Make the Future Happen Today: 5 Steps to Creating Value-Driven Products

Image by Gerd Altmann.

There has never been a better time to make the future happen than right now.

Interconnected technology trends — cloud and quantum computing, 5G and 6G wireless, the Internet of Things, artificial intelligence, virtual reality, blockchain, and more — will transform our lives.

I’ve described in prior articles how these trends could impact the world of 2030 and 2040. New software, services, and devices will create tomorrow’s experiences for how we work, live, and play.

But it’s hard to create new products that truly delight customers. Close to 40% of new products fail to deliver their intended results.

Why is that? The root causes are usually some mix of these:

• The product didn’t solve a real problem that customers value;
• The product’s features didn’t deliver the experience customers wanted to solve the problem; and/or
• The organization — sales, marketing, engineering, and others — wasn’t aligned to deliver the product’s value to customers.

It’s the job of every product manager to avoid these problems and make their product successful. But how?

Focus everything you do on delivering great value to your target customer. It’s what I call value-driven product management.

In this article, I’ll describe how you can move fast in the right direction and build great products that make the future happen. It covers five steps:

1. Identify customer insights

2. Translate insights into your product’s value proposition

3. Prioritize features to support the value

4. Align the organization

5. Iterate with customers: The details matter

1. Identify Customer Insights

This is the foundation for every successful product, and the step on which I’ll spend the most time.

The most important job of any product manager is to identify patterns across your target customers and champion their voice in defining your product. It’s also key to innovation.

By understanding your customer inside and out — how they work and think, their stated and unstated needs — you can identify new ways to add value for them. And by identifying these insights well in advance of user experience and engineering execution, you can clearly define the direction of your product so that the team can move quickly to deliver on its value.

Start by defining your initial hypothesis on your target customers and their needs. Based on what you know today, ask yourself: What does your target customer’s profile look like? What are their defining characteristics?

For consumers, this may cover their age, income, and other demographics, along with their attitudes, values and other psychographic factors. For enterprises, this may include company characteristics such as employee size and industry and the personas of different individuals involved — the buyer, influencers, and users.

Identify what you think your customer’s priority pain points are and how a new product would add value to them. Equally important, highlight what you don’t know about your target customer, their pain points, and your new product ideas. This becomes the basis for the key questions to address through customer research.

Let’s look at an example. A product manager wants to introduce a new artificial intelligence (AI) cloud product that helps companies optimize their marketing efforts. She has defined her current hypothesis below — the target customer and their pain points, an initial product concept — and what she doesn’t know or needs to learn:

The key questions from the product hypothesis then drive your customer research. But before you start —

• Review available data to focus your questions. This includes industry analyst reports, support tickets, sales team input, web analytics, and other data sources. Can you answer some of your questions? Or do these inputs generate other questions? By refining your hypothesis with available data, you can really focus your customer research on what’s important.
• Engage key internal stakeholders. Identify key people in your organization who have a viewpoint on your target customer and/or who need to be bought into your product. These could be executives, key salespeople, marketers, engineering managers, or others. You will benefit not only from their insights but also from their early alignment behind your product ideas and key questions. Make sure you keep them engaged in your process — updating them regularly on the results of your research and next steps.
• Refine your product concepts. Based on these inputs, how would you further refine your proposed product concept(s)? Be creative and challenge assumptions. Get team members — user experience, engineering, and others — up-to-speed on your hypothesis and brainstorm ideas with them. Focus on what will make the value in your product irresistible to the customer.

You’ll need to have well-defined product concepts to test with customers. Write these out in a couple of paragraphs, describing how your customer would use the product. Even better — create a user experience (UX) mockup that shows your customers how they would use the product.

With this foundation set, it’s now time for the most important step — talking with your customers.

This is qualitative research — engaging 7–10 or more of your customers in one-on-one interviews. Make sure you have a good mix of customers in your target segment. From our earlier example, this includes companies of different sizes between 50 to 1,000 employees and operating in different industries.

The purpose of these one-on-one interviews is to identify consistent themes or patterns in their answers. You’ll know you have interviewed enough customers once you start hearing these repeat in your interviews.

Your customers time is valuable, and you need to use it effectively. Create and use an interview guide, or an outline for your discussion. This helps you focus on the right questions and get the most out of the meeting.

Here’s how to organize your interview guide:

· Research objectives and key questions. Put this right at the top of your interview guide. It will remind you of where you need to focus.

· Introduction. Thank the customer for their time, give them an overview of what you will cover, and emphasize their inputs will be kept confidential.

· Background on your customer. Learn more about the person you are interviewing and their perspective. Ask them about:

• Their role in the organization: What do they do, and how do they do it?
• Their key demands and pain points: Why are they a real problem?
• Other products or workarounds they have they tried to meet their needs: What has worked or not worked? Why?
• How the organization decides on buying new products: Who are the actual buyers vs. influencers vs. users?

· Concept testing. It’s always exciting to present your new product concepts to customers. But make sure to present these neutrally — not to sell the customer. We want to hear what the customer honestly thinks about it — what they would say about it to their colleagues.

When you show the concept — whether a UX mockup or written description — tell a story for how the customer would actually use it in practice.

And then ask the customer:

• What do they like or dislike about the concept? What would they add to the concept or change to make it even better?
• On a scale from 0 to 10 — with 0 being low and 10 being high — how likely would they recommend to others that they seriously consider purchasing the product, if it was available today at a reasonable price? Why did they score it that way?

The last question is not meant to get a firm read on whether they would actually purchase it. It’s to understand how excited they are about the product concept. Scores of nine or higher are a strong indicator that your customer would advocate for the product.

· Closing. Thank the customer and ask if you can contact them in the future. If they were really interested in your product, they may be a great candidate to be a beta user — more on that later.

After each interview, write down the key inputs and observations from the customer on your questions. It helps to put each customer’s input into a spreadsheet, organized along the main axis of your segmentation — age, income, number of employees, or other dimension. See the example below. This helps you to see patterns emerge in your customers’ responses.

Ask yourself after every interview: What patterns in customer responses — positive and negative — are you hearing? What adjustments, if any, should be made to your product concept(s)?

Take what you’ve learned, make any adjustments to your product concept(s), and test that in the next customer interview. It’s all about iterating on your hypotheses to get as close as possible to what the customer wants. Again, you’ll know you have interviewed enough customers when you hear consistent themes or patterns in their answers.

It’s a good practice to validate the insights you’ve heard with a broader customer sample through quantitative research, especially if there are conflicting or competing patterns you’ve heard in your customer interviews.

This could be in the form of a survey with similar questions, an interactive mock-up of your product which customers can use, or a combination of the two. By testing with a large, statistically significant sample, you increase the chances that the answers and insights are indicative of the broader target market.

Some best practices for quantitative research -

· Focus on what’s important. Make sure the study really gets at the inputs you want — the key questions you have, the engagement you want to see from customers on your interactive mock-up. Remember: The more time you ask from your customer, the less likely they’ll complete the study.

· Clarity and phrasing are critical. You don’t have the ability to clarify what you mean in your questions to the customer. Review your survey with others in your organization — especially key stakeholders. This will help you to not only improve your survey but also increase the likelihood they will buy into the output of the research.

· Test your study with a small sample of customers first. This will help you work out any remaining bugs or issues before you roll it out to your full customer sample.

· Read all the verbatim answers. If you ask open ended questions to customers, read all of their answers. What patterns do you see? Do these align with what you heard in earlier customer interviews?

Further refine your product hypothesis, based on the output of your qualitative and quantitative research. Share your results of your research and your latest product hypothesis with key stakeholders to get their feedback and maintain their buy-in. And with this step complete, you’re now ready to translate insights into your product’s value proposition.

2. Translate insights into your product’s value proposition

The next step is to write the value proposition of your product, informed by your research. Describe the value in the language that the customer will understand — how it addresses their demands and pain points and is truly differentiated from what competitors offer. Follow this general framework -

· One sentence statement on your value proposition. If you only had your customer’s attention for 15 seconds, what would say on why they should buy your product?

· Top three benefits. These are the ‘pillars’ of your value proposition, supporting why your product is compelling. Include at least one of these benefits — and ideally all three — into your single sentence value proposition.

· For each benefit, three reasons to believe. What key features, metrics, or other proof points support each of your benefits? Start these phrases with an active verb to make these come alive to your customer. This provides the ‘concrete’ in each of your benefit ‘pillars’.

See the example below. This is based on the product hypothesis we defined earlier in this article.

Before you finalize your value proposition, test it out with the customers to make sure it resonates, adjusting as needed.

Everything you do from here is focused on delivering this value proposition to customers. Done right, the value proposition you define will be the same one that the entire organization will support — engineering and user experience in building the product, marketing in its messaging and go-to-market efforts, sales in engaging customers, and others — to make your product a success.

It also acts as the ‘true north’ for prioritizing features that support the value proposition.

3. Prioritize features to support the value

Every product team has constrained engineering and user experience resources, and there are always trade-offs that need to be made in execution. It’s critical that you use these scarce resources to ensure the right features are prioritized to support your value proposition.

There are many ways to prioritize, but a great approach to follow is through Kano analysis. This technique groups features into one of four categories:

· ‘Must have’, or threshold, features. If your product doesn’t have these, it’s not a viable product. Following our original example, a dashboard that shows the results of digital campaigns may be considered a ‘must have’ feature by your customers, otherwise they cannot measure results.

· Performance features. The more you add, the more satisfaction is generated — like gas mileage on a car, or the number of integrations with third party marketing data systems.

· Delighter features. These aren’t expected by customers, but if present, they deliver real excitement and differentiation for your product.

· Neutral to not important. These are features with low or no value.

To use this approach, present your customers with a visual or written description of each feature. Ask them how they would feel if the feature was present, and if it wasn’t present. Based on their responses, group the features into the above categories, using the evaluation table described in this article.

Once you understand the customer value of different features, you can prioritize their execution. A viable product has all ‘Must Have’ features, key Performance features that customers evaluate and compare against competitive alternatives, and one or more Delighters that are core to your differentiated value proposition. When in doubt, execute the ‘Must Have’ features first while you refine your views on Performance and Delighter features.

4. Align the organization

This starts right from the beginning as you define your initial product hypothesis and continues through research, value proposition definition, launch and beyond.

The product manager must drive this ongoing effort to ensure understanding and buy-in across the organization — executives for approval; engineering and user experience for execution; and sales, marketing, operations, and support to take the product to market.

Alignment goes well beyond key stakeholders to include your broader product team — individual engineers, user experience designers, and otheres. Review your target customer and key insights, product value proposition, and priority features. Make it clear how the efforts of everyone directly tie back to supporting the value proposition.

It’s not enough to do this once — it’s an ongoing effort. Whether in an all-hands meeting or at the beginning of every sprint — remind everyone of who you’re targeting, the value proposition, and the upcoming priorities to execute. By ensuring that everyone understands this, you empower people to make the right daily decisions in their areas — engineering in architecting and coding the product, user experience in designing the interface, product marketing in messaging, positioning, and go-to-market, and others.

5. Iterate with customers: The details matter

Get iterative customer input on your product — not just in the initial research, but at every stage of its execution. Key best practices -

· Run a beta program. Your initial research — qualitative or quantitative — can be great way to identify a representative set of your customers who want to try out the product and give you feedback on the actual implementation of features. Those early customers can become your first sales, reference accounts and case studies.

· Test everything. With the customers in your beta program and others, test everything that’s needed to support your value proposition through launch, including:

• Messaging and positioning of your value proposition: Does it resonate? Is it in the language and terms that customers understand?
• Proposed pricing: Would they buy the product at your proposed price? Does your price incent the behavior you want to see from customers?
• Other details that matter to customers: Support levels, operational expectations, preferred ways of buying your product (bundling/packaging), and more.

· Measure and iterate. Make sure your product is instrumented with analytics to measure how customers use your product in practice: trial to purchase conversion, features used vs. not used, and more. After launch, gather feedback about how your value proposition is landing with customers — sales, marketing, support, and operations — in addition to review product analytics.

The creation of value-driven products never ends. From the post-launch data and feedback you gather, you will learn what’s working and not working with your product, new customer demands, and new questions to be answered. The process then restarts — defining your hypothesis and key questions for the next version, and engaging customers to shape the future of your product.

Final Thoughts

When we look back in ten years, we will be amazed at how innovative products have changed how we live, work, and play. Creating value-driven products comes down to doing three things well:

• Know your target customers inside and out. This is the foundation of everything you do. Remember: Your customers won’t tell you the breakthroughs they want. But they’ll tell you what they like when you show them what’s possible.
• Make the value irresistible. Word of mouth is the most effective form of marketing. Make the value in your product so great — easy to use, great cost to value, better than anything else — that customers just have to tell everyone how great it is.
• Details matter. Every aspect of your product — features, usability, performance, messaging & positioning, sales and support experience, and more — contributes to supporting or detracting from the actual value your product delivers. Make sure everyone involved with your product supports your value proposition, understands the customer feedback, and takes action to address it.

There has never been a better time to make the future happen than right now. The value-driven products you create today can make that future happen. Let’s get started.