Targeting the right people in the universe. Photo by Pixabay: https://www.pexels.com/photo/person-standing-under-a-rock-formation-on-a-starry-night-33688/.
And a surprising key to effective product growth
Are you confused about product strategy?
As a product person, are you frequently unsure how to prioritize what to build with your team? Are you getting slammed from all sides internally, trying to figure out how to build out everything your internal stakeholders are asking for?
Does your Sales team constantly pressure you, trying to grab every minute of spare engineering capacity? Are you frequently reduced to resorting to some kind of Excel spreadsheet-based prioritization framework like RICE or WSJF, or worse? And on top of all that, has your product growth stalled?
Fortunately, thanks to Ben Foster, in a few simple diagrams, you’ll have a powerful visual metaphor for product strategy and better be able to understand your current situation.
As a bonus, we’ll extend that visual metaphor with insights from Chip Heath and Dan Heath to lay out a counterintuitive key to effective product growth.
Meet Ben Foster
Ben Foster has had a stellar product career, working first at eBay under Marty Cagan, and later as Chief Product Officer at WHOOP band through its greatest growth period. Ben is also the author, with Rajesh Nerlikar, of a truly outstanding product management book: “Build What Matters: Delivering Key Outcomes with Vision-Led Product Management.”
In that book, Ben and Rajesh introduce many breakthrough concepts from their own experience leading product, as well as their consulting work through their Prodify.group consultancy.
Of the many insights introduced in that book, I consider one of their biggest to be their transformative take on product strategy.
For Ben, there’s a fundamental divide between being sales- and services-driven vs. being a product-driven organization.
A Universe of Potential Strategic Choices for Your Product
Let’s take a product, and show where it might sit in the universe of available customers it could potentially serve by answering the two main questions from the “Playing to Win” strategy framework:
- Where will you Play? (WTP) (Personas, Geography, Channels)
- How will you Win? (HTW) (How will you differentiate?)
Ben Foster uses this image to represent this customer “map,” with each dot representing the universe of customers a product could potentially serve:
Sales/Service-Driven vs. Product-Driven
For Ben, one big reason many products don’t have a clear, overarching product strategy is they’re predominantly sales and service-driven.
In sales and service-driven companies, there’s a dominant Sales function led by a strong, experienced, and capable sales team. They may have a “President’s Club” for salespeople and tend to reward them with lavish bonuses and vacations. They’re aggressive, and they focus on closing deals.
Any deal, and the bigger the deal size, the better.
Which is great, but leads to chasing whatever potentially interested customer in whatever vertical the sales team can convince to sign up, which ends up looking something like this:
But to quote Ben, this has far-reaching impact:
“In order to perfectly satisfy every customer’s desires, you would have to deliver a specially tailored solution for each of them, which is exactly what services-driven companies do. Those solutions could be delivered via ongoing services (as a consultancy does) or by delivering bespoke technology solutions, as represented by the squares on the map.“Foster, Ben; Nerlikar, Rajesh. Build What Matters: Delivering Key Outcomes with Vision-Led Product Management (p. 25). Lioncrest Publishing. Kindle Edition.
In a company that’s otherwise trying to be product-driven, while these “bespoke solutions” might provide short-term boosts to the company’s bottom line, or increase the sales team’s overall year-end bonus, as we’ll see below, they may actually be creating costly impact to the product’s long-term viability.
But it doesn’t have to be this way.
What a Product-led organization looks like
“A product-driven company takes the exact opposite approach from a services-driven company. They never build a custom solution for an individual customer.“Foster, Ben; Nerlikar, Rajesh. Build What Matters: Delivering Key Outcomes with Vision-Led Product Management (p. 26). Lioncrest Publishing. Kindle Edition.
For Ben, product-led organizations intentionally make a set of consciously thought-out tradeoffs to come up with a cohesive product strategy.
In this scenario, we could call these conscious “Where to Play?” and “How to Win?” choices “integrated” and consistent, which Ben and Rajesh represent as the product’s “Win Zone,” as shown in this image:
What most Product people get wrong with their Strategy
Forgetting about the end user
Trying to focus only on internal needs is a lost cause.
As we touched on above, when product managers are reduced to prioritizing features using some prioritization framework, there’s clearly a strategy gap at the top. This applies equally for PMs and teams scrambling to build something to satisfy a random customer, the Sales team, or any other internal stakeholders’ “must-have” feature request list.
Externally, when we think of the impact to the product’s end-users, every one of those random feature requests has to be rolled so users will know what it is and how to use it.
Implications for the organization
The long-term internal impact of a lack of strategy is equally bad.
Every one of those features now has to be documented, and Customer Success has to be trained how to use them and talk users through them. The software team’s lives are now made progressively more complicated, as these features not only have to be maintained and regularly updated, they all add to an ever-increasing mountain of technical debt. Over time, any attempt to add to or extend the product’s codebase gets increasingly unmanageable.
Worse, the user experience impact of satisfying all these wide-ranging demands is products that can feel like a random mix of features jumbled together.
How can we address this while fielding a near-constant stream of internal and customer-focused dissatisfactions with your product?
The first step to becoming Product- and Strategy-led
For Ben Foster, recognizing you can’t, and shouldn’t try to please everybody is the first step to becoming strategy and product-driven:
“You will never finish building a product that makes every customer in the target market perfectly satisfied. After all, that’s the approach of a services-driven company, not a product-driven company. To avoid unintentionally becoming a services-driven company, you must say no to most product requests.“Foster, Ben; Nerlikar, Rajesh. Build What Matters: Delivering Key Outcomes with Vision-Led Product Management (p. 27). Lioncrest Publishing. Kindle Edition.
Saying “no” for a product person is the first step to becoming strategy- and product-driven.
The Surprising Key to Growth
We’ve established the importance of being clear on your strategy, and what the “Product Win Zone” looks like.
As we start to gain traction and achieve Product-Market fit, over time, we’ll want to scale our product’s impact, and bring it to a larger audience.
How can we do that without creating the kinds of custom solutions that limit the long-term viability of our products?
Finding the right customers to please
The conventional wisdom is to focus backlogs and roadmaps to address all customers’ biggest pain points.
But what if that conventional approach was dead wrong?
Not all of your customers love you
In their book “The Power of Moments: Why Certain Experiences Have Extraordinary Impact,” Chip Heath and Dan Heath share a key insight that fits perfectly with Ben Foster’s product strategy mental model, and has major implications for nearly every software team’s roadmap and backlog.
In that book, Chip and Dan refer to customer satisfaction research Forrester conducted, ranking satisfaction on a scale from 1 to 7. Customers rating a product as a “1” were highly dissatisfied, and those rating a product a “7” represented extremely satisfied brand advocates.
For long-term product viability, profitability, and growth, whose needs would you choose to prioritize?
“…given that everyone else — from the 1s to the 6s — has room for improvement, who gets the attention? Would you try to fix problems for the 1s, the people you’ve made miserable? Or would you try to delight the 6s to nudge them up to a 7? In an ideal world, you’d do everything at once — finding ways to vault everyone up to a 7.”Heath, Chip; Heath, Dan. The Power of Moments: Why Certain Experiences Have Extraordinary Impact (p. 45). Simon & Schuster. Kindle Edition.
What most organizations do, even highly-rated, customer-centric brands like Porsche, Disney, Vanguard, Southwest Airlines, and Intuit, is prioritize fixing their biggest problem areas, and try to move their highly-dissatisfied “1’s” up to “4’s,” figuring out what’s missing and providing the features, services, and functionality those dissatisfied users feel they’re most lacking.
This is what Chip and Dan call “Eliminate the Negatives (Plan A).”
What happens when we try to please everyone
Unsurprisingly, based on what we’ve learned so far, Forrester interviewed service executives and learned their organizations were overwhelmingly trying to please their “1’s.”
“They estimated, on average, that their companies spent 80% of their resources trying to improve the experience of seriously unhappy customers.“Heath, Chip; Heath, Dan. The Power of Moments: Why Certain Experiences Have Extraordinary Impact (p. 46). Simon & Schuster. Kindle Edition
Using Ben Foster’s model, companies are essentially trying to address the orange boxes far outside of their “Product Strategy Win Zone”:
Could trying to eliminate all negatives potentially be a costly distraction?
If we think of Growth as expanding the total universe of all users at all costs, finding and fixing every single user’s problems and fixing them all ASAP would seem to make sense.
“That seems reasonable at first glance — they’re trying to eliminate the worst customer problems.Heath, Chip; Heath, Dan. The Power of Moments: Why Certain Experiences Have Extraordinary Impact (p. 47). Simon & Schuster. Kindle Edition
But as a strategic investment, it’s madness.“
Based on what we’ve learned so far, it should be immediately apparent we’re falling back into the trap of trying to build out feature solutions outside of our “Product Strategy Win Zone,” potentially resulting in products that attempt to satisfy everyone, which will most likely turn out to please no one.
Like a sales- or services-led organization, we would be effectively chasing people who have already stated they are, at best, pessimistic and negative about how well our product meets their needs.
As Forrester reviewed their data over repeated customer surveys, they surfaced an important discovery that ties perfectly with Ben Foster’s “map.”
“Forrester’s researchers have built models of the financial value of a customer. They know from survey responses… the happiest people in any industry tend to spend more, so moving a 4 to a 7 generates more additional spending than moving a 1 to a 4.Heath, Chip; Heath, Dan. The Power of Moments: Why Certain Experiences Have Extraordinary Impact (p. 47). Simon & Schuster. Kindle Edition
Furthermore, there are dramatically more people in the “feeling positive” 4–6 zone than in the “feeling negative” 1–3 zone. So, with [the Elevate the Positives] Plan B, you’re creating more financial value per person and reaching more people at the same time.“
It’s not even close
The difference between getting “1’s” to “4’s,” or “Eliminate the Negatives (Plan A),” vs. “Elevate the Positives (Plan B),” getting “4’s” to “7’s,” was an even bigger gap than anyone could have anticipated:
“As a result, choosing between Plan A and Plan B is not a close call.Heath, Chip; Heath, Dan. The Power of Moments: Why Certain Experiences Have Extraordinary Impact (p. 48). Simon & Schuster. Kindle Edition
Here’s the astonishing finding from the Forrester data: If you Elevate the Positives (Plan B), you’ll earn about 9 times more revenue than if you Eliminate the Negatives (8.8 times, to be precise.)
Yet most executives are pursuing Plan A [Eliminate the Negatives].“
Simply put: Stop paying attention to people you’ll never win over
First off, it’s just never going to happen.
Secondly, for all the external and internal downsides listed above, trying to be all things to all people has major negative longer-term impacts for both your organization and your product..
So if we decide to focus on your “4’s,” in Ben’s model, it might look something like this:
Our goal would therefore be to identify the product innovations that will address these user opportunities, and open the door to the kind of growth that will lead to a new and larger “Product Strategy Win Zone”:
The ROI of Being Product-Driven
If you’re still convinced you’d like your teams to handle streams of one-off feature requests, note Ben’s take on the dramatic valuation difference between Sales/Service-driven vs. Product-driven companies:
“There’s a reason the service-driven companies have more like 1–2x multiples on their revenues for their valuation, as opposed to the 10–15x that you tend to see with SaaS companies that are truly product-driven.“Ben Foster on Melissa Perri’s “Product Thinking” podcast, March 31, 2021
TL;DR — Make choices
- Unless you specifically want to be a services-driven consultancy, make clear choices about
- Where to Play
- How to Win
- Map your product strategy “Win Zone”
- Find out who’s close to loving your product (“4’s”) and address their biggest concerns
- Remember it’s 9X more effective to “Elevate the Positives” (lifting “4’s” to “7’s”) than trying to “Eliminate the Negatives” (lifting “1’s” to “4’s”)
- They will represent your most effective route to growth, longer-term viability, and Return on Investment (ROI)
Coda: An entire book on targeting the right people
During the writing of this article, Nicolas Cole, of my Ship30 writing cohort shared a book entirely focused on strategically marketing your product to target the right people: “Superconsumers: A Simple, Speedy, and Sustainable Path to Superior Growth” by Eddie Yoon.
According to Eddie’s research, “Superconsumers” (someone rating your product a “7”) represent less than 10% of consumers in any category, but are responsible for driving:
- From 30–70% of sales
- 100% of your user insights
- More than 100% of your potential growth
In a takeaway that perfectly matches both Ben and Rajesh’s mental model, as well as what Chip Heath and Dan Heath discovered with Forrester’s research, you never need to target all available customers to drive growth for your product.
Just find and make your “Superconsumers” happy.