Better Product Managers, and Product Management

Are your best customers really your best customers?   Or are they simply your earliest adopters, the ones who write you the biggest checks, or the ones with the name everyone recognizes?

When you’re a product manager joining a new organization, you inherit a whole slate of existing customers. However, you’ll be the one responsible for building a product that creates contract renewals and new customers.

So it’s critical for you to push beyond asking “Who are our most important customers?” and ask “Why are they so important for us?”

Potentially misguided answers:

They’re a huge revenue source (B2B):

What percentage of our revenues does [Customer X] contribute?  While a contract with a lot of zeroes on it means money in the bank, it also means risk.  Does the company rely too heavily on that single source of income?

Having one or a few customers providing a large percentage of your revenues gives them a lot of power over you – power that translates into demanding new one-off features, hours of customer support time, or hefty discounts on professional services rates.

Speaking of professional services: does that represent a big chunk of how these customers spend their money?  ProServe can be a great money maker, but it’s also harder to scale and can be hefty on opportunity costs.  If your best people are doing custom work for this “great customer”, they’re not concentrating on the product improvements that will bring in the next twenty or fifty customers.

They have a great brand name (B2B):

But do they have enough in common with other potential customers?  A recognizable name gives you instant credibility, but it doesn’t necessarily translate into the next sale.

“[Company X] is definitely our best customer,” said our beaming sales rep.

“Great! How much are they paying us?”

“Well, they aren’t. But we have the opportunity to put together a revenue sharing deal with them in the future – as long as we can improve performance–”

“Wait, what’s wrong with their performance?  Isn’t the product working for them?”

“Of course! They’re very excited about us.  It’s just that they probably didn’t deploy it in the best way…”

In this case, having this big-name customer got us initial meetings, but once those prospects took a closer look, we didn’t get a second one. Time spent keeping the “big fish” happy would’ve been better spent finding a more appropriate reference customer and making everything work beautifully for them.

I’ve also heard “you’ve done a great job with [Customer X], but we’re totally different” many times.  For example, a solution that worked for RyanAir – a successful but definitely non-traditional airline – may actually deter a high-touch, full-price airline like Singapore Airlines.

They’re so easy to work with (B2B, B2C):

How, exactly? This often means one of two things: a) they never bother us, or b) they tell us exactly what they need and we do it.  Neither one is good.

When you don’t hear from customers, it doesn’t mean they’re fully satisfied. It means you’re not that important to them: you’re not mentioned in internal meetings, they aren’t worried about incorporating you into their next release, they forgot that you’re there solving whatever problem you solve.

“Ugh, stupid gym bill!”

“I didn’t even know you belonged to a gym.”

“I hardly ever go – the cardio machines are always full, and the classes start way earlier than I get off work.  Then I feel too guilty to complain. I should just cancel my membership.  Whatever you do, don’t join [Gym X].”

When customers tell you exactly what they need and you build it, you’re missing an opportunity to understand a wider market need.  Customers who work with you to articulate their problems provide great insight into where to look for the next killer feature; customers who tell you what to do keep you tunnel-visioned.

They’re obsessed with our product (B2C):

What’s the ROI on these customers?  Are they profitable enough to compensate for the additional attention they require?

Most companies would love to have rabid fanatic customers like Apple, Harley, or Starbucks, but don’t realize how expensive those customers are.  They generate more customer service calls. They demand more features. Their expectations are sky-high … and they don’t hesitate to spread the word if you let them down.  In some cases, their presence may even “scare off” more mainstream and lower-maintenance customers.

Answers You Want to Hear

We solve a big problem for them (B2B, B2C):

When your product/company solves a painful problem for a customer, you create more partnership opportunities.  You’re empowered to ask more questions, and they’re happy to provide you with information in the hopes that it will further diminish their “pains”.

Just make sure that the “big need” you’re filling is, in fact, something that you’re good at and can charge enough for.

They always want to know what more we can do for them (B2B, B2C):

When you can be integrated into multiple points within a company, or within a customer’s life, it’s hard for them to un-integrate you.  That equals revenue security, and increases the chances that they’ll look to you when they have a new problem that needs solving.

“We have an RFP from [Company X] – this product is on your roadmap, isn’t it?”

“Yes – but it’s not ready yet and our competitors already have an offering.  Are we really in the running for this?”

“Definitely.  Since we’re already providing them [Product X] and [Service X], they’d rather stick with us than integrate another vendor.  This could be a great partnership opportunity – we’d learn from them and they’d fund part of our product development.”

They represent exactly the [industry/demographic] we’re targeting (B2B, B2C):

The most reference-able customer will always be one where future potential customers look at them and say “they’re like me!”  Brand-name recognizability is trumped by situation-type or industry-type recognizability.

Local credit unions have all heard of Bank of America, but they’re more likely to look at other local credit unions when deciding what technology decision to make.  Diet-conscious users have all heard of Jillian Michaels, but they’re more likely to ask their friend who lost twenty pounds what online tools they used.

They use our product really well (B2B):

Did they deploy it well? Anyone who has worked in enterprise software knows that 50% (or more) of a customer’s success with your product depends on how they use it.  If your product is not integrated into their processes, or their employees are not trained, or usability guidelines not followed, it will look as though your product is ineffective.

Even if the customer is satisfied with their results, they’re unlikely to look impressive enough to win over a new prospect.  At best, you’ll win another deal… but risk having this new customer go through the same shoddy deployment process that guarantees them mediocre results.

They love to talk about us (B2B, B2C):

You can usually convince a satisfied customer to be a reference for you, but there’s nothing more valuable than one who evangelizes you on their own. A company who mentions you in their press releases or marketing, or a user who blogs about you and recommends you to friends — gives you credibility and authenticity.

In short, benefits need to go both ways.  It’s easy to get so caught up in providing value to your customers that you don’t stop to analyze what value they’re providing to you.  Cash is great, but when you’re building a business, it’s not enough.

If your “best customers” aren’t, look at other existing customers to see if they’re a more strategic fit.  Figure out who would be the “ideal customer” – and check with your sales team to compare that with their prospects.

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Here’s why I won’t be using Hunch:

Anatomy of a bad user experience – step by step:

1. Read an article about Hunch, remembered that I had a beta account.
2. Thought of a question that I wanted an answer to.
3. Went to hunch.com and tried to type it in – you CANNOT ask a new question.  If what you typed doesn’t match a pre-existing topic, there is no call to action to create one.
4. Logged in – maybe only logged-in people can create a topic?
5. Clicked on “Create new topic”
6. Got the above image – basically “no, you can’t do what you want until you jump through these hoops.”

I understand that the system needs to be “seeded” with information.  This is not the way to do it.

Any product where the first user experience actually uses the words “Come back when you’re done” needs an immediate rethinking.

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This post is part 4 in a series.  Read part 1, part 2, part 3.

Silence is deadly.  Lack of information leads people to imagine the worst-case scenario.

This is why, even if your new strategy is humming along beautifully and you’re hitting your early risk-reduction milestones, you can be derailed by FUD.

A customer writes a lengthy blog post theorizing that the lack of updates to the old site means you’re going out of business.   Sales reports that existing clients are getting conflicting messages from the company.  Internally, some teams feel like they’re doing a ton of work and haven’t heard about any payoff yet. Competitors are gunning for existing customers, planting the seeds of doubt that you may not have a long-term strategy.

This can all be avoided by Momentum-Building Communication.  Very simply, make it your practice to share updates at minimum:

• Once a week internally
• Twice a month externally

It takes time to put together a meaningful update.  But I’ve found that for most product managers, it’s not the time so much as figuring out what to say!

Here are some ideas for information that is memorable, useful, and builds excitement:

Share with Internal Teams, External Customers:

• User Quotes – every time you send out a simple survey, include an optional free-form question about how customers use your product.  (Tip: “How do you use” will get more interesting responses than “What do you like”)
• % Successful Registrations – set up a simple “funnel” in Google Analytics to see how many people made it past your landing page to the “registration success” page.  (Don’t be depressed if this number isn’t near 100% – a “good” percentage for many types of services is 40-50%!)
• % Successful Conversions (upgrades, purchases, completing a core action)  – hopefully these metrics were built into your product.  If not, get thee to a change request spec, stat.  (Again, remember your comparison points – the cart abandonment rate was around 40% industry-wide, last I checked.)
• Login Frequency - Are people coming back more often?  For internal sharing, be sure to take the next step to explain how more usage -> more revenues.
• Analyst or Tech Blog posts that validate your concept – You probably already have Google Alerts set up for your company name and product name.  Add alerts for your “concept” (i.e. “recommendations technology” or “personal financial management” as well to help find trending articles)
• Spotlight on a customer suggestion that was implemented - Spread the credit around! Recognize the customer(s) who made the suggestion, talk about why it was a great idea, and show off some screenshots of the newly-implemented piece.  It will prove that you listen to customer feedback, and tying it back to the “why” will implicitly remind customers that their ideas are evaluated in terms of the whole business.
• Spotlight on a problem that was fixed – We screwed up, here’s how we fixed it.  Honesty (sadly!) amazes customers because of its’ relative rarity.

Share Internally:

• Customer/Prospects Quotes – What a great excuse to talk with your field sales team!  Ask them how existing customers and prospects are responding to the new direction.  If customers are excited, pass that along.  If not, share that news – as well as how you’re going to work with them to turn it around.  Either way, give credit to your sales folks and help build that relationship.
• Efficiency Improvements (by % or number of hours) – Talk to your engineering and QA teams to understand the progress they’re most proud of – and then explain how that helps the entire business.  Increased automation of test cases, shortened time to bug resolutions, or creation of standard libraries may not sound exciting – but they translate into faster turnaround of revenue-driving products and happier customers.
• Ratio of Positive to Negative Comments – Whether this is a “good” or “bad” number, report on it so that you can show people the trend over time.  (Immediately after any launch, comments are often skewed negative; it’s exciting when six weeks later you can show a big turnaround.)  You can get this number from a combination of customer surveys, VOC from customer service reps, and your customer feedback channels.
• Spotlight on customer suggestions/issues that will NOT be implemented (and why) – You won’t build everything that everyone asks for – and that’s a good thing.  Highlight some ideas that are not core to your business and why they won’t increase revenues/customers/deals closed.   This helps keep everyone focused.
• Summary of resolved issues / outstanding issues - Again, the beauty of this is trending over time.  The first time you report on this, it may sound like an uphill battle – but in a few weeks you’ll be able to show significant progress.  When everyone is heads-down working, it’s hard to realize how much has been accomplished.  It’s your job as product manager to make that tangible and share credit with everyone.
• Net Promoter Score – best as a standalone survey.  I prefer to extend this to TWO questions, the default “Would you recommend this product to others?” as well as “WHY would you recommend/not recommend this product to others?”  You can make the latter optional, but I’ve found people with strong opinions usually answer it – and those are the people either attracting or repelling new customers for you.

You’ll notice that the “share internally” list includes some bad as well as good.  That’s an important part of building the momentum – giving everyone enough of a “big picture” vision that they understand the good and the bad.

If you only cheerlead, you’re setting folks up to be blindsided by bad news later.  You want them to know the bad, be able to refute the bad or explain how it’s getting better, and counter it with some good.

So, pick 2-3 of the above.  Write a SHORT update now and share it.  Then set up reminders on your calendar so you’ll remember to do it again.  And again.  And again.

At some point you can decrease the frequency to once a month.  But there’s really never a finish line, is there?  That’s the fun part.

This post is the final part in a series.  Missed the earlier posts? Go back and read part 1, part 2,  part 3.

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This post is Part 3 in a series.  Read Part 1, Part 2.

You’ve got questions, answers, metrics.  You’ve picked the changes you’re going to make and defined how you will evaluate their success.  Your product management organization is excited and you’ve got executive buy-in for moving full speed ahead.

But wait – no one likes change.  The other teams in your company are going to have objections.  Existing users are going to complain.  You’ll be tempted to refine your vision under the radar for awhile, but that’s a recipe for failure. 

Your job as a fast-failing product manager is to frontload the “no’s”.

Here’s how you start:

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