Product Management Throwdown: Pragmatic Marketing vs. Customer Development

PRODUCT MANAGEMENT THROWDOWN Pragmatic Marketing vs. Customer Development Todd Wyder and Bernhard Kappe Chicago Product Management Association November 11, 2010

Agenda Introductions Pragmatic Marketing Customer Development Similarities Differences

Features Pragmatic offers many templates to help with each area of the framework NIHITO Interviews (Qualitative Marketing) Customers Non-customers Win/loss Positioning Problems Marketecture Features

Example – MailChimp Problems Marketecture Features Need to respond to folks  Autoresponder • Google Analy7cs  who signed up  Integra7on • List Segmenta7on • Dynamic Content Very 7me consuming to see  Inbox Inspector • See results for all major  what emails look like to the  browsers customer • See results for all major  email clients Have to create emails  RSS to email • Automa7cally send  whenever we have  newsleFers when RSS is  something new updated • Customizable templates Then create short posi7oning statements that include the Problem, Marketecture and Features

Pragmatic Strengths Focused on the market Good templates Enables you to get to the marketing aspects Encompasses most of what a product manager does Great training program Industry Standard

BCG Chart New Features Exis7ng Exis7ng New Customers

BCG Chart New Features Pragma6c      Marke6ng  Exis7ng Thrives Here Exis7ng New Customers

Pragmatic’s Weakness It doesn’t do as well if you don’t know who the customer is Case Study – The worst position you can be in as a Product Manager is to have a product that you have to find a market for

PRAGMATIC MARKETING IS OK FOR EXISTING PRODUCTS ...

But What About New Products? New products can create markets in market areas that were previously underserved New products disrupt existing industries and incumbents New products create new revenues and profits New products don’t have all the bagage of a legacy product New products can be a lot of fun

But I’m Interested In New Products

WHAT’S THE PROBLEM WITH NEW PRODUCTS?

9 OUT OF 10 NEW PRODUCTS FAIL

Why Do They Fail? Most Fail because of Lack of Customers and Market Unknown Problem, Unknown Solution, Unknown Customer The Path to Disaster / Castles Made of Sand Business Plan Built on Untested Assumptions Market Research Serves to Support Your Assumptions Rather than Validate Them

What You Need Question Your Assumptions An approach that will help you to make business decisions based on tested hypotheses, rather than untested assumptions. A way to quickly and cheaply iterate through tests of business model hypotheses to answer who are the customers, how much will they pay, and for what

Customer Discovery Question Your Assumptions Engage with your customers in specific ways that test those assumptions: “Get Out of the Building” and test your core customer-problem solution assumptions. Define and build Minimal Viable Products (MVPs) that test technological or market risk (the willingness of customers to pay for a specific set of features) Document and test your assumptions on the mechanics of your business ecosystem/ business model Create a value path for mitigating high risk items first in the hopes of making major pivots as early as possible.

Customer Validation Product-Market Fit 1. The customer is willing to pay for the product. 2. The cost of acquiring the customer is less than what they pay for the product. 3. There’s sufficient evidence indicating the -market is large enough to support the business. Benchmarks: 40% very disappointed without your product, net promotor 30+ Business Model Validation Sales and Marketing Road Map

Business Model Canvas Description 1 Description 2

Lean Startup

Customer Development Strengths Good for Finding Product-Market Fit for New Products Great for Discovering Appropriate Business Models Can Feed into traditional Product Management in later stages (Customer Creation and Company Building)

Customer Development Weaknesses Does not address existing products Does not address how to do marketing Can be difficult for a large company to pull off

BCG Chart New Customer Features  Development Pragma6c               Thrives Here      Marke6ng        Thrives Here Exis7ng Exis7ng New Customers

Which is better? Both are very customer focused NIHITO and Get out of the building Both are data driven Pragmatic is best if you are certain who the customer is Customer Development is better if you don’t If you use customer development, there is some good stuff to borrow from Pragmatic

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Product Management Throwdown: Pragmatic Marketing vs. Customer Development

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Product Management Throwdown: Pragmatic Marketing vs. Customer Development — Presentation Transcript