 4. Conjoint Analysis 01: 1 Know how your market values your product By Brett Jarvis 4 • The Pragmatic Marketer • Volume 8, Issue 2, 2010
  5. 5. Product management is all about trade-offs. Whether the objective Conjoint analysis is increased market share, profit margin or revenue, every product manager makes trade-offs—quality vs. cost, time to market vs. is a set of market breadth of features, richness of the offering vs. ease of use, etc. research techniques So, how do you know what the market wants? What market that measures the segments exist? What those segments prefer? What will they pay? In value the market short, how do you know what trade-offs to make? The answer is to places on each get the market to make the trade-offs for you. Not the entire market, of course, just a representative sample of the market. feature of your product and predicts By using conjoint analysis, you, as a product manager, can do just the value of any that: understand the trade-offs you should make by understanding the trade-offs your market will make. Then, apply your increased combination of market insight to your revenue, profit or share objective. features. Conjoint analysis is, at its Is conjoint analysis right for me? essence, all about Conjoint analysis has been successfully applied in many industries, features and such as Air Travel, Smart Phones, Computers, Financial Services, trade-offs. Health Care, Real Estate, and Electronics. If your job includes configuring a defined set of features for a product or service and the consumer’s purchase decision will be “rational,” conjoint analysis can help. If, on the other hand, your consumer’s purchase decision will be “impulse” or “image,” conjoint is not the right tool for you. If you’re a technology product manager, conjoint analysis is right up your alley. Because conjoint analysis helps you understand your market’s preferences, you can apply it to a variety of difficult aspects of the job, including product development, competitive positioning, pricing, product line analysis, segmentation and resource allocation. “How should we price our new product to maximize adoption?” “What features should we include in our next release to take market share from our competition?” “If we expand our product line, will overall revenue grow, or will we suffer too much cannibalization?” “For which value-added features is the market willing to pay?” For example, a technology company was feeling pressure from a lower cost alternative and debated lowering its own prices. Then, the results of a conjoint analysis showed the market valued their products differently from the competitors. They chose not to lower prices, but to slightly reconfigure their offering. As a result, the business grew and realized substantial profits that they otherwise would have never seen. Not every situation is as dramatic as that, of course, but a conjoint analysis done right is impactful. The Pragmatic Marketer • Volume 8, Issue 2, 2010 • 5
  6. 6. Conjoint Analysis 101: Know how your market values your product What exactly is conjoint analysis? Conjoint analysis is a set of market research techniques that measures the value the market places on each feature of your product and predicts the value of any combination of features. Conjoint analysis is, at its essence, all about features and trade-offs. With conjoint analysis, you: 1. Ask questions that force respondents to make trade-offs among features 2. Determine the value they place on each feature based on the trade-offs they make 3. Simulate how the market reacts to various feature trade-offs you are considering To demonstrate conjoint analysis in action, let’s consider cell phone plans. These plans have various feature types, which in the language of conjoint analysis are called attributes. Let’s focus on Brand, Price, Minutes, Rollover Options, and Call Options. In reality, plans can be more complicated and conjoint analysis can keep up with the complexities, but let’s keep the example simple. Each of the attributes listed above has different levels. The levels of the Brand attribute might be AT&T, T-Mobile, Verizon, etc., but here we will refer to possible Brands as Brand A, Brand B, etc. Attributes Levels Brand Brand A, Brand B, Brand C, Brand D Price $60/month, $75/month, $100/month Minutes 800; 1,000; 1,400; 2,000 Rollover Options No rollover of unused minutes Unused minutes rollover for 1 month Unused minutes rollover for 1 year Call Options No free calling based on contacts Free calling to top 5 contacts Free calling to top 10 contacts Attributes must be something you can categorize, but they don’t have to be numeric. Note that the attributes include brand, price, and various product features. Through conjoint analysis, you gain insights into the value of your brand and the value of product features, and determine price sensitivity. 6 • The Pragmatic Marketer • Volume 8, Issue 2, 2010
  7. 7. Conjoint Analysis 101: Know how your market values your product Survey the market Conjoint analysis survey questions could take a variety of forms, depending on your study objective, but the most common type of question would be: Which of the following cell phone plans do you prefer? Brand A Brand B Brand C 1,400 minutes 1,000 minutes 800 minutes Unuse d minutes No rollover of Unuse d minutes rollover for 1 month unuse d minutes rollover for 1 ye ar No fre e calling Fre e calling t o Fre e calling to base d on contacts t op 5 contacts top 10 contacts Costs $100/month Costs $75/month Costs $60/month The survey would present multiple questions of this type, varying the levels and, therefore, the trade-offs the respondent needs to make. Derive values for each of the levels From responses to these questions, conjoint analysis uncovers the underlying value for each level, depending on how often a level was included in the product selected. The relative value of the levels is what is relevant, in other words, how the value of one level compares to the value of another. For example, the values for the levels of the Call Options attribute and the Rollover Options attribute for one respondent might be: Call Options Value Rollover Options Value Free calling to top 10 contacts 50 Unused minutes 100 rollover for 1 year Free calling to top 5 contacts 20 Unused minutes 30 rollover for 1 month No free calling based on contacts 0 No rollover of 0 unused minutes You can see in this example, given the levels tested (which is an important caveat), the Rollover Options attribute (with values ranging from 0 to 100) was more important to the respondent than the Call Options attribute (with values ranging from 0 to 50). These values can be calculated for individuals as well as for the overall market, which means you can use conjoint analysis to segment your market based on respondent characteristics, needs and preferences. Each of the level values is called a part-worth, because they represent the worth of any given part of the product. The Pragmatic Marketer • Volume 8, Issue 2, 2010 • 7
  8. 8. Conjoint Analysis 101: Know how your market values your product Predict preference for various products Once you see the part-worths, you understand what trade-offs to make so a product will be more desirable to the market. This predictive capability is where the real power of conjoint analysis is evident. For example, given a set of part-worths, you might have the following scenario: Brand A 30 Brand C 0 $75/month 40 $60/month 70 1,000 minutes 55 1,000 minutes 55 Unused minutes rollover for 1 month 30 No rollover of unused minutes 0 Free calling to top 5 contacts 20 Free calling to top 5 contacts 20 Total 175 Total 145 The total value of the Brand A product is 30 more than the Brand C product. This consumer would be more likely to select the Brand A product. But, if the Brand C call option was changed from “Free calling to top 5 contacts” (part-worth of 20) to “Free calling to top 10 contacts” (part-worth of 50), the overall value of each product would be the same and the consumer would be equally likely to select either product. The overall value of a product is referred to as its total utility. Simulate competitive markets Now that each attribute level has an associated part-worth, we can create any number of competitive scenarios by mixing and matching the levels and increasing or decreasing the number of products. The result of any conjoint analysis study is a simulation model that allows you to simulate, for example, what share of the market will prefer your product versus your competitors’ products. For example, you might see results like this: Brand A Brand B Brand C $60/month $75/month $75/month 1,000 minutes 1,400 minutes 1,000 minutes Unused minutes Unused minutes rollover Unused minutes rollover for 1 year for 1 month rollover for 1 year Free calling to Free calling to top 10 contacts No free calling top 5 contacts based on contacts 40% share 35% share 25% share These shares, totaling 100%, are called “shares of preference,” because they refer to the share of the market that prefers each product, if everything else were equal. They are not market shares, because they don’t take into account a variety of other factors, such as sales and marketing efforts, distribution channels, product lifecycle phase, etc. Simulating shares of preference is powerful. And, there’s no limit to the simulations you can run. So, for example, if your competitor changes its product, you can run simulations to help determine your response. If you are contemplating adding a new product, you can predict whether that will be beneficial and from which product in the existing market your new product will grab the most share. These are simple but potent examples of the many different ways that conjoint analysis may be used. 8 • The Pragmatic Marketer • Volume 8, Issue 2, 2010
  9. 9. Conjoint Analysis 101: Know how your market values your product To get a complete picture of the What’s the best way competitive landscape, include all to move forward? competitors, and to ensure the predictive capability of the approach over time, think There is software to help you design, carefully at the start about the attributes conduct and analyze a conjoint analysis and levels you will include in the study. study yourself. But there are also nuances and important decisions to make in each That said, because it allows endless step of the process. For example, there are scenarios to be tested in a competitive different conjoint methodologies, each with landscape, share of preference allows for its own approach to data collection. The powerful “what if” analysis. It ultimately one that is appropriate for you depends on provides the insights you need to make the objectives of your study. the trade-offs you are faced with every day as a product manager. The insights Unless you’re going to personally do a gained regarding how you might change conjoint study at least a few times a year, your position in the market, respond it’s likely that you will want to engage to competitive threats, grow revenue, someone with experience in the field to penetrate specific segments, etc. can help you navigate these nuances. Although have a dramatic impact on the success surprising to many, the person you engage of your product. for your study need not be an expert in your field. You are that. They need only be expert in applying conjoint analysis to Analyze purchase likelihood real business issues. Even if your product is so new it has Just remember, the next time you’re no competition and will create its own making trade-offs as a product manager, market, conjoint analysis provides use conjoint analysis to get your market powerful insights. In addition to market to make the trade-offs for you. simulations and shares of preference, conjoint analysis also analyzes your product’s purchase likelihood. Purchase likelihood analysis uses the total utility of a product to determine a percentage indicating the relative likelihood that the product will be purchased, given various combinations of features and pricing. Because purchase likelihood is single- product focused and does not take into account the competition, it is particularly helpful when launching a product that is completely new to the marketplace. Purchase likelihood is often appropriate for micro-level product design as well, when major product decisions are already made, and the focus is on getting the details right. Brett Jarvis is the former Global Director of Product Management for Oracle’s Advanced Customer Services business. He currently provides marketing strategy consulting for Sawtooth Technologies Consulting Group. Learn more about Sawtooth Technologies at www.sawtooth.com or follow them on Twitter at twitter.com/sawtoothconsult. Contact Brett at bjarvis@sawtooth.com The Pragmatic Marketer • Volume 8, Issue 2, 2010 • 9
  10. 10. Are your product management and marketing teams overloaded with tactical activities, spending too much time supporting Development and Sales rather than focusing on strategic issues? The Pragmatic Marketing Framework ™ Business Marketing Positioning Plan Plan Market Market Buying Customer Pricing Problems Definition Process Acquisition Win/Loss Distribution Buy, Build Buyer Customer Analysis Strategy or Partner Personas Retention Distinctive Product Product User Program Competence Portfolio Profitability Personas Effectiveness STRATEGIC TACTICAL MARKET STRATEGY BUSINESS PLANNING PROGRAMS READINESS SUPPORT Competitive Product Launch Sales Presentations Innovation Requirements Landscape Roadmap Plan Process & Demos Technology Use Thought “Special“ Collateral Assessment Scenarios Leadership Calls Status Lead Sales Event Dashboard Generation Tools Support Referrals & Channel Channel References Training Support © 1993-2010 Pragmatic Marketing Visit PragmaticMarketing.com or call (800) 816-7861
  11. 11. Seminars Living in an Agile World™ Requirements That Work™ Strategies for product management Methods for creating straightforward product when Development goes agile. plans that product managers can write and developers embrace. Practical Product Management® Principles of the Pragmatic Marketing Framework, Effective Product Marketing™ the industry standard for managing and marketing Repeatable, go-to-market process to design, technology products. execute, and measure high-impact marketing programs. Pragmatic Roadmapping™ Techniques to plan, consolidate and communicate New Rules of Marketing™ product strategy to multiple audiences. Reach buyers directly, with information they want to read and search engines reward with high rankings. Product Launch Essentials™ Assess organizational readiness and define team Executive Briefings responsibilities for a successful product launch. Designed specifically for senior management, Executive Briefings discuss how to organize Product Management and Marketing departments for optimal effectiveness and accountability. In addition to the extensive published schedule, training can be conducted onsite at your office, saving travel time and costs for attendees, and allowing a much more focused discussion on internal, critical issues. Pragmatic Marketing’s seminars have been attended by more than 60,000 product management and marketing professionals.
  12. 12. Is Your Product Step 1: There are no goals for the product launch Launch goals are the cornerstone of a Launch Doomed? successful product launch, yet many companies fail to establish launch goals. CEOs have an expectation of what success looks like and believe the rest of the By Dave Daniels organization understands these expectations. But often they aren’t translated into meaningful goals, and are not understood Products don’t sell themselves! by the people tasked with planning and executing the launch. The process of introducing a product to market is a serious undertaking. Unfortunately for many For the sales team, goals are clearly understood. They have a quota and get companies it’s merely an afterthought; a set rewarded for meeting that quota. The of deliverables created from a checklist at the marketing team’s contribution to the end of product development. When the level goal is less clear. Sales leads are one measure of performance but connecting of effort and resources applied to the creation this measurement to a sales goal is often of the product dwarfs that of the launch, it’s no problematic. For example, getting agreement wonder product launches fail to achieve the sales on a common definition of a lead. velocity anticipated. The target for Sales seems clear but will the revenue come from existing customers So how do you forecast if a product launch may or new buyers? be in trouble? Here are 10 easily identifiable signs This question may seem benign to the your launch is about to become a disaster. sales team, but it’s fundamental to the marketing team as they devise strategies and tactics to support the sales goal. When the connection between the sales goal and what the marketing team does becomes unclear, the marketing team often retreats into areas they can control and manage. For example, NEW focusing on deliverables like collateral, web content and sales tools. In effect becoming reactionary to the sales team’s requests rather !! than taking a leadership role. ACTION Establish launch goals with the executive team as early as possible and communicate them in meaningful ways throughout the organization. 12 • The Pragmatic Marketer • Volume 8, Issue 2, 2010
  13. 13. Step 2: The launch Confident the problem is solved, Step 3: The launch plan strategy is based on the PMO proceeds to oversee the contains unrealistic timeframes next launch. Based on the checklist, a set of deliverables the launch team knows what’s and expectations A launch checklist is not a launch expected and which deliverables Optimism is wonderful but it can strategy. It usually gets created they are responsible for completing. blind teams to the realities of after a failed launch. Expected This time the launch is delayed constraints and capabilities within deliverables are missing, the sales by several months while each item an organization. It’s wise to evaluate team isn’t trained, the systems for on the checklist is completed to the the organization within the context booking and delivering the sale are satisfaction of the PMO. Sadly, the of the product being launched to overlooked, and on and on… revenue results were no better than identify readiness gaps. This is more the last launch. than just getting the product ready. To prevent this problem from It means the entire organization is happening again, someone An effective product launch checklist ready to market, sell, deliver and is assigned to go around the is developed only after establishing support at a level that can achieve organization and ask each launch goals and then choosing the launch goals. functional area what they want for the best strategy to support them. a successful launch. The problem The checklist will change from Widget Tech was planning to is everyone defines “successful” launch to launch, adjusting to introduce a new product to market. differently, particularly if the launch accommodate the strategy. Products The product was a departure from goals are unclear. The result is a early in their lifecycle, which are the typical products Widget Tech bloated wish list of activities with undergoing significant change, will developed and would be sold to a questionable value, often growing see a more dynamic process than a new set of buyers. The company was with each successive launch. mature product with an established excited about the new potential for customer base undergoing only revenue growth. However, the launch incremental updates. was a fiasco and it became apparent The CEO of a software company, frustrated with poor results from an the launch goals were unrealistic important product launch, decides ACTION and the change was too much for the it’s time for action. Her reputation sales channel to absorb within the Once launch goals are established, with the board of directors is on the time allocated. formulate the launch strategy and line because the promised results then define the deliverables. were not realized. To ensure the next The key is to assess the organization launch won’t be an issue, she creates objectively and not color the a Project Management Office (PMO) assessment with personal bias. This to oversee future launches. readiness assessment should provide management with a realistic picture The head of the PMO is a highly of the risks and provide a plan to regarded project manager address them. In some cases it will who addresses the problem by become evident the launch goals interviewing every department in are too aggressive and will need the company. Fresh from the recent to be adjusted. failure, everyone is more than eager to participate. The result is a ACTION “thorough” checklist and a master Evaluate launch goals against the project plan template. organization’s ability to execute. Then develop an action plan to fill the readiness gaps. The Pragmatic Marketer • Volume 8, Issue 2, 2010 • 13
  14. 14. Is Your Product Launch Doomed? Step 4: Sales enablement Step 5: Significant effort Step 6: No single person training is based on is spent creating collateral is responsible for driving product features and sales tools for people product launch results Sales enablement training is one who never read it Many business-to-business (B2B) of the most critical components of Ninety percent of sales tools are organizations have just one window a successful launch. Unfortunately never used by salespeople, yet of opportunity to launch each year. most training is packed with marketing teams keep producing Accountability for driving results information about the product them. They also include a staggering is fundamental to the success of emphasizing the newest features, amount of gobbledygook. Does a launch, but too often central the schedule of the marketing it really matter to your buyer that accountability is assumed to be in programs, an overview of sales you’re “the leading provider” of place when it’s really distributed tools, and a product demo. anything or that your software is among several individuals. “robust”? Maybe; but it depends This type of training lacks any on the buyer, not your ego. Development does their part and insight or information to help throws it over the wall to Marketing. individual salespeople achieve their Part of the problem occurs as a Marketing does their part and sales quota. Successful salespeople result of blindly following a launch throws it over the wall to Sales. solve problems for their buyers, checklist which serves as a proxy When the launch fails, those in they don’t sell features. Inevitably for a launch strategy. Marketing one group will confidently state some of the product features Communications becomes a factory they made a solid contribution and your buyers find most valuable producing a collection of marketing blame the others. are not necessarily the newest materials that’s a wishlist from ones or the ones you think are the sales team. A successful launch takes more than important or cool! merely coordinating the completion But, solidly anchored in launch of tasks among departments. It takes Salespeople need to know what goals, a clear strategy, and a deep an individual who can drive results problem the product solves, understanding of buyers, Marketing throughout the organization. A which buyers have the problem, Communications has the context to launch owner provides a single point what criteria they use to make a build the collateral and sales tools of accountability, ensuring product buying decision, and how to have that influence buyers throughout launch planning and execution has a conversation with those buyers in the buying process. the high priority it deserves. a way that results in a purchase. Note: in this context, collateral Getting involved as early as possible, ACTION is designed for prospects and a launch owner can collaborate Become an expert on how customers, sales tools are created with the management team to for the sales team. establish launch goals and the and why your buyers buy. strategy needed to achieve them. With goals defined, a launch owner ACTION can assemble and lead the most Focus on gaining a deep appropriate cross-functional launch understanding of your buyers, team. Regardless of their current job then build collateral and sales title, the launch owner needs strong tools to influence them through leadership skills and the confidence that management will support them. the buying process. ACTION Assign the responsibility for achieving the launch goals to a launch owner, and provide them with the flexibility and resources to make it happen. 14 • The Pragmatic Marketer • Volume 8, Issue 2, 2010
  15. 15. Is Your Product Launch Doomed? Step 7: The launch plan Step 8: The launch plan A new customer has an is based on hunches, not mimics your competitor understanding that getting from where they are today to fully market evidence Just because one organization deploying your product will likely Hunches may be great for gambling chooses a particular launch take some work on their part. but not for a successful product tactic doesn’t mean it will work However, existing customers don’t launch. Hunches are guesses based for another. What may seem share this expectation. They’ve on “gut feeling” not market evidence. like an easy option is to mimic already made the investment and your competitor. However, there feel a transition to a new version are too many factors in play to of the product should be relatively Your hunch says you can steal guarantee the same tactic will have painless. They trust you will take customers away from your primary equivalent outcomes. Mimicking a care of them. competitor. It’s exhilarating to do competitor also assumes they are this, but would you bet the success smarter than you. Your product has been very of your launch on this strategy? You might, if you have market evidence successful and gained market the competitor is in a weak position, Choosing to mimic a competitor share. To grow revenue, you’ve or is failing to provide adequate is the result of inexperience or a discovered an opportunity in an service to their customers. limited launch planning window. adjacent market segment. But in It’s easier to copy something that order to enter this new segment, appears to be successful than it is radical changes must be made to Suppose your marketing team is to develop a sound plan based on support critical capabilities expected planning to exhibit at a tradeshow your own capabilities. Mimicking by this new market. However, the to announce your new product. If a competitor can lead to lost cost of supporting two products is your launch goal is to build sales market opportunity, misdirection prohibitive so you merge the two sets velocity, how would you know if this of resources, and loss of focus. of capabilities into one product. is the right tactic? You would if there is market evidence enough buyers of the kind you need will be in The context competitors use for a The launch of the updated product attendance. given launch could be completely attracts customers in the new different than the context of your segment but existing customers product launch. Due to strong won’t migrate to the new version. Market evidence helps mitigate the brand equity, companies like Apple The impact on their business is risk that a hunch will be wrong. It can choose tactics that will work just too great. helps make sound business decisions brilliantly for them, but may spell and develop a launch strategy based disaster for your company. When the pain of migrating to a on market facts rather than intuition. new version of a product (from the ACTION same vendor) is perceived to be With an initiative as important as An intimate knowledge of buyers equal or greater than the migration a product launch there is no room to a competitor’s product, customers for guessing. and the buying process provides the will often evaluate competitive best guidance for the most effective offerings. At best they may delay. At ACTION launch tactics. worst they switch to the competitor. Make launch planning decisions This could spell disaster for your based on market evidence product launch. not guesses. Step 9: Existing customers are not adequately considered ACTION in the launch plan Ensure the migration to a new It’s staggering how many version of your product is smooth organizations fail to recognize the and straightforward for impact a new version of a product current customers. can have on existing customers. They’re so focused on acquiring new business, they forget about the current customer base—the ones they’ve worked so hard to acquire and nurture. ?? ? ? The Pragmatic Marketer • Volume 8, Issue 2, 2010 • 15
  16. 16. Is Your Product Launch Doomed? Are you ready to launch? Step 10: The launch team isn’t a team I Have you ever been responsible for a product Don’t Yes No Know launch and felt like you were the only one doing the work? Were you happy with the results of your last product launch? Product launch is a team sport involving a range of expertise. No single individual can possibly know Is your team clear about their all the details, especially in large organizations. This launch roles and responsibilities? necessitates the creation of a cross-functional launch team, where individuals can contribute their unique Are launch goals established and perspectives and experience. communicated to your team? 10 The value of successful cross-functional teams is Do you have a designated launch well documented, increasing exponentially with the size of an organization. However, so does the owner? 9 complexity of driving results. Is the approach to product launch Breakdown occurs when the launch team isn’t really a team effort? 8 a team at all. It’s a collection of individuals from various parts of the organization impacted by the Does your launch team follow launch, but whose management doesn’t encourage or reward their participation in the team. Sound a proven launch process? 7 familiar? Why would a launch team member put in Do you consider different launch the hard work to make the launch successful if it’s strategies for each product launch? not deemed important by their manager? 6 Do you collaborate launch planning The launch team consists of three distinct among functional areas? roles. The launch owner is responsible for organizing and driving the launch team. 5 Is your team learning from each The launch team members are launch experience? ambassadors from their respective functional areas. An executive Do you identify and address 4 sponsor helps break down barriers, serve as a mentor and acts as readiness gaps before launch? political muscle. 3 ACTION Each “yes” gets you closer to a successful product launch. Each “no” or “I don’t Make participation in a cross- functional launch team a priority know” gets you further away from 2 sales velocity. and reward the contribution. If your company is like many others, you will have the opportunity to launch only 1 once this year, make it the priority it deserves! 0 Dave Daniels is an instructor for Pragmatic Marketing with more than 25 years of experience. He specializes in product marketing and product launch, with an emphasis on effective go-to-market strategies and execution. His extensive background includes development, sales, product management and product marketing, with a global perspective of the entire product launch process. He speaks at many industry events about launch best-practices and writes the Launch Clinic blog. Contact Dave at ddaniels@pragmaticmarketing.com 16 • The Pragmatic Marketer • Volume 8, Issue 2, 2010
  17. 17. Product Launch Essentials ™ Plan and execute a successful product launch Are your product launch efforts focused on deliverables rather than results? Launching a product is more than following a simple checklist. A successful product launch is the culmination of many, carefully planned steps by a focused, coordinated team. Even good products can fail because of organizational issues, misunderstanding of roles and responsibilities, and a lack of a strategic approach to guide efforts. • Learn a repeatable product launch process to shorten the launch planning cycle, get the resources needed, and know what to expect at every step. • Understand the seven product launch strategies your team can use to maximize sales velocity. • Measure product launch progress with indicators that identify unforeseen issues before they become big problems. Get a free e-book at Daniel s PragmaticMarketing.com/launch id By Dav Download a complete agenda and register at PragmaticMarketing.com/seminars Call (800) 816-7861 to conduct this seminar at your office
  18. 18. Measurement-Driven Product Management Measure only what matters most By Mike Smart “ problem with most measurements istheir The that too many companies have trained of the role. The stakes are high! A product management function that demonstrates a direct contribution to the company’s income statement employees to measure the wrong things. ” and uses objective measurements to gauge their effectiveness and value to the company will have more influence shaping the product strategy Craig Stull, Phil Myers and David Meerman Scott and the roadmap. in Tuned In The fact there is increased emphasis on measurements, metrics and alignment with In a rapidly changing business climate the corporate goals during this business cycle is not allocation of resources and budgets are closely a surprise. What is intriguing is the number of tied to a department’s ability to get short term product management leaders acknowledging results. If you are a vice president, director or this focus will continue after growth returns to team leader for a product management function, the industry. This is in part because CEO’s need one of the biggest challenges you face today is how better risk mitigation and are demanding more to demonstrate the team is making a significant predictability in all aspects of the business. contribution to top line or bottom line targets. The pressure on budgets and resources from At a recent ProductCamp industry event, a session executives has forced a tighter link between on “Metrics-driven product management” was filled current investments and near term results. with product management team leaders, directors and VP’s. All of the attendees expressed serious If you can’t measure your team’s effectiveness, concern about the need to establish better linkages or if you are focused on the wrong metrics, your between the activities of product management with headcount and budget allocation could be at risk. broader company results such as revenue, product margin and profits. Very few challenged the sole use of these conventional corporate measurements In the 2008 best-selling book, Tuned-In: Uncover as the gauge for product management effectiveness. the Oppor tunities T hat Lead to Business Breakthroughs by Craig Stull, Phil Myers and David Meerman Scott; the authors point out that many Success in building high performance teams begins companies force employees to measure and track with using measurements that give visibility about the wrong thing which leads to out of synch or the overall effectiveness and efficiency of the team. “tuned-out” behaviors. The key is finding the right measurements. In this economy, the best way a product What are the best measurements to monitor management team can establish its value to the the effectiveness of product management teams? corporation is by using a reliable set of outcome- What are the best practices measuring the health of oriented measurements that demonstrate both products? How to demonstrate value and alignment performance of the product(s) and effectiveness with larger corporate goals? 18 • The Pragmatic Marketer • Volume 8, Issue 2, 2010
  19. 19. “ youmanage it. it you If can’t measure degree to which a company adopts Rearview or financial measurements ” a measurement driven approach to are part of the common language for can’t drive the business depends on the companies. Product Management company culture. will be ultimately judged by the The Balanced Scorecard by financial success of the product, Rearview measurements but there are consequences with Robert Kaplan and David Norton putting too much emphasis on Pragmatic Marketing’s 2009-2010 these measurements. Measurements and metrics Annual Product Management and Marketing Survey shows • We learn too late what is working The use of measurements performance in classical financial and metrics seems like a well and what is not measurements such as product straightforward distinction revenue, product margin and • Focus on rearview measurements but deserves some discussion. profitability are most commonly These terms are often used can drive product managers to used to determine the success the wrong behavior interchangeably, yet have very of product management. These different applications. A more measurements are “rearview” • Product managers are held formal definition of the terms because they are lagging indicators; “measurement” and “metric” accountable for outcomes they meaning they cannot drive the have little or no control in gives us a common language performance of people, processes to move forward. achieving or products. Product management teams that focus solely on these A solid understanding of the key Metric: A measuring system that measurements usually struggle financial indicators for products quantifies a trend, dynamic, or to establish clear value to the is important but it’s not enough characteristic. Metrics encourage company’s goals. to ensure a successful product or objectivity. They make it possible an effective team. to compare; they facilitate Why do so many companies rely understanding. Think benchmarks on rearview measurements to statistics and predictive indicators. assess the effectiveness of product management? Because those Measurement: A way of monitoring measurements are easy to assign and tracking the progress of strategic and consistent with the high level objectives. Measurements can be focus of the executive. leading indicators of performance or lagging indicators. Common These rearview measurements measurements such as product are the natural tools of top- revenue, profits, product margin down goal setting. It is and product adoption rate are often common for CEO’s to push referred to as key performance these MBO’s (management indicators or KPI’s. by objective) down to product management. There is value But, what type of measurements in using rearview measurements; to use and how can they be used primarily to identify historical profit to accurately express performance leaks such as: and ultimately give management the ability to predict results? • Product revenue growth • Profitability There are three types of measurement that are necessary • Cost of sales to create reliable performance indicators; rearview, operational • Product margin and activity-based. All key to developing an effective product management organization. But the The Pragmatic Marketer • Volume 8, Issue 2, 2010 • 19
  20. 20. Measurement-Driven Product Management: Measure only what matters most Operational measurements A crucial step is to translate the rearview or financial measurements into the appropriate Operational measurements are the “measurements operational measurements. The leader of behind the measurements.” These are leading the product management team must be indicators for most organizations, because they can fluent in both the financial and operational drive and create outstanding financial results. Ideally measurement paradigms. VP’s and directors of product management interpret the company strategy and align with key financial measurements by emphasizing relevant operational Operational Driver Financial Outcome measurements. These can be the key ingredients of a high performing product management team. Speed-to-market Increase product revenue Clear and relevant operational measurements Product adoption Increase product margin enable better focus on the team and increase the probability of product and market breakthroughs. Product launch Lower cost of sales If we understand the relationship between specific operational measurement and the financial measurement, they bring more predictability to the company’s financial results. Above, we see that linking these measurements gives the product management team more context and better insight into their contribution to the Establishing and using operational measurements to company goal. It also gives product management evaluate the effectiveness of product management leaders concrete and objective measurement to and the health of the product is critical because track interim results and key milestones. it bridges the gap between company strategy and execution. As an example, speed-to-market is a metric that can be tracked in several A company’s operational measurements are how ways. How fast did we reach the market high-level goals become grounded. They become with new product releases compared to “the vital few” for the product management team. last year? How many times did we beat the competition to market with comparable Relevant operational measurements include: product releases? Where do we rank within our industry segment? Over time we learn • Market sensing—knowledge of market problems what effect improving this measurement has on increasing revenue. Every team member should among customers, evaluators and potentials understand these relationships and how their • Speed-to-market—putting the right product projects and key activities affect the outcome in the right market segment faster than of the operational drivers. a competitor • Product adoption—driving the uptake rate in a market at a lower cost and shorter time than a competitor • Product launch—improving the response rate from target buyers with fewer impressions • Customer satisfaction—increasing the “willing to recommend” percentage of existing customers 20 • The Pragmatic Marketer • Volume 8, Issue 2, 2010
  21. 21. Measurement-Driven Product Management: Measure only what matters most Financial outcomes Activities Performance Activity-based measurements Properly conducted onsite interviews across the total addressable market enable discovery of un-met The next step in developing predictable needs or market problems. Validation of these measurements is linking activities, performance market problems through surveys demonstrates drivers and final outcomes. what percentage of the market has these problems and the value of solving them. The data from Activity-based measurements are the execution side these activities gives product managers the facts of the measurements fulcrum. While operational to define the next release and a high degree of measurements are leading indicators to financial confidence that the proposed solution is the right results, activity-based measurements are the tactical product for the right target segment. This product tasks that lead to the desired operational outcome. development approach is fast and more efficient. Using these allows team leaders to identify the crucial activities that drive the desired outcomes. Establishing strong links between activity-based Activity-based measurements reduce ambiguity and measurements and operational measurements may establish accountability for all team members. not be easy, but is critical in establishing the value of product management and to build credibility Activity-based measurements that a product within the organization. The key is to develop manager should be held accountable for are: reasonable correlation and monitor the accuracy of these relationships over time. • Onsite market interviews • Assessing impact to customers for existing or future products • Positioning to buyer personas The table below illustrates how to close the gap between specific activities, operational drivers and financial results. Activity-Based Targets Operational Driver Financial Outcome On-site interviews Speed-to-market Increase product revenue Assessing impact to customer Product Adoption Increase product margin Positioning to buyer personas Product Launch Lower cost of sales The Pragmatic Marketer • Volume 8, Issue 2, 2010 • 21
  22. 22. Measurement-Driven Product Management: Measure only what matters most Here is an example of how a team Best Practice Measurements Look for connections between could establish strong links between operational measurements and activity-based measurements and Share of hearts, minds activity-based measurements that operational outcomes. and markets may not seem obvious at first. Question your current assumptions Most product management leaders The annual operational goal for about the business and what really would benefit from the ability to the product management team drives product performance. rigorously assess existing projects is to improve speed-to-market and new opportunities, identifying by beating competitor A to the potential risks. This approach would Require transparency market. What activity-based guide investment and allow VP’s and measurements must the team Initiating a performance measurement directors to evaluate outcomes and leader assign to each product program is a commitment to reinvest to maximize contribution. manager to ensure this goal is changing the way a team operates. The enhanced visibility would achieved by the end of the year? The biggest change is a commitment enable product management leaders to complete transparency. to defend the allocation of resources Consider these: with measurements that are tightly linked to the company’s income In some companies, Product statement. Management has accountability for • Conduct Strength, Weakness, the operational goals—each of these Opportunity and Threat (SWOT) are translated into product specific analysis against Competitor A As a leader of a product objectives and measurements. management team, what should The product management leaders • Complete customer impact you measure? must defend key measurements assessment of Competitor A’s and performance at the products vs. ours Initially two things: product product line level. performance and product • On-site customer visits to management effectiveness. validate Competitor A’s Must impact financial results perceived product gaps These are different but equally In a down economy, CEO’s are critical dimensions of the product pressured to emphasize near term • Complete Market Requirements management process. Team leaders results and near term execution Document (MRD) with that impact the income statement. must monitor people, process and Competitor A as key theme market success for the product Product management leaders lifecycle. To be successful, all three must be aware of potential • Deliver 100% of something must be continually assessed. shifting priorities and if your key ahead of Competitor A measurements are trending badly, early intervention is critical. One caution to the team leader— Must be relevant make sure the sum of these activities The most important outcome from The team leader using this is greater than or equal to one or Product Management are financial measurement system must have more of the team goals. This linking results, but product management a dashboard view of products, can provide the ability to benchmark leaders must translate the financial projects, processes and people. This and propose metrics that have results into performance drivers is the only way to focus on what predictive value. that lead to the income statement matters most and to continuously outcome. Until a clear linkage refine key measurements. It also The key to success with this between actions and outcomes allows the team leader take action approach is to continuously review is established the measurements based on insights gained or data and trends to ensure the are theoretical. emerging trends. measurement remains relevant. When it comes to setting targets for However, the proper use of individual product managers there measurements must go beyond are best practices to follow. driving short-term financial results. The real potential is in changing the way Product Management thinks about its role and value to the organization. 22 • The Pragmatic Marketer • Volume 8, Issue 2, 2010
  23. 23. Stay current with industry best practices Ultimate goal “ metric, whether it is used…, stock, will Every future strategies, or simply to take to evaluate affect actions and decisions. ” From “Metrics: You are what you measure” European Management Journal The long term benefit of Product Management becoming measurement-driven is higher team performance, improved predictability and increased credibility. The ultimate benefit is developing the ability to reliably create outstanding products and market breakthroughs. Can Product Management operate with this high level Visit the online community at of maturity, using a reliable measurements and metrics system with more predictable results in a company? PragmaticMarketing.com This “holy grail” of product management performance • Review 10 years of Annual Product is doable, but often many cultural and process gaps Management and Marketing Survey results must be addressed first. An organization fosters a measurement-driven culture by reinforcing other • Attend a webinar by one of today’s industry aspects of the process, such as tightly coupling thought-leaders rewards, recognition, compensation and promotion to attainment of operational results. Does yours? • Read hundreds of articles on product management, marketing and leadership strategies Mike Smart is an independent • Read blogs from Pragmatic Marketing consultant working with private equity thought-leaders and other industry experts firms to increase the value of their portfolio companies by implementing • Stay connected with your industry peers product management and product by joining a local Product Management marketing best practices. He has a Association passion for identifying key metrics that drive company performance. • Read profiles of companies who have achieved success using the Pragmatic Mike brings more than 25 years of industry Marketing Framework™ experience in a variety of leadership roles. These include Senior Vice President of Operations, • Participate in online networking with VP of Product Management Development, VP LinkedIn and Facebook groups of Product Management and VP of Sales. • View a list of recommended books and Most recently, Mike was an instructor and software tools for product managers consultant with Pragmatic Marketing where and marketers he worked with medium and large enterprise software companies to teach and implement the Pragmatic Marketing framework. Contact Mike at msmart@egrss.com

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