The Pragmatic Marketer: Volume 8, Issue 1


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The Pragmatic Marketer: Volume 8, Issue 1

  1. 1. 8 1 2010 Pragmatic Marketing’s 10th Annual Product Management and Marketing Survey World’s Largest Review of Product Management Practices Re-Inventing ProductManagement withLOVE F iveWays toTorpedo YourProduct Management Career
  2. 2. Executive Briefing The proven way to organize and measure effective product management teams. • Review key concepts of the Pragmatic Marketing Framework, the worldwide standard for product management. 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 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 1 • 2010 Scottsdale, AZ 85260 10 T Pragmatic Marketing, Inc. Founder and CEO Craig Stull H Editor-in-Chief An Kristyn Benmoussa nua lS Managing Editor Graham Joyce ————————————————— urv Interested in contributing an article? Visit ey 6 Pragmatic Marketing’s 10th No part of this publication may be reproduced, Annual Product Management stored in any retrieval system, or transmitted, in any form or by any means, electronic, mechanical and Marketing Survey photocopying, recording or otherwise, without the by Steve Johnson prior written permission of the publisher. For advertising rates, call (480) 515-1411. Pragmatic Marketing conducts an annual Other product and/or company names mentioned survey of product managers and marketing in this journal may be trademarks or registered trademarks of their respective companies and professionals. So it is that time of the year are the sole property of their respective owners. to take a close look at where you and your The Pragmatic Marketer, a Pragmatic Marketing publication, shall not be liable regardless of the company stand in the ratings. cause, for any errors, inaccuracies, omissions, or other defects in, or untimeliness or unauthenticity of, the information contained within this magazine. Pragmatic Marketing makes no representations, warranties, or guarantees as to the results obtained from the use of this information and shall not be liable for any third-party claims or losses of any 16 Re-Inventing Product kind, including lost profits, and punitive damages. Management with LOVE The Pragmatic Marketer is a trademark of Pragmatic Marketing, Inc. By Bruce La Fetra Printed in the U.S.A. To deal with the changes in All rights reserved. how customers interact with ISSN 1938-9752 (Print) companies, a new model for ISSN 1938-9760 (Online) About Pragmatic Marketing® customer relationships is Creator of the world’s most popular product needed. The Lifetime Opportunity management and marketing seminars, Pragmatic Value Equation (LOVE model) gives Marketing has trained more than 60,000 technology product management and marketing professionals product managers a relevant and at 5,000 companies in 21 countries. As the thought- actionable framework for generating leader in the industry, the company produces blogs, webinars, podcasts, and publications read by more valuable interaction with consumers. than 100,000 every year. Pragmatic Marketing has been honored four times by Inc. magazine as one of the fastest growing private 23 Five Ways to Torpedo Your companies in America (2000, 2007, 2008, 2009), and Product Management Career in 2008 named a Comerica Bank Arizona Company to Watch. By Greg Council Visit to learn more. With technology-based solutions it really does “take a village” to raise a successful product. Failing to recognize that can lead to disaster. Read the five common pitfalls (or torpedoes) that can make or break a product manager’s career The Pragmatic Marketer • Volume 8, Issue 1, 2010 • 3
  4. 4. 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 or call (800) 816-7861 The Pragmatic Marketer • Volume 8, Issue 1, 2010 • 4
  5. 5. 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 ExecutiveBriefings 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.
  6. 6. P r a g m a t i c M a r k e t i n g ’s 10 th A n n u a l Product Management and Marketing Survey by Steve Johnson Each year Pragmatic Marketing conducts a survey of product managers and marketing professionals. Our objective is to provide information about compensation as well as the most common responsibilities for those performing product management and marketing activities. Over 1,500 responded to the survey between October 29 through November 25, 2009 using Vovici’s EFM Feedback survey tool. Remember when making decisions, this report describes typical practices, not best practices. For best practice in product management and marketing, attend a Pragmatic Marketing seminar.
  7. 7. 10th Annual Product Management and Marketing Survey Organization Profile of a Product Management ratios product manager within the company • Average age is 37 How are product managers allocated relative to other departments? • Responsible for 3 products and work in a department of 6 people For each product manager, we find: • 87% claim to be “somewhat” or “very” technical • 0.7 Product marketing managers • 32% are female, 68% are male • 0.7 Marketing Communications • 95% have completed college and 41% have • 6.1 Salespeople completed a masters program • 2.3 Sales engineers (pre-sales support) Reporting • 1.1 Development leads The typical product manager reports to a director • 6.5 Developers in the product management department. • 0.9 Product architects and designers Title Other ratios • 44% report to a director • 3.7 developers per QA manager • 31% report to a vice president • 2.5 salespeople per sales engineer • 19% report to a manager • 6% report to a CXO Impacts on productivity Department • Product managers receive 50 e-mails a day • 26% direct to CEO or COO and send 25. • 21% in Product Management • Product managers spend roughly two days a week • 16% in Marketing in internal meetings (15 meetings/week). But 55% are going to 15 meetings or more each week, and 35% • 13% in Development or Engineering attend 20 or more meetings! • 8% in Sales • Product managers typically work 50 hours per week. • 3% in Product Marketing 3.7 deve lope 2.5 salespeople per rs p sales engineer er Q Am ana ger The Pragmatic Marketer Volume 8, Issue 1, 2010 • 7
  8. 8. 10th Annual Product Management and Marketing Survey Activities StrategicActivities (based on the Pragmatic MarketingActivities Marketing Framework) 72% Market problems 33% Marketing plan Percent of respondents 34% Win/loss analysis indicating they conduct 21% Customer acquisition the activity 52% Distinctive competence 20% Customer retention 47% Market definition 63% Launch plan 57% Product portfolio TechnicalActivities 31% Thought leadership 72% Business plan 75% Competitive landscape 15% Lead generation 57% Pricing 35% Technology assessment 36% Referrals references 47% Buy, build or partner 80% Product roadmap SalesActivities 66% Product profitability 47% Innovation 24% Sales process 71% Positioning 79% Requirements 60% Collateral 24% Buying process 69% Use scenarios 60% Sales tools 34% Buyer personas 62% Status dashboard 60% Channel training 56% User personas 69% Presentations demos Business Marketing 43% “Special calls” Positioning Plan Plan 42% Event support Market Market Pricing Buying Customer 67% Channel support 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 The Pragmatic Marketer • Volume 8, Issue 1, 2010 • 8
  9. 9. reate material for external audiencel for external Create materia s audiences Create promotiona l material promotional material Create Measure marketin 10th Annual Product Managementraand Marketing Survey g prog ms marketing programs Measure Create sales presen tatioCreate sales presentations ns Manage company social med they conduct media Manage Comparison of roles Percentage of respondents indicatingia company socialthese activities. Train salespeople Train salespeople 0% 20% 40% 60% 80% 100% Go on sales calls Go on sales calls Research market needs Work with press or analysts k with press or analysts Wor Perform win/loss analysis Visit sites (without salespeople) Product Man agement Product Management Product Marke Product Marketing ting Prepare business cases Write product requirements Write detailed specifications Monitor development projects Create material for internal audiences Plan and manage marketing programs Create material for external audiences Create promotional material Measure marketing programs Create sales presentations Manage company social media Train salespeople Responsible for Go on sales calls go-to-market strategies Work with press or analysts CMO 4% Product Product Management Product Marketing CEO 4% Manager 35% Responsible for Other 5% product profit loss Product Director 12% Marketing Other CFO 4% Manager VP 26% Director 8% Product Marketing Manager 14 % 15% 4% CEO 18% VP 31% Product Manager 20% The Pragmatic Marketer • Volume 8, Issue 1, 2010 • 9 8
  10. 10. 10th Annual Product Management and Marketing Survey We asked,“Howmuchinfluenceissocial mediaonyourgo-to-marketactivities?” Influence of social media on go-to-market activities We recognize it should be more of We want to do more, but have an influence, no approval to do yet to resource this area and have Considered None a cohesive strategy to leverage but not 40% Social media is becoming a larger social media a significant part of what we do but currently is factor in the planning stages No formal process to integrate to 51% product plan Crowdsourcing is used significantly for tactical product input from We are still looking into it, too customers large of a company to adopt without a corporate brand message Major part of Not used, not allowed by company the program policy Conservative industry, slowly 9% moving to social media Not incredibly relevant for B2B Our customers do use it to review Use of social media tools such as products or offerings in Business blogs is under consideration but not to Business used at present Do you use Oh I wish, too big of a company Twitter? We are ramping up in the area, and everything is reviewed by legal but currently it is more on the No corporate communications side of Becoming more critical 62% the house Our customers do not use social Yes, SM is growing strongly and will be media channels (as a rule) personally major tactic in 2010 27% Increasing as our SM base grows Yes, for the company Use of Twitter (as an individual and/ or as the company) Still trying to figure out its value I follow (I don’t personally tweet) 11% in a B2B world In a professional capacity, avoiding The Valley is again pulling the personal comments/updates wool over the world’s eyes. We’ve learned nothing from the late 90’s! A nuisance perpetuated by the self-absorbed Will use more in 2010 for products Hate it but feel I need to know it No tweets but do use search I am scared to use Twitter on Twitter as a marketing tool has very behalf of the company interesting potential Contribute corp tweets to Only experimenting at present corp account It makes my eyes bleed The Pragmatic Marketer • Volume 8, Issue 1, 2010 • 10
  11. 11. 10th Annual Product Management and Marketing Survey After a year-long void at the We asked,“Howhasyourjobchanged?” Executive level in Marketing, we brought in an experienced Sr. VP of Marketing Product Management. Having someone at the executive level who understands software product management has Organizational challenges Less focus on “strategic,” been enormously helpful. more on “tactical” We lost PL responsibility at I am working with an amazing the product level and are well Changed to “all-hands-on-deck,” director who has let me really on the way to being a sales doing more non-PM work (filling try getting out of the office to support function. the gaps between the scarce visit customers and prospects. engineering staff). He’s pleased with the results so Program management was dissolved far. Nothing like success to win by the previous management Way too much babysitting of people over! making product management developers that are incapable take on program management. of hitting deadlines without it! More strategic—YEAH! Lots of folks in areas they are not comfortable and don’t really have It is increasingly field-facing. We I have gone from Product Manager enough time to devote to in order now spend considerable time in TITLE to Product Manager in to do the job good service. supporting sales calls with roadmap actual role performance. presentations and product details/ My original manager (VP) retired explanation, etc. making a peer of mine a manager... Social media and the ability to take big mistake! in information from many sources Finally releasing our largest most has increased significantly—which complicated product attempted to lets me spend less time looking for Hectic is the new normal—role date. Lots of janitorial work is being information and having information has expanded beyond product done to clean up the mess the appear on my doorstep more management with no end in sight. best I can. easily. In addition, the perspective Lots of product managers who call of technical product ownership/ themselves PMs have no clue what management has increased so that they are doing. Some good news… there’s a name for the job I was doing all along. I am spending far less time on sales After my boss attended the calls (which is good) but also far Pragmatic Marketing seminar, she Since Pragmatic Marketing less time out of the office (which understood the role of product certification, I’ve been trying is not good). We are “protecting” management. Now we spend a lot to incorporate more of the tools our product managers from giving more time with customers and on into my presentations to the sales demos but also making them overall strategy. leadership team. This seems to spend far too much time on internal be encouraging them to see the project meetings. Product as genuinely strategic Fairly significantly. Product management has evolved from because they’re seeing things from I started doing win/loss analysis something like a cousin to us that they’ve never seen before. after Pragmatic Marketing seminar. engineering management into real Unfortunately, the opportunity WOW!, worth its weight in gold. product management (as defined by immediately in front of them I also say “product managers Pragmatic Marketing). It was a long tends to trump all the best will need to publish” and “product process to bring it about. in the world. manager’s work must apply to all customers, not just one.” With the economic downturn, I’m doing Job is becoming more clearly more individual consultation with defined. Not there yet, but customers and more support work getting close. due to less headcount. The Pragmatic Marketer • Volume 8, Issue 1, 2010 • 10 11
  12. 12. 10th Annual Product Management and Marketing Survey Compensation Average salary $120 Average US product management compensation is $96,580 salary plus $12,960 annual bonus. 77% of product managers get a bonus (multiple responses were $100 permitted). Bonuses are based on: $80 • 66% company profit $60 • 26% product revenue $40 • 36% quarterly objectives (MBOs) Anything goes $20 (cowboy coding) Anything goes • 27% say bonus does not motivate at all and 14% say bonus motivates a lot. (thousands) (cowboy coding) Bachelor’s Doctoral MEng MBA Geographic impact on compensation (US $) An Agile methodology An Agilenot Scrum that’s methodology Average Average Minimum Maximum Maximum Int’lRegion Salary Bonus Salary that’sSalary not Scrum Bonus Australia $ 94,308 $ 11,714 $ 44,000 150,000 Scrum (a$ speci c type$ 20,000 Canada 89,588 11,290 50,000 Agile (a150,000 c type40,000 of Scrum development) speci Europe 87,743 10,616 24,000 Agile development) of 170,000 45,000 USA 98,005 12,369 14,000 210,000 50,000 Waterfall Waterfall 0 5 10 15 20 25 30 35 40 US regional impact on compensation 0 5 10 15 20 25 30 35 4 Average Average Minimum Maximum Maximum USRegion Salary Bonus Salary Salary Bonus Upcoming Current Upcoming Current Midwest $ 89,490 $ 11,566 $ 38,000 $ 150,000 $ 37,000 Northeast 102,823 13,351 14,000 210,000 50,000 Pacific 107,860 12,263 41,000 170,000 45,000 Southeast 91,652 11,424 44,000 145,000 40,000 South 98,609 13,194 51,000 150,000 45,000 Gender comparison in West 91,662 12,821 21,000 145,000 50,000 compensation vs. experience Average 98,017 12,360 14,000 210,000 50,000 $120 $120 $100 Annual Salary (US $) Midwest (IA, IL, IN, KS, MI, MN, MO, ND, NE, OH, SD, WI) $100 Northeast (CT, DE, MA, ME, NH, NJ, NY, PA, RI, VT) $80 Pacific (AK, CA, HI, OR, WA) $80 $60 Southeast (AL, FL, GA, KY, MD, MS, NC, SC, TN, VA, WV) $60 South (AR, LA, OK, TX) $40 West (AZ, CO, ID, MT, NM, NV, UT, WY) $40 $20 $20 (thousands) 1-2 3-5 6 - 10 11 - 15 15+ (thousands) 1-2 Years of6experience15 3Female - 10 Male -5 11 - 15+ Female Male The Pragmatic Marketer • Volume 8, Issue 1, 2010 • 12
  13. 13. 10th Annual Product Management and Marketing Survey Ifyoucouldsayonethingtoyour companypresidentwithoutfear ofreprisal,whatwouldyousay? We received about 800 responses to this survey question. Highlights are: It’s all about Just because something communicating strategy sounds like a good idea I understand the laser focus to you, it doesn’t mean it’s anything our customers have on delivering positive financial Give the company some vision any interest in. results to shareholders. However, besides make some money. resources have been cut so severely, resulting in a culture of Let product management do their frustrated overworked employees. It’s better to do a few things right job! Just because your kid saw than a million things half-baked. I expect a mass migration once something last week don’t shift the job market opens up. the roadmap! Not the best with having realistic expectations and setting and Stop complaining about how Stop thinking you know we are too slow to launch new sticking to strategic direction. everything and that our customers Tends to change directions with products and innovate and spend don’t know what they want. Listen a week in my job to see why the the expectations of the most recent to our customers more! customer he’s spoken to. “outsource everything” product development environment you Great sales leadership, not a clue have implemented causes the Why aren’t we attempting what to do with Marketing. challenge you are so quick to more of a land-grab in these point out yourself! uncertain times? Belt tightening is stifling us from going after new He is knowledgeable about our opportunities. customers and is focused on There is no more blood to squeeze producing products they need to from this turnip. Start focusing on get their jobs done. But he is more how we can provide more value You cannot maintain a wartime frequently getting pressured by to our customers with the meager economy indefinitely. Not the finance department to save resources we have. every product release of every costs at the expense of customer product can qualify as an satisfaction. emergency. Better planning and Treat your employees with more communication of that plan will respect. Especially when laying make the company more profitable them off. and stable. Fix the staffing issues Please allow your executive staff Get me more developers! I have to do their jobs. You are way too Don’t lose touch with what our products to build. involved in the details. Get over customers are like. They are not as cutting edge as you are and your Steve Jobs envy. they are risk averse. I wish you would understand what my role is and quit assigning my job duties to other people. Go work in one of our retail stores for a day. The Pragmatic Marketer • Volume 8, Issue 1, 2010 • 13 12
  14. 14. 10th Annual Product Management and Marketing Survey Fix the Sales issues Some positive news Remarkably consistent in terms of following a market strategy. Don’t overvalue your sales Advocates change which is a director for what the vision nice change. She is great. of the product should be. He has a very clear understanding Steers the ship well. Good Give us the control we need to of product management’s purpose business focus. execute our roadmap rather than within the organization. constantly change direction due Thank you for fostering such a to some unsubstantiated item that He is a very smart and capable positive environment in which to comes out of a sales engagement individual. work. Your dedication to business or a random revelation. success and your employees shows through each of those that He is great! He has mixture of Please don’t sell what we don’t report to you. strong sales skills and an in-depth have and don’t have resources understanding of technology. to scope, develop and deliver. Thank you for truly understanding and valuing product management!! He is new to the job. It would be Stop changing the sales model nice to know what he is doing. every year. You’re doing a great job! (he’s new since September 1st). He puts employees first with the Stop chasing shiny objects and belief that happy employees serve approve products with proven customers better. revenue streams. And finally… He understands how to hire and Your sales force is not equipped to motivate people. Don’t get drunk in front of sell our solutions and you have no customers and prospects. clue how to develop software. It’s my company and I can say anything to the CEO. Please come to work more often. We want to see you and your passion for this space. Keep up the good work—We have been growing at a 20%/year rate for the past 4 years. He started today! Steve Johnson is a recognized thought-leader on the strategic role of product management and marketing. Broadly published and a frequent keynote speaker, Steve has been a Pragmatic Marketing instructor for more than 10 years and has personally trained thousands of product managers and hundreds of company senior executive teams on strategies for creating products Visit people want to buy. Steve is author of the Product Marketing blog. Contact Steve at for more results The Pragmatic Marketer • Volume 8, Issue 1, 2010 • 14
  15. 15. 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 id By Dav Download a complete agenda and register at Call (800) 816-7861 to conduct this seminar at your office
  16. 16. Re-Inventing Product Management with By Bruce La Fetra The critical role of the product manager is in the process of changing significantly, and both companies and product managers need to adapt. While product management is among the most critical roles in any company, it’s a role whose importance is under-heralded in most organizations. The extent and nature of the changes to the role mean that those that fail to re-invent themselves—or don’t try—are likely to find themselves displaced. The Pragmatic Marketer • Volume 8, Issue 1, 2010 • 16
  17. 17. Re-Inventing Product Management with LOVE Change or die direct customer meetings create The key in the new environment is a truly bi-directional relationship interacting with consumers rather Two major forces are driving of the type that is needed going than transacting with them. Product the need for change in product forward. These transactional type managers and marketers currently management. First, the nature activities are controlled and shaped lack a model for understanding of the competitive landscape is by the company. Non-transactional how to interact with consumers as changing with the emergence over interactions occur between peers. the company - customer relationship the past 15 years of low-cost, off- The need for interactions rather than evolves through different stages. shore manufacturing that quickly transactions changes the methods (Newsflash: not all consumers are clones successful products. Merely employed by the product manager the same.) This represents a huge manufacturing a quality product that (the “how”) every bit as much as the change for marketing managers people want has become a profit- need to accelerate innovation and as they must stop trying to bribe challenged commodity business. introduce solutions (the “what”). and manipulate people to get Earning the types of profits investors consumers to do what they want. expect from American technology To date, nearly all attention has This is transactional behavior that firms now requires rapid and focused on the “what,” although the doesn’t encourage your company— continuous innovation and a move “how” is no less a challenge. Since or the consumer—to seek new toward difficult-to-copy solutions customer interaction is growing forms of value. rather than products. Apple’s success in importance, a big part of the with the iPod and iTunes represents “how” is the manner in which your Product managers have a lot near perfect execution. Often company interacts with consumers. at stake as well. More than a solution may span companies This is a huge and visible change marketers (perhaps), product or involve active partnering with for the marketing function. To non- managers understand that customer users. Crowdsourcing and mash-ups product managers, the change is less relationships evolve. However, most are examples. visible for product management, but lack any sort of model to understand no less important for success. this evolution and use it to their The key to success is being open benefit. Even fewer use—or even to new forms of value. Some of Technology makes it easier than ever recognize the enormous power the new forms of value may be for product managers to listen in of—a model that is shared across unfamiliar: consumer products or interact directly with customers, all parts of your company. companies offering their “products” adding new tools to the product as components to third-parties manager’s kit such as crowdsourcing building unique solutions or even and co-creation. Technology is Why the world needs LOVE entirely new products. Turning one’s an enabler, but doesn’t tell the customers loose is an excellent way The Lifetime Opportunity Value product manager when and how to to drive lots of innovation. iRobot Equation (LOVE model)1 departs engage customers, or to understand allowed its Roomba robot vacuum from the buying funnel by viewing how customers vary in their cleaner to become an open platform consumer relationships as an relationship needs. resulting in a nearly limitless variety evolving set of bi-directional of upgrades and modifications interactions. These relationships available from third-parties. Many We need a new model grow from an introductory stage of the resulting devices are not where neither party knows much even vacuums. To deal with the changes in how about the other all the way to customers interact with companies, co-creation. In a co-creative With so many more inputs, the role a new model for customer relationship, you and your customers of the product manager is becoming relationships is needed. Product share a common vision and align less about coming up with great management (and marketing) needs interests. The benefits of co-creation ideas and more about enabling, to lead the way in understanding are huge, and reach into every gathering, and coordinating inputs how to engage and leverage corner of your company and are as a sort of “traffic manager” or hub. customer relationships in the reflected in both top line revenue age of two-way media. and bottom line costs. Deeply The second force is the manner engaged customers buy from your in which companies interact Most organizations—probably yours, company not merely because they with their customers. Gone are too—define customer relationships like the product or service, but the days when companies could in terms of a linear path that allows because they genuinely want your broadcast a controlled message to deterministic modeling, such as the business to be successful. consumers. Two-way media such buying funnel process: awareness, as blogs, user reviews, and social consideration, and purchase. The media mean consumers can talk buying funnel is predicated on your company controlling the message, [1] The LOVE model is built on concepts originally back—and to each other—without the company having any say in but this no longer works in an developed by Harry Max at Rubicon Consulting. the matter. Don’t fool yourself into environment dominated by two-way Harry also came up with the LOVE model name. thinking focus groups or even and unstructured communications. The Pragmatic Marketer • Volume 8, Issue 1, 2010 • 16 17
  18. 18. Re-Inventing Product Management with LOVE The LOVE model explained The LOVE model can be applied Co-Creation Co-Creation to any online relationship, not just to customer acquisition and Commitment Commitment purchase. Likewise, the benefits of the LOVE model extend far Stability Stability beyond social media and marketing campaigns, making it of particular Power Struggle Power Struggle value to product managers seeking Romance Romance to drive change throughout their organizations. The LOVE model drives long-term value in areas Romance PowerStruggle as diverse as customer support, Getting introduced Maintaining interest product development, and thought leadership. You can’t build a relationship Where Romance is about generating with someone you don’t know, interest and opening the door to Product managers will experience so the initial phase of the exciting possibilities, the second an epiphany as they realize how consumer–company relationship phase, Power Struggle, is about to engage customers at each phase is Romance. Romance is about spending time together and getting of an evolving relationship. By introductions and learning and to know each other. In the world of understanding more about how to trying things. People don’t want commerce, this is about working to interact with customers, you can to think about big commitments maintain the consumer’s attention. tailor your interactions to be more when they’re still trying to decide The power struggle isn’t adversarial, productive. Because the interactions if they even want to get to but is a mutual effort to learn how are vibrantly bi-directional, your know you better. both parties in the relationship are company and consumers grow going to fit together. After all, there in alignment as the relationship There are serious pitfalls in skipping needs to be balance if a relationship grows deeper. the romance phase and moving too is going to last for the long term. quickly from social to transactional While a company’s relationship interactions. Once the parties to a If you don’t provide an engaging with individual consumers falls relationship define it in terms of experience that fulfills the into a specific phase, the company an exchange it is very difficult to consumer’s need for credible can be at different relationship redefine it as something broader. information, you will struggle to phases with different consumers, A properly developed romance keep them from clicking somewhere so a company is not limited defines the long term relationship else. You lose the consumer’s to a single relationship phase. as something other than primarily a attention and, with it, your ability The descriptions below include monetary exchange or a transaction. to drive the relationship narrative. companies that do a particularly By contrast, too many companies good job at understanding specific today insist on a kiss at the Dell’s IdeaStorm allows Dell “to gauge types of relationships. The phase beginning of the first date. which ideas are most important and names are both descriptive most relevant” by engaging the public and instructive. Twitter and other social networking in online discussion. Users are able to applications are good at letting people add articles, promote them, demote explore and set their own pace of them and comment on them. By discovery and use. giving users the power to drive what is discussed, Dell maintains engagement while accomplishing its own goals of Co-Creation understanding what people care about and want to see. Commitment Stability Power Struggle Romance The Pragmatic Marketer • Volume 8, Issue 1, 2010 • 18
  19. 19. Re-Inventing Product Management with LOVE Co-Creation Co-Creation Co-Creation Commitment Commitment Commitment Stability Stability Stability Power Struggle Power Struggle Power Struggle Romance Romance Romance Stability Commitment Co-Creation Finding balance Discovering shared outcomes Co-owning a vision At the point where no major Commitment comes when the The final and ultimate phase mis-match of status between relationship advances from stability is Co-Creation. At this level the the parties exists, a relationship to a shared outcome. While relationship is about co-creating enters the third phase, Stability. loyalty in a predominantly one- value and co-ownership of a A stable relationship is one where way, transactional exchange is common vision rather than merely you provide a reasonable value fragile, commitment in a stable, sharing in the outcome. With this proposition for filling latent bi-directional relationship is far more type of relationship, the consumer consumer needs. You have stability robust and makes consumers more is no longer merely making when both of the following are true: likely to stay in the relationship a purchase, but is supporting a through the ups and downs the preferred business. The benefits of 1. The consumer is willing to go market inevitably deals. co-creation are huge, and reach into through the process of sorting every corner of a business and are through the criteria for making There are lots of ways to show reflected in both top line revenue a decision, and commitment. Preferred customer and bottom line costs. programs are one form of 2. You are willing to transparently commitment, although many As mentioned on page 17, iRobot, make available the information such programs are based on a makers of the Roomba robot vacuum needed to satisfy the consumer’s transactional quid pro quo rather cleaner, support an entire ecosystem criteria. than true commitment. of customers and partners. Many have hacked Roombas to add capabilities or is a company that McAfee formed a strong bond of create entirely new devices, in effect, understands this extremely well. The commitment with the hundreds of turning the Roomba into a platform. Amazon site is a virtual cornucopia “McAfee Maniacs” that handle much of By listening to its customers and of information on all manner of McAfee’s technical support via the Web. recognizing them as trusted partners, consumer products. Not only are there Some post thousands of responses in iRobot is able to embrace a class of user user reviews, but the reviews gain McAfee forums—as of this writing the that exceeds what we typically think of additional credibility because users can top contributor has made more than as a customer. As a result, the Roomba comment on the reviewers. Amazon 31,000 posts. Except for some modest has become more than just a vacuum provides an enormous quantity and peer recognition, the Maniacs are and its users are much more valuable to variety of information with the implicit uncompensated, and yet the shared iRobot than merely customers on the expectation that, if and when the outcome of helping people navigate other end of a monetary exchange. consumer makes a purchase decision, McAfee’s software motivates some Amazon is most likely to be the amazing commitment. purchase vehicle. Amazon benefits from a stable relationship because consumers have little reason to leave the Amazon site The LOVE model drives long-term value to gather additional information. Both in areas as diverse as customer support, product parties feel their needs are being met in a balanced way. As a consumer, you development, and thought leadership. are always free to leave the Amazon site, but why would you? The Pragmatic Marketer • Volume 8, Issue 1, 2010 • 19 18
  20. 20. Re-Inventing Product Management with LOVE New products Process improvements n tio New ways to ea message market Cr - s Co es sin Bu LOVE for the entire company 3. New ways to message and market become apparent as soon as you start engaging with consumers in a Each of the five phases—Romance, Power Struggle, genuine dialog. They’ll help you sell their bosses and Stability, Commitment, and Co-Creation—represents they teach you how to market more effectively to their a different flavor of relationship and a different way neighbors. If your new product name is an undesirable of thinking for product managers. Some consumers slang term in a foreign language, they’ll tell you rather will want to align their interests with your company’s than letting you blast it to the world. because it makes their lives easier, such as frequent customers who want the sales process to run 4. Business co-creation is the Holy Grail of relationship. smoother. The motivation of other consumers may be It happens when your customers are emotionally less direct—perhaps visionary customers who see a invested in the success of your business. They make better way or an interesting combination of products referrals to friends, family, and colleagues because it or services. The Co-Creation process manifests itself creates intrinsic joy for them. Having a customer who in four distinct types of value: wants you to be successful is much more powerful than a customer you’ve bought with a loyalty program. 1. New products and services are the most visible way It is important to remember that co-creators may exist you can engage with and learn from your customers. in forms and places that are invisible to companies. A genuine dialog with the consumer always makes You need to support these advocates, even when you the development process better, but in many cases don’t know exactly who they are. it also makes it simpler as feature sets can be better validated and it is easier to identify components To a limited degree, the LOVE model can be that add little value. implemented by a single discipline within a company, but as the above examples point out, the real value 2. Process improvements are an area where many consumers is in infusing its effects throughout the organization. have strong feelings, but few companies bother to ask. The LOVE model thus provides product managers Still far fewer take the view that consumers should be (and marketing) a vehicle for offering leadership to empowered to help design the processes. The key is the entire company. interests that are aligned in a deep and holistic way. The Pragmatic Marketer • Volume 8, Issue 1, 2010 • 20
  21. 21. Re-Inventing Product Management with LOVE How LOVE changes product management Stay current with The LOVE model gives product managers a relevant and actionable framework for generating valuable industry best practices interaction with consumers. These bi-directional interactions provide a source of product, process, and business improvement and innovation that enables your company to co-create new forms of value with customers. Both forces discussed in this article require significant changes in product management. First, the need for greater innovation and new types of solutions means that product managers are less makers and more organizers. The second force—the need to find a more workable model of consumer—company relationships, pushes product managers to interact with consumers in a truly bi-directional manner where consumers are peers rather than objects to the company. With changes to both the “what” and the “how,” the C-suite needs to re-think what they expect Visit the online community at from product management. Instead of being product champions, product managers need to be customer or market champions with a broad view of how their company’s expertise and technology can • Review 10 years of Annual Product contribute to customer solutions. They need to Management and Marketing Survey results understand ecosystems rather than just product applications. They need to enable customers to help • Attend a webinar by one of today’s industry co-create all aspects of their business (not just the thought-leaders products) as this is how they will create sustainable differentiation. This will likely lead to changes in • Read hundreds of articles on product how the product management function is organized management, marketing and leadership and managed. strategies For the first time, companies have a holistic model to guide them in developing more valuable and • Read blogs from Pragmatic Marketing actionable relationships with customers across all thought-leaders and other industry experts parts of the company. Embracing the LOVE model embarks an organization on a journey of discovery • Stay connected with your industry peers which leads to quantifiable results, long-term value, by joining a local Product Management and enhanced competitiveness. Association • Read profiles of companies who have achieved success using the Pragmatic Marketing Framework™ • Participate in online networking with Bruce La Fetra is a Business Strategist for Rubicon LinkedIn and Facebook groups Consulting, Inc. With insights gained from more than 20 years experience in product management, • View a list of recommended books and marketing, and strategy consulting, he guides clients in market definition and visioning work software tools for product managers to define their mission and growth strategies. He writes and marketers and speaks on business models, consumer experience, and pricing licensing. Prior to consulting, Bruce held product management, business development, and product service marketing roles for leading software, hardware, and financial services companies. Contact Bruce with thoughts on the LOVE model at The Pragmatic Marketer • Volume 8, Issue 1, 2010 • 21
  22. 22. Training at Your Office Sign up for the home team advantage WantPragmaticMarketing tocometoyou? Benefits • Ensure everyone learns at the same level from start to finish • Focus on the material most relevant to your company • More of your staff can attend • Discuss proprietary issues in complete confidentiality • Save money on travel expenses by having our instructor come to you TeamDevelopment • Your entire group will become more productive • Everyone will use consistent methods and speak the same language • The skills learned are practiced during the training session — all seminars are highly interactive and encourage participation Call (800) 816-7861 to conduct a seminar at your office
  23. 23. Product Management Career By Greg Council If you’re just starting a career in product management, take comfort in the fact that not only is the role and value of product management getting more notice, but there is also a decent amount of information regarding the mechanics and strategies of product management available to product managers. Techniques and tools, such as those offered by Pragmatic Marketing and others, provide product managers methods for focusing attention on tasks that really matter. Just as important is the attitude of collaboration and camaraderie you take into your new role. Even though the product manager role is at the center of many activities involved with identifying opportunities and bringing solutions to market, a lot of other folks take part in getting market-driven products to market. Unfortunately, many product managers take the “manager” in “product manager” a little too far and try to command and control every aspect of the process. With technology-based solutions it really does “take a village” to raise a successful product. Failing to recognize that can lead to disaster. In my many years as a product manager, I’ve observed five common pitfalls (or torpedoes) that can make or break a product manager’s career. The Pragmatic Marketer • Volume 8, Issue 1, 2010 • 23