7 things about product pricing

Here are 7 things I have learnt about product pricing.

#1 If price is your ONLY product differentiator, you are selling a commodity. And if your competitor is much larger than you, you may not have a prayer – they can run you out of town by giving the product away for free.

#2 There is nothing called perfect price. You will either overprice or underprice your product. The key is to test quickly to see what the market can bear, quickly iterate and arrive at your final price. Pick test markets, learn and manage, so that if you do not get it right, you do not have a customer backlash to deal with.

#3 Never roll out pricing increase to existing customers all at once. Why? – see #2.

#4 You cannot increase price without adding additional value for your customers. Customers don’t care about your expenses especially when they have choices. Focus on value you bring to the table for the customer, how it solves their pain points, not your expenses.

#5 You do not have to drop prices if your competitors do. If price is all you have to talk about, see #1. Refocus the discussion to customer value you provide and why the value is worth the additional price. If the customer will not, assess if the customer is worth acquiring. Not all customers are.

#6 You do not have to have single pricing. Promotions to attract new customers, rebates for large volume customers are things to consider only if it makes business sense. Don’t do any of this unless you have a sales strategy in place – what is the end goal for promotions and rebates – new customer acquisition? customer retention?

#7 If you want to price products based on value, think about packaging. Car companies do it – EX, LX, RX; consumer products do – large, medium, small; online services do – Basic, Pro, Premium.

What are your learnings about pricing based on your experience? Please share with me and other readers.

If you enjoyed this post, please consider leaving a comment or subscribing to the feed to receive future articles delivered to your feed reader.

Awareness, Persuasion and Shelf Life

Couple of weeks back, I was invited to write a guest blog post on On Product Management.

My post was titled Awareness, Persuasion and Shelf Life. I hope you enjoy reading it. If you do, please leave comments either on the post there or here.

Prevent your development team from turning into “blind men”

Involve them in exactly ONE customer interaction whether it is a customer visit or a customer phone call!

Not more, not less, exactly ONE and you as a product manager would have done them the greatest disservice. blindmenandelephantThere is no better way for you to taint your team’s perspective of your market, your prospects, your customers, your buyers. They will now have ONE data point to rely on. Later when they question your market research based on your large number of customer data points, can you blame them? You will hear “That is not what I heard from the customer I talked to…..”

Instead as a product manager, involve your cross functional team members (development, QA, product marketing etc.) in multiple customer interactions as possible. Avoid the situation where a team member just attends one. Set the ground rules – either you attend at least three customer calls (visits) or you don’t attend any. Having a musical chair of developers attend these customer calls (visits) such that each one gets to listen to one customer is not useful. If this happens, your team’s perspective of the customers will be akin to the Blind Men in the famous Indian fable of Blind Men and the Elephant.

They will miss out on seeing the patterns, trends, consensus, variations, contradictions that emerge after multiple customer calls. You will be better off in having less number of developers get a good feel for the user base by having them consistently attend multiple calls (visits) than spreading the wealth among all of your team members. Once you do this, it will be a lot easier to prioritize and decide what to build.

Thoughts?

Image Courtesy of: Satrakshita

If you enjoyed this post, I will be honored if you leave a comment or subscribing to the feed of this blog to receive future posts delivered to your feed reader.

Business Lesson from Wimbledon Finals 2009?

What an amazing Wimbledon Men’s final it turned out to be between Andy Roddick and Roger Federer. An epic battle of 4+ hours, 77 aces, 77 games, the fifth set alone lasting 90 minutes. Roddick brought his A+ game to try to beat his arch nemesis Federer who had beaten him 18 of the previous 20 times they had met. But alas after 77 games, 27 aces, holding serve until the very last game, winning 83% of his first serve points – the result ended up to be the same – Federer won it all. I felt bad for Roddick because he gave it everything and still came up short.wimbledon

As I was thinking about the entire match over the course of the afternoon, something dawned on me as a business lesson from this finals. It is every tennis player’s dream to win at Wimbledon. But not many do, it is a lot harder. But then there are tons of other tournaments where the competition is not that tough but with a lot of winners. This is where I thought businesses could learn from – which dreams to chase, where to play, where to spend the energy and time etc.

Imagine that you sell sales automation software. The market is huge since every company on the planet can possibly make use of it. Let us assume that you have $100,000 sales and marketing budget. Would you want to spend all of it in trying to win the “big fish” account – a Fortune 500 company trying to replace their current sales automation software? The stakes are high, competition is stiff with a lot of bigwigs with a lot of money in the fight. You could transform your company overnight if you win it all – but should you play? The question comes to something simple – what are your chances of winning? Are you better off playing in the smaller “tournaments” and building a strong customer base before trying to play on “center court” in the biggest tournament of your market? Will you survive if after all the effort you end up like Roddick – with no Wimbledon title to show? (Andy Roddick is still an awesome player who still has a lot to show since he has won 27 singles titles, $15M+ prize money).

The key is “focus” – where do you want to spend your money, time and energy? It sounds simple right? No. It is very easy to try to be everything to everyone and be nothing to anyone. It is easy to go chasing after the biggest deal on the planet and come up with nothing. It is easy to try to solve a problem more than you can chew and fail completely. A local company that recently shuttered its doors comes to mind – it (I am withholding the name) was launched with an ambitious goal of  developing a cross-channel commerce platform that would allow large retailers to integrate and manage content and sales across the Internet, catalogs, and physical stores – a novel idea, but with one problem – they had just one customer (its parent from whom they had spun-off) sign up on the vision – eventually the company folded when it could not deliver. TechCrunch report said “In retrospect, the warning signs were everywhere: 1) big company spin-off; 2) raised way too much money for a series A round; 3) reliance on that same big company as its main customer (and as an investor)”.

So everytime you are told by sales that this is “the” deal – ask about the stakes. What if you don’t win after all? Will you survive? Do you have eggs in other baskets? It could be your biggest win but could be your death knell as well. It may just be OK to say “No” to play and spend your energy in the smaller “tournaments” and notch up wins. Business after all is never a sprint, it always is a marathon.

Keep it human

Susan Oakes of M4BMarketingBlog asked me if I would be willing to write a short tip for her upcoming post on “How to Keep your Customers Loyal”. The post outlining some great tips should be coming out anytime now. Here is what I submitted.

Keep it Humantips
In the times we live in, customers are bombarded with marketing messages from all over. In this noisy world, companies that stand out are the ones which retain the human touch. The best way to buy customer loyalty is by treating each one of them as a unique human being at every touch point. Buying after all is a human behavior, so make sure you respect the “human” part of it.

Now what does “keep it human” mean? It could mean any or all of the following:

  1. An introductory greeting and opening the door to the customer when they walk into your store
  2. Helping the customer “buy” the right thing to solve their problem and not just try to “sell” them what you have. In some cases, you may not even have the right thing that the customer wants – recommend where they can “buy” the right thing – it means loss of a sale, but could be earning a longtime “relationship”, people typically don’t forget those who help them.
  3. A thank you card send to the customer after purchase
  4. A follow up phone call to make sure the customer is satisfied a few days after purchase
  5. A website that helps the customer finalize the buying decision and written in a language that the customer understands as opposed to one with marketing gobbledygook where the customer feels stupid
  6. A no questions asked, quality guarantee for all purchases
  7. Reachable customer support and friendly voice of the rep that engages with the customer to solve the problem
  8. A business that the customer would like to associate with and recommend to family/friends thereby putting his/her own reputation on the line
and the list could go on.

If you think about it, many of the above holds good for local businesses – the mom and pop stores in your neighborhood. The owner knows many of his customers by name, he chit chats with them when they come in, helps them solve their problem (not just sell them what they have). This is a relationship that has been painstakingly built over the years. The value of the relationship is not completely based on how much money you have spent in the store, but being respectful of you as a human being. In the good and bad economic times, one scarce resource is “customer’s attention”. Business that win more of the customer’s “attention” will succeed. Customers tend to give more “attention” to those that respect them and keep it human.

Do you agree? What would your tips be on “How to keep Customers Loyal?”

Image Courtesy of: Montgomery Public Schools

If you enjoyed this post, I will be honored if you leave a comment or subscribing to the feed to receive future posts delivered to your feed reader.

Contact Us but facilitate it ….

All companies on their website have an About Us or Contact Us section. However, not all companies provide their phone contact information phoneon their website and instead ask you to fill out a web form or email them if you want to contact them.

This unfortunately sends wrong messages. The message could be construed as any of the following:

  1. Sorry, we are too busy that we don’t want you to bother us by calling us.
  2. We don’t value direct communication between humans, we want you to write to us even though you may be a prospect with a willingness to buy.
  3. You are too many and we don’t have the bandwidth to answer your questions, most of which we could deem to be stupid anyways – so we only want to talk to the serious folks who take the time to write to us though we will not commit if we will ever get back to them either.

In a world where people value authenticity and human touch, you are essentially creating hurdles for people so that they do not communicate with you. In one of my previous posts, I had written about email and 7% – how you lose 93% of your communication power when you use email as the communication channel.

With a web form or email, there is no feedback as to when one will get a reply as opposed to getting to talk to a human being – customers/prospects usually have a question that they want answers for now, not later. Would these companies say this to a prospect in a face-to-face meeting? But unfortunately these companies are sending the wrong message to the millions that are on the internet that they will never have a chance to have a face-to-face conversation with.

I understand the scalability issue, but that is not a prospect’s or a customer’s problem – that is the company’s problem. Airlines list their contact phone numbers, banks do, telephone companies do. But some of these companies have the long phone trees which we all have come to hate so much that websites such as gethuman.com have cropped up. But all of this is better than not providing a contact number for your customers/prospects to reach you. Hiding your phone contact information behind a web form or email is outright insulting to your site visitors.

Now this is applicable not just at the organization level. It is very applicable to us as product managers. Whenever, I talk to my prospects/customers or meet with them, I hand out my business card, my direct number, my email address – if they call me, I want to talk to them. There is nothing more important that I am doing that is more important than talking to customers. I am not saying that I do customer support for them, but I want to hear their concerns, questions etc. and make sure that I get the right person to help them. In 99% of the cases, the caller is happy that I am going to transfer the call to the person best to help them. I thank them for having called me.

Be authentic, be human and more importantly be reachable. If we as consumers get offended by the lack of contact information, I will guarantee you that our customers are as well. There is a lot of downside and no upside for hiding your phone number. After all, our jobs exist only to serve our customers.

Thoughts?

If you enjoyed this post, I will be honored if you leave a comment or subscribing to the feed to receive future posts delivered to your feed reader.

Image: Courtesy of geekologie.com

Product Camp – New York

Are you a product manager who lives around New York City or will be in NYC during the weekend of July 18? Do you want to learn about product management from other product managers who are walking in your shoes everyday? Look no further, ProductCamp is coming to town on July 18th. I will be traveling all the way from Boston to attend it.

Don’t know what a ProductCamp is?

ProductCampNYC is a free collaborative “unconference” where product managers can discuss the most current topics facing them on a daily basis.Loosely based on the successful BarCamp and Open Space formats, ProductCamp is an intense ad hoc gathering of product mangers and marketers to share, present, network, learn, laugh, and discuss. The agenda is defined by and voted on by attendees the morning of the event, ensuring the participants get the most out of their experience.

ProductCamp has been successfully hosted in San Francisco (twice!), Austin, and Boston. And…Atlanta and Seattle are in the works. Here are a few reviews following these events.
- “This was a great event. I took back more useful ideas than I have gotten at large industry events. The interactive format and the use of Brainshark and other tools made it very valuable.”
- “What a great experience to get together with a (large) group of passionate product managers and have lively discussions about how we can improve.”
- “There was a lot of collective talent assembled all striving for the same goal … let’s make product management the best career opportunity in the next few years.”

Here are the details:

ProductCamp NYC
Saturday, July 18, 2009 8am – 5pm
FREE to attendees!
St. John’s University – 101 Murray Street NYC
Registration & Additional Info: http://barcamp.org/ProductCampNYC
Register now, what are you waiting for? It is absolutely FREE to attendees.

Adding customer value by subtraction

As product managers, we are trained to look for ways to add value to customers such that they are willing to buy our products. Now, what does adding value actually mean?

Adding value, does not necessarily mean that customers have to necessarily see an uptick in their revenues after they buy your product. For example, your ad product may allow the customer to place their ads to the right audience and at the right places and sell more of their products thereby generating greater revenue. Your product may help them to increase the attach rate of their subscription renewals.  Nothing wrong with any of this.

But there is a whole slew of propositions that generate value without increasing revenues, but instead improve the bottomline by reducing the expenses – what I call addition by subtraction.

For example, does your product help the customer

1) Do more digital iterations that helps them optimize their material costs before building any physical prototypes? (for example, 3D CAD software)

2) Prevent loss of customers and associated brand destruction if credit card data gets stolen (for example, credit card encryption software)

3) Manage double the service events with same or reduce number of staff? (oops, this may mean job loss, but business productivity goes up)

4) Reduce inventory and storage costs by better forecasting of demand (for example, just in time manufacturing)

5) Reduce costs by allowing them to buy in bulk at fixed cost (for example, fuel price hedging)

6) Reduce operational costs by eliminating the number of steps involved in completing an operation

and the list could go on .

To get an accurate view of the impact your product may have on the customer, you need to understand where your product fits in the value chain of the customer’s business and then look at all the upstream and downstream benefits brought by your product.

So does your product add value by subtraction?

Thoughts?

Leverage the baby steps …..

You bike the 180 mile PMC challenge from Sturbridge, MA to Provincetown, one pedal at a time …

You walk the 20 mile Walk for hunger one step at a time …

You run the Boston Marathon one mile at a time …

You process the 100 emails in your inbox one at a time … (unless you choose to mass delete them)

the list could go on.leverage

The point here is that it is important that we leverage the baby steps. In one of my previous jobs, we used to get 100’s of enhancement requests from users every month. By the sheer number, it looked overwhelming. But, if you look at it in terms of the smaller steps, it was not a big volume at all.

I had a team of 8 – the goal set was very simple – each of us would read 10 requests every day spending on an average 2 minutes per request

  • that is 20 min/person/day
  • that is 80 requests read/day
  • that is 400 requests read/week
  • that is 1600 requests read/month.

On a different topic, I had set an MBO for all of my direct reports that they had to be out of the building visiting customers one day/month. I really did not care if they were out every month – they had to do 6 per quarter – but one day a month was easier to remember.

So if I had told the team that they had to do 200 customer visits that year, it would have sounded overwhelming – how the heck would we do it? do we have the travel budget? – the whole discussion would have revolved around a large number. We did it very simply by breaking it down -

  • 6 visits/person/quarter
  • that is 24 visits/person/year
  • that is 192 visits for the whole team per year.

Imagine, how much customer capital we had with us when having product discussions with internal stakeholders.

It is all about leverage – it is amazing how much you can get done by using the collective resources at your disposal when each resource expends only a fraction of the time they have. Think leverage.

Thoughts?

Image: Courtesy of zoomstart.com

Dogs, Cows and Kids …

In every company, product managers have more things to do than you have time for. So how do you decide which products to fund? which projects to work on? and more importantly what NOT to work on? After all, if you have more things to do than you have time for, there is nothing worse than working on the wrong stuff. Marty Cagan of Silicon Valley Product Group says – “….lose your dogs and milk your cows, and you should have significantly more resources with which to feed your kids.”

Marty in his latest blog post “Dogs, cows and kids” talks about how to identify what to ride to the sunset, what to milk and what to focus energy on. It is a great read.

4 tips for collaboration – What? When? How? Who? and in that order

As  product managers, our work lives revolve around working with cross functional groups. Leading by influence and not questionsmuch authority, our jobs are to motivate people to get things done for the benefit of the paying customer. Sounds easy right? But when different groups have their own goals and priorities, a product manager’s job often feels like herding cats. Even after 13+ years of doing product management in multiple companies, I am in no way close to mastering this. It is easy to unknowingly step on some one else’s shoes. It is easy to get emotionally attached to problems and solutions.

Last week when I was reflecting on my years of experience and the instances where leading a cross functional team had been challenging, something very simple occurred to me. What if we product managers always use the following as a guiding principle – Ask yourself “What? When?How? Who? and in that order”.

  1. What is the problem to be solved? – Do we agree?
  2. When do we need to solve it by? – Determine the priority – is it something important to solve, is it worth the time and effort?
  3. How do we best solve the problem? – What is the best possible solution?
  4. Who is the expert(s) in the team that is best equipped to solve the problem?

If we approach any problem in the following sequence, I think things will fall into place. The biggest challenge usually is getting everyone aligned first on the problem to be solved, then the timeline and then how best to solve it. Once the consensus sets in and team feels invested in solving the problem, who needs to do the work to solve the problem becomes the easy task. I am not trying to discount in any way that it then becomes a cakewalk, but such a structure I believe will allow all involved to step away from their emotional engagement with a problem and look at it in a very objective manner.

Thoughts?

Image: Courtesy of newsday.com

Always question data – at least twice

Question all data you collect or are presented with.

First of all, make sure you are collecting the right data. If you don’t measure what matters, the data is garbage.  I have written before on using the right metric.

data-analysisOnce you are sure that you have collected the right data, never trust your first analysis of the data. Whenever you see %, averages etc. question it even more.

Percentages are misleading – you need to know the sample size. Imagine if someone told you that 50% of the people who ate at a specific restaurant got food poisoning – 50% sounds scary right? What on deeper analysis, you find out that the data was collected by only talking to 2 people and it so happened that one out of this group did get food poisoning and 200 people on an average eat at that restaurant every week?. Is it scary anymore? No. Your whole perspective changes once you find out the sample size, and the confidence level of the sample size being representative of the population.

Averages are the other ones to be suspicious of – a very few outliers can very quickly tilt the average up or down. Always double check it with medians to make sure outliers are not having undue influences. Let us look at the following example. Assume that you sold 30 different widgets and the selling prices were as given below.

4, 4, 4, 4, 4, 5, 5, 5, 5, 5, 5, 5, 5, 5, 5, 5, 5, 5, 5, 5, 6, 7, 8, 8, 30, 30, 36, 40, 50, 50

On analysis,

Average selling price = $12

Median (50th percentile) = $5

75% percentile = $7.75

The average selling price of $12 sounds like a good number. But if you look at the data closely, 50% of the items sold for $5 or less and 75% of the items sold for $7.75 or less. The six higher priced items are making the average look much higher. Now the outliers are not necessarily bad. Another way of looking at this is that just be selling 5 higher priced widgets, you were able to quickly double your average selling price. So your conclusion might be to focus on selling priced items as opposed to focusing on volume. But how long is the sales cycle for the higher priced items? What is the selling costs compared to selling a volume of lower priced items? Asking these questions of your data will help you draw the right conclusions from the same data.

One way to avoid this trap is to always triangulate – will you arrive at the same conclusions if you approach it another way? Try collecting the data from a different angle and see if you will arrive at the same conclusion.This will also remove from your analysis any biases associated with one data set.

Never trust your first analysis of your data.

Thoughts?

Image: Courtesy of Neural Computing Research Group

Activity is not equal to progress

Lot of activity does not necessarily equate to progress. It sounds cliche but it is true. Just because one is busy does not mean one is making progress. Having focused goals and then making sure majority of the activities relates to those goals is paramount. Identify goals, create metrics to measure progess and then align your activities towards those goals and then measure progress. Otherwise, in this crazy digital world we live in, all we could end up is a long list of meetings we attended and the zillion emails we received and replied to. I have had such weeks where on Friday I have wondered what actually got accomplished. Every month keep a list of items that has added value to your product, company or yourself. After each year, do you have anything that you consider worth adding to your resume? After all, we all have a career to manage.

Homogeneous or Heterogeneous – What is better?

Which is better? It depends.colors

  1. Southwest Airlines flies only Boeing 737’s to reduce maintenance costs.
  2. EMC wants their customers to buy all of the data servers from them.
  3. Microsoft wants everyone to use IE.
  4. Michelin wants to be the single supplier for all tires for Toyota.
  5. Pratt&Whitney wants Airbus to use nothing but their engines for their jets.

But then…

  1. Boeing cannot survive just making Boeing 737’s.
  2. IT departments don’t want to put all eggs in one basket.
  3. World does not trust Microsoft.
  4. Toyota does not want to single source to Michelin.
  5. Airbus does not want its entire fleet  grounded if P&W engines have a problem.

Isn’t this world so beautiful for the heterogeneity it possesses. So why in business would we ever think we can achieve monopoly? Why do some businesses lull themselves to believe they do not have competition? The question is how much of the pie one can have, you WILL not have the whole pie. Success breeds competition. Otherwise, it may not be a large market after all.

If you enjoyed this post, please consider leaving a comment or subscribing to the feed to receive future articles delivered to your feed reader.

Image: Courtesy of DragonArtz Designs

Do your customers know that “you” exist?

In one of my previous posts, I had talked about educating customers on all the different product enhancements you have made to solve their problems. But there is another problem that needs customer education.

The phone conversation goes:

Product Manager: “Mr. Customer, I am the product Manager from company X.”

Customer: “Product Manager? Who is that?”

This is not uncommon. Not many people know what product managers do in companies. Some mistake them to be salespeople or customer support. Yes, we are a not well known breed like salesmen, software engineers, finance, customer support etc. We have to take it upon ourselves to educate our customers on who we are and then build the rapport with them.

Once customers find out that product managers have a large influence on the future direction of products they use, you become their greatest ally. But it is up to us to communicate it to them, build rapport with them, listen to them (yes listen, not talk to them) and build solutions that will make their lives easier.

Two questions product managers must always ask

1) “What is the problem we are trying to solve?”

Ask the internal stakeholders who are pitching new ideas to you, ask this of customers who are asking for new features and repeatedly ask yourself to make sure you are needle1not deviating from it as you are getting caught up in the weeds.

2) Is this going to move the “needle”?

What is the measurable impact solving the problem has and by how much? Which “needle” is this going to move  – sales “needle”? customer satisfaction “needle”? customer support cost “needle”? marketing “needle”?, engineering “needle”? If it is not going to move anything significantly, then it is nothing but a “nice to have” and probably is not worth spending time on. Don’t forget about the opportunity costs when you are pursuing something that is nice to have.

If you enjoyed this post, please consider leaving a comment or subscribing to the feed to receive future articles delivered to your feed reader.

Image: Courtesy of Winston Motor sports

Do your customers know?

How often have your customers asked you for functionality that you already have in your product – functionality you have had in the product for a year or two? I have had this happen often enough in my career. There are two causes for thiseducation

1) You forgot to tell the customer

2) Your product is too big that new features are no longer discoverable

I want to spend more time on 1) than 2) because it is the easier problem to solve and I think in my experience more prevalent. You as a product manager identified the customer problems to solve, worked with engineering to come up with the most innovative and easy way to solve the problems, your team is delighted, but all of this equates to naught, if you do not take the initiative to let the world know that you have solved the problem. Often times, organizations get caught up in drumming about this new feature/product with prospective customers (thanks to the zealous salesmen who are looking for the first available opportunity to demo the new wares to prospects), that often educating the existing customers is forgotten.

This is more of an internal organization problem than an external one. It can be easily solved by first educating your internal stakeholders (training, sales, marketing etc.) on the benefits of the new widget, what problems it solves and for which customer profiles. If you do this internal stakeholder education well and carve out the go to market launch plan, then this becomes an easier and accomplishable task. And trust me, only if you do this well, can your external customers know about what you have done for them.

On problem 2) – this one is a harder problem to solve especially for feature rich products such as MS Excel, Oracle etc. Simplification is not as easy to do as it may seem. I don’t know the answer to this problem, in my past experience, we tried many solutions to solve this problem, but nothing I would say worked tremendously well. It was a tough nut to crack.

Thoughts? Comments based on your experience?

If you enjoyed this post, please consider leaving a comment or subscribing to the feed to receive future articles delivered to your feed reader.

Image: Courtesy of Connecticut State Board of Education

Messenger of problems?

It is very easy to identify problems. What is difficult is figuring out how to solve them? Ones who do the ldeliveryatter are valued and get ahead. Sounds like cliche? Absolutely. But it still surprises me when I run into “messengers” of problems. Many want to bring a slew of problems to their bosses – this is not working, it is not efficient, we are understaffed etc. I am sure your boss probably knows about these issues as well. Sometimes, he may not. But if all you are doing is taking a problem to him/her, you are slowing becoming another problem for him/her.

Let us consider a different scenario of a person who identifies the problem, prioritizes the problem, thinks of possible solutions and then approaches his boss stating the problem and his/her recommended solutions. Valuable? Of course. Put yourselves in your bosses shoes. What would you do to solve the problem if you had the authority to fix it? Would you prioritize it to get it fixed? Would you spend political capital on it to get it fixed? If the answer is No, don’t be the messenger of the problem.

Those that are valued are the messengers of recommended solutions to identified problems. No one will stop you from making something better, more efficient, less costly, work faster. But no one wants to hear that something is broken, they want to know how to get it fixed and that yo are willing to take charge to get it fixed.

Futility of “feature wars”

Feature WarIf you as a software product manager is arming your sales force with detailed information on all of the features in your product(s), you are arming them with information to fail. If your sales team is engaging in a “feature war” with your competitors, you are bound to lose to the competitor who is smart enough to engage the customer in a discussion on their needs and how their product(s) solves these problems and how it would help the customer achieve their goals.

What exactly is a “Feature war?” – software vendors trying to outdo each other on who has more features than the other. You cannot win this war – any product is going to have a feature that another one does not and vice versa. Engaging in a “feature war” is death knell for two reasons:
1) You are losing focus on the fact that the customer is looking for a solution to their problems and not for a product with features. They want to know how your product (as a whole, not individual features) benefits them, solves their problem(s) and achieve their goals.
2) If you get caught up in the features (weeds), your driving force is going to be add more features and create a very complex product – a “Frankenstein”.

Mature products have feature bloat – they have more features than one would ever want to use. Take the example of MS Office. I would still be happy with MS Office 97 because I still use maybe 2% of the functionality that is there. I would bet there is a large majority of users are like me. But software vendors often have to keep adding features just to put out a new release to feed the subscription “engine” (often a large “revenue” stream and only “profit” generator) and and also to create momentum for their sales force. This is fine if the new release solves problems for new market segments or problems previously not solved for existing customers. But often times, it is not. It is change for the sake of change.

You should rather be spending time on solving the customer’s problem(s) better – understand it better, solve it better than anyone does today. Then make sure your sales force is armed with information on how your product(s) solves the customer problems better than your competitors. Make sure they start the discussion at a very high level, thoroughly understand the problems faced by the customer and then convince the customer on how your product(s) provide the best possible solution and if needed the features that make it work.

When you are training your sales force, make sure you are educating them on the customer benefits of using your product(s), what problems it solves and how the individual features contribute to solving the problems. Package it for your sales force so that it is easy for them to grasp than them getting caught up in the weeds.

If you enjoyed this post, please consider leaving a comment or subscribing to the feed to receive future articles delivered to your feed reader.

Image: Courtesy of filesanywhere.com (the use of this image does not indicate in any way that filesanywhere.com is engaged in feature wars or has feature bloat. The image is for illustration purpose only. In fact they have a very good website that clearly explains customer benefits of using their product using words that I as a customer would use. Please check them out.)

How organizations can get caught napping …

If you the product manager is thinking:

1) We are the market leaders and the well known brand and we set the tone in this market or

2) I fully understand the market segment that will be interested in buying this product or

3) We have the marketing muscle to push new products out  or

4) We have the best feature set in the industry

then you must read the latest Wired Magazine’s article on how cheap little laptops hit the big time NOW – not tomorrow, not later, but NOW. And then recalibrate your thinking.

Here are my key takeaways:

1) Customers (especially the vociferous ones) could ask for more, but a vast majority of them actually want less.

2) Your product can open up new markets and market segments that you did not even dream off. Be ready to be suprised. No focus group or research is going to reveal this because you tend to do these with the potential market segment you have in mind. Do you think the netbook folks would have interviewed middle class consumers about their laptop needs?

3) Beware of the Davids, not the Goliaths. You will not see their attacks coming. It is easy to pooh pooh them.

4) Beware of the ecosystem changes happening in your industry – it is not usually one thing that upends an industry, it is the combination of things that create the perfect storm.