1. 8 2 2010
Is Your Product Launch Doomed?
Measurement-Driven Product Management:
Measure only what matters most
Defining and Designing Technology for People
Don’t Let the Sun Go Down:
Techniques for sunsetting or retiring products and features
Conjoint Analysis 101:
Know how your market
values your product
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4 Conjoint Analysis 101:
Founder and CEO Know how your market values your product
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By Brett Jarvis
Editor-in-Chief
How do you know what the market wants? What market
Kristyn Benmoussa
segments exist? What those segments prefer? What will they
Managing Editor pay? In short, how do you know what trade-offs to make? By
Graham Joyce using conjoint analysis, understand the trade-offs you should
————————————————— make by understanding the trade-offs your market will make.
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12 Is Your Product Launch Doomed?
By Dave Daniels
The process of introducing a product to market is a serious
No part of this publication may be reproduced,
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Printed in the U.S.A. 24 Defining and Designing
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Technology for People
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About Pragmatic Marketing® knowledge of those people’s needs. We build upon our prior knowledge
Creator of the world’s most popular product and experience to design and develop better products. Each new
management and marketing seminars, Pragmatic
Marketing has trained more than 60,000 technology
generation of solutions improve based on market and customer feedback.
product management and marketing professionals
at 5,000 companies in 23 countries. As the thought- 28 Don’t Let the Sun Go Down:
leader in the industry, the company produces blogs,
webinars, podcasts, and publications read by more Techniques for sunsetting or retiring products and features
than 100,000 every year. By Steve Johnson
Pragmatic Marketing has been honored four times by
Inc. magazine as one of the fastest growing private
Sunsetting is the process of pulling a product or feature from the market when
companies in America (2000, 2007, 2008, 2009), and the cost of development and maintenance exceeds profit. It’s a business
in 2008 named a Comerica Bank Arizona Company
to Watch.
decision that should be easy to make. Understand the factors to consider
when discontinuing product.
Visit PragmaticMarketing.com to learn more.
The Pragmatic Marketer • Volume 8, Issue 2, 2010 • 3
4. Conjoint Analysis 01:
1
Know how your market values your product
By Brett Jarvis
4 • The Pragmatic Marketer • Volume 8, Issue 2, 2010
5. Product management is all about trade-offs. Whether the objective Conjoint analysis
is increased market share, profit margin or revenue, every product
manager makes trade-offs—quality vs. cost, time to market vs. is a set of market
breadth of features, richness of the offering vs. ease of use, etc. research techniques
So, how do you know what the market wants? What market
that measures the
segments exist? What those segments prefer? What will they pay? In value the market
short, how do you know what trade-offs to make? The answer is to places on each
get the market to make the trade-offs for you. Not the entire market,
of course, just a representative sample of the market. feature of your
product and predicts
By using conjoint analysis, you, as a product manager, can do just the value of any
that: understand the trade-offs you should make by understanding
the trade-offs your market will make. Then, apply your increased combination of
market insight to your revenue, profit or share objective. features. Conjoint
analysis is, at its
Is conjoint analysis right for me? essence, all about
Conjoint analysis has been successfully applied in many industries, features and
such as Air Travel, Smart Phones, Computers, Financial Services, trade-offs.
Health Care, Real Estate, and Electronics. If your job includes
configuring a defined set of features for a product or service and
the consumer’s purchase decision will be “rational,” conjoint analysis
can help. If, on the other hand, your consumer’s purchase decision
will be “impulse” or “image,” conjoint is not the right tool for you.
If you’re a technology product manager, conjoint analysis is right
up your alley.
Because conjoint analysis helps you understand your market’s
preferences, you can apply it to a variety of difficult aspects of
the job, including product development, competitive positioning,
pricing, product line analysis, segmentation and resource allocation.
“How should we price our new product to maximize adoption?”
“What features should we include in our next release to take market
share from our competition?” “If we expand our product line, will
overall revenue grow, or will we suffer too much cannibalization?”
“For which value-added features is the market willing to pay?”
For example, a technology company was feeling pressure from a
lower cost alternative and debated lowering its own prices. Then,
the results of a conjoint analysis showed the market valued their
products differently from the competitors. They chose not to lower
prices, but to slightly reconfigure their offering. As a result, the
business grew and realized substantial profits that they otherwise
would have never seen. Not every situation is as dramatic as that,
of course, but a conjoint analysis done right is impactful.
The Pragmatic Marketer • Volume 8, Issue 2, 2010 • 5
6. Conjoint Analysis 101: Know how your market values your product
What exactly is conjoint analysis?
Conjoint analysis is a set of market research techniques that measures
the value the market places on each feature of your product and
predicts the value of any combination of features. Conjoint analysis
is, at its essence, all about features and trade-offs. With conjoint
analysis, you:
1. Ask questions that force respondents to make trade-offs
among features
2. Determine the value they place on each feature based
on the trade-offs they make
3. Simulate how the market reacts to various feature trade-offs
you are considering
To demonstrate conjoint analysis in action, let’s consider cell phone
plans. These plans have various feature types, which in the language
of conjoint analysis are called attributes. Let’s focus on Brand, Price,
Minutes, Rollover Options, and Call Options. In reality, plans can be
more complicated and conjoint analysis can keep up with the
complexities, but let’s keep the example simple. Each of the attributes
listed above has different levels. The levels of the Brand attribute
might be AT&T, T-Mobile, Verizon, etc., but here we will refer to
possible Brands as Brand A, Brand B, etc.
Attributes Levels
Brand Brand A, Brand B, Brand C, Brand D
Price $60/month, $75/month, $100/month
Minutes 800; 1,000; 1,400; 2,000
Rollover Options No rollover of unused minutes
Unused minutes rollover for 1 month
Unused minutes rollover for 1 year
Call Options No free calling based on contacts
Free calling to top 5 contacts
Free calling to top 10 contacts
Attributes must be something you can categorize, but they don’t have
to be numeric. Note that the attributes include brand, price, and
various product features. Through conjoint analysis, you gain insights
into the value of your brand and the value of product features, and
determine price sensitivity.
6 • The Pragmatic Marketer • Volume 8, Issue 2, 2010
7. Conjoint Analysis 101: Know how your market values your product
Survey the market
Conjoint analysis survey questions could take a variety of forms, depending on your
study objective, but the most common type of question would be:
Which of the following cell phone plans do you prefer?
Brand A Brand B Brand C
1,400 minutes 1,000 minutes 800 minutes
Unuse d minutes No rollover of Unuse d minutes
rollover for 1 month unuse d minutes rollover for 1 ye ar
No fre e calling Fre e calling t o Fre e calling to
base d on contacts t op 5 contacts top 10 contacts
Costs $100/month Costs $75/month Costs $60/month
The survey would present multiple questions of this type, varying the levels and,
therefore, the trade-offs the respondent needs to make.
Derive values for each of the levels
From responses to these questions, conjoint analysis uncovers the underlying value for
each level, depending on how often a level was included in the product selected. The
relative value of the levels is what is relevant, in other words, how the value of one
level compares to the value of another.
For example, the values for the levels of the Call Options attribute and the Rollover
Options attribute for one respondent might be:
Call Options Value Rollover Options Value
Free calling to top 10 contacts 50 Unused minutes 100
rollover for 1 year
Free calling to top 5 contacts 20 Unused minutes 30
rollover for 1 month
No free calling based on contacts 0 No rollover of 0
unused minutes
You can see in this example, given the levels tested (which is an important
caveat), the Rollover Options attribute (with values ranging from 0 to 100) was
more important to the respondent than the Call Options attribute (with values
ranging from 0 to 50). These values can be calculated for individuals as well as
for the overall market, which means you can use conjoint analysis to segment
your market based on respondent characteristics, needs and preferences. Each
of the level values is called a part-worth, because they represent the worth
of any given part of the product.
The Pragmatic Marketer • Volume 8, Issue 2, 2010 • 7
8. Conjoint Analysis 101: Know how your market values your product
Predict preference for various products
Once you see the part-worths, you understand what trade-offs to make so a product
will be more desirable to the market. This predictive capability is where the real power
of conjoint analysis is evident. For example, given a set of part-worths, you might have
the following scenario:
Brand A 30 Brand C 0
$75/month 40 $60/month 70
1,000 minutes 55 1,000 minutes 55
Unused minutes rollover for 1 month 30 No rollover of unused minutes 0
Free calling to top 5 contacts 20 Free calling to top 5 contacts 20
Total 175 Total 145
The total value of the Brand A product is 30 more than the Brand C product. This
consumer would be more likely to select the Brand A product. But, if the Brand C call
option was changed from “Free calling to top 5 contacts” (part-worth of 20) to “Free
calling to top 10 contacts” (part-worth of 50), the overall value of each product would be
the same and the consumer would be equally likely to select either product. The overall
value of a product is referred to as its total utility.
Simulate competitive markets
Now that each attribute level has an associated part-worth, we can create any number of
competitive scenarios by mixing and matching the levels and increasing or decreasing the
number of products. The result of any conjoint analysis study is a simulation model that
allows you to simulate, for example, what share of the market will prefer your product
versus your competitors’ products. For example, you might see results like this:
Brand A Brand B Brand C
$60/month $75/month $75/month
1,000 minutes 1,400 minutes 1,000 minutes
Unused minutes Unused minutes rollover Unused minutes
rollover for 1 year for 1 month rollover for 1 year
Free calling to Free calling to top 10 contacts No free calling
top 5 contacts based on contacts
40% share 35% share 25% share
These shares, totaling 100%, are called “shares of preference,” because they refer to the
share of the market that prefers each product, if everything else were equal. They are
not market shares, because they don’t take into account a variety of other factors, such
as sales and marketing efforts, distribution channels, product lifecycle phase, etc.
Simulating shares of preference is powerful. And, there’s no limit to the simulations you
can run. So, for example, if your competitor changes its product, you can run simulations
to help determine your response. If you are contemplating adding a new product, you
can predict whether that will be beneficial and from which product in the existing
market your new product will grab the most share. These are simple but potent examples
of the many different ways that conjoint analysis may be used.
8 • The Pragmatic Marketer • Volume 8, Issue 2, 2010
9. Conjoint Analysis 101: Know how your market values your product
To get a complete picture of the What’s the best way
competitive landscape, include all to move forward?
competitors, and to ensure the predictive
capability of the approach over time, think There is software to help you design,
carefully at the start about the attributes conduct and analyze a conjoint analysis
and levels you will include in the study. study yourself. But there are also nuances
and important decisions to make in each
That said, because it allows endless step of the process. For example, there are
scenarios to be tested in a competitive different conjoint methodologies, each with
landscape, share of preference allows for its own approach to data collection. The
powerful “what if” analysis. It ultimately one that is appropriate for you depends on
provides the insights you need to make the objectives of your study.
the trade-offs you are faced with every
day as a product manager. The insights Unless you’re going to personally do a
gained regarding how you might change conjoint study at least a few times a year,
your position in the market, respond it’s likely that you will want to engage
to competitive threats, grow revenue, someone with experience in the field to
penetrate specific segments, etc. can help you navigate these nuances. Although
have a dramatic impact on the success surprising to many, the person you engage
of your product. for your study need not be an expert in
your field. You are that. They need only
be expert in applying conjoint analysis to
Analyze purchase likelihood real business issues.
Even if your product is so new it has
Just remember, the next time you’re
no competition and will create its own
making trade-offs as a product manager,
market, conjoint analysis provides
use conjoint analysis to get your market
powerful insights. In addition to market
to make the trade-offs for you.
simulations and shares of preference,
conjoint analysis also analyzes your
product’s purchase likelihood. Purchase
likelihood analysis uses the total utility
of a product to determine a percentage
indicating the relative likelihood that the
product will be purchased, given various
combinations of features and pricing.
Because purchase likelihood is single-
product focused and does not take into
account the competition, it is particularly
helpful when launching a product that
is completely new to the marketplace.
Purchase likelihood is often appropriate
for micro-level product design as well,
when major product decisions are already
made, and the focus is on getting the
details right.
Brett Jarvis is the former Global Director
of Product Management for Oracle’s
Advanced Customer Services business.
He currently provides marketing strategy
consulting for Sawtooth Technologies
Consulting Group. Learn more about Sawtooth
Technologies at www.sawtooth.com or follow
them on Twitter at twitter.com/sawtoothconsult.
Contact Brett at bjarvis@sawtooth.com
The Pragmatic Marketer • Volume 8, Issue 2, 2010 • 9
11. 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
Executive Briefings 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.
12. Is Your Product
Step 1: There are no goals
for the product launch
Launch goals are the cornerstone of a
Launch Doomed? successful product launch, yet many
companies fail to establish launch goals.
CEOs have an expectation of what success
looks like and believe the rest of the
By Dave Daniels
organization understands these expectations.
But often they aren’t translated into
meaningful goals, and are not understood
Products don’t sell themselves! by the people tasked with planning and
executing the launch.
The process of introducing a product to market
is a serious undertaking. Unfortunately for many For the sales team, goals are clearly
understood. They have a quota and get
companies it’s merely an afterthought; a set
rewarded for meeting that quota. The
of deliverables created from a checklist at the marketing team’s contribution to the
end of product development. When the level goal is less clear. Sales leads are one
measure of performance but connecting
of effort and resources applied to the creation this measurement to a sales goal is often
of the product dwarfs that of the launch, it’s no problematic. For example, getting agreement
wonder product launches fail to achieve the sales on a common definition of a lead.
velocity anticipated.
The target for Sales seems clear but will
the revenue come from existing customers
So how do you forecast if a product launch may or new buyers?
be in trouble? Here are 10 easily identifiable signs
This question may seem benign to the
your launch is about to become a disaster.
sales team, but it’s fundamental to the
marketing team as they devise strategies and
tactics to support the sales goal. When the
connection between the sales goal and what
the marketing team does becomes unclear,
the marketing team often retreats into areas
they can control and manage. For example,
NEW
focusing on deliverables like collateral, web
content and sales tools. In effect becoming
reactionary to the sales team’s requests rather
!! than taking a leadership role.
ACTION
Establish launch goals with the executive team
as early as possible and communicate them in
meaningful ways throughout the organization.
12 • The Pragmatic Marketer • Volume 8, Issue 2, 2010
13. Step 2: The launch Confident the problem is solved, Step 3: The launch plan
strategy is based on the PMO proceeds to oversee the contains unrealistic timeframes
next launch. Based on the checklist,
a set of deliverables the launch team knows what’s
and expectations
A launch checklist is not a launch expected and which deliverables Optimism is wonderful but it can
strategy. It usually gets created they are responsible for completing. blind teams to the realities of
after a failed launch. Expected This time the launch is delayed constraints and capabilities within
deliverables are missing, the sales by several months while each item an organization. It’s wise to evaluate
team isn’t trained, the systems for on the checklist is completed to the the organization within the context
booking and delivering the sale are satisfaction of the PMO. Sadly, the of the product being launched to
overlooked, and on and on… revenue results were no better than identify readiness gaps. This is more
the last launch. than just getting the product ready.
To prevent this problem from It means the entire organization is
happening again, someone An effective product launch checklist ready to market, sell, deliver and
is assigned to go around the is developed only after establishing support at a level that can achieve
organization and ask each launch goals and then choosing the launch goals.
functional area what they want for the best strategy to support them.
a successful launch. The problem The checklist will change from Widget Tech was planning to
is everyone defines “successful” launch to launch, adjusting to introduce a new product to market.
differently, particularly if the launch accommodate the strategy. Products The product was a departure from
goals are unclear. The result is a early in their lifecycle, which are the typical products Widget Tech
bloated wish list of activities with undergoing significant change, will developed and would be sold to a
questionable value, often growing see a more dynamic process than a new set of buyers. The company was
with each successive launch. mature product with an established excited about the new potential for
customer base undergoing only revenue growth. However, the launch
incremental updates. was a fiasco and it became apparent
The CEO of a software company,
frustrated with poor results from an the launch goals were unrealistic
important product launch, decides ACTION and the change was too much for the
it’s time for action. Her reputation sales channel to absorb within the
Once launch goals are established,
with the board of directors is on the time allocated.
formulate the launch strategy and
line because the promised results
then define the deliverables.
were not realized. To ensure the next The key is to assess the organization
launch won’t be an issue, she creates objectively and not color the
a Project Management Office (PMO) assessment with personal bias. This
to oversee future launches. readiness assessment should provide
management with a realistic picture
The head of the PMO is a highly of the risks and provide a plan to
regarded project manager address them. In some cases it will
who addresses the problem by become evident the launch goals
interviewing every department in are too aggressive and will need
the company. Fresh from the recent to be adjusted.
failure, everyone is more than
eager to participate. The result is a ACTION
“thorough” checklist and a master Evaluate launch goals against the
project plan template.
organization’s ability to execute.
Then develop an action plan to fill
the readiness gaps.
The Pragmatic Marketer • Volume 8, Issue 2, 2010 • 13
14. Is Your Product Launch Doomed?
Step 4: Sales enablement Step 5: Significant effort Step 6: No single person
training is based on is spent creating collateral is responsible for driving
product features and sales tools for people product launch results
Sales enablement training is one
who never read it Many business-to-business (B2B)
of the most critical components of Ninety percent of sales tools are organizations have just one window
a successful launch. Unfortunately never used by salespeople, yet of opportunity to launch each year.
most training is packed with marketing teams keep producing Accountability for driving results
information about the product them. They also include a staggering is fundamental to the success of
emphasizing the newest features, amount of gobbledygook. Does a launch, but too often central
the schedule of the marketing it really matter to your buyer that accountability is assumed to be in
programs, an overview of sales you’re “the leading provider” of place when it’s really distributed
tools, and a product demo. anything or that your software is among several individuals.
“robust”? Maybe; but it depends
This type of training lacks any on the buyer, not your ego. Development does their part and
insight or information to help throws it over the wall to Marketing.
individual salespeople achieve their Part of the problem occurs as a Marketing does their part and
sales quota. Successful salespeople result of blindly following a launch throws it over the wall to Sales.
solve problems for their buyers, checklist which serves as a proxy When the launch fails, those in
they don’t sell features. Inevitably for a launch strategy. Marketing one group will confidently state
some of the product features Communications becomes a factory they made a solid contribution and
your buyers find most valuable producing a collection of marketing blame the others.
are not necessarily the newest materials that’s a wishlist from
ones or the ones you think are the sales team. A successful launch takes more than
important or cool! merely coordinating the completion
But, solidly anchored in launch of tasks among departments. It takes
Salespeople need to know what goals, a clear strategy, and a deep an individual who can drive results
problem the product solves, understanding of buyers, Marketing throughout the organization. A
which buyers have the problem, Communications has the context to launch owner provides a single point
what criteria they use to make a build the collateral and sales tools of accountability, ensuring product
buying decision, and how to have that influence buyers throughout launch planning and execution has
a conversation with those buyers in the buying process. the high priority it deserves.
a way that results in a purchase.
Note: in this context, collateral Getting involved as early as possible,
ACTION is designed for prospects and a launch owner can collaborate
Become an expert on how customers, sales tools are created with the management team to
for the sales team. establish launch goals and the
and why your buyers buy.
strategy needed to achieve them.
With goals defined, a launch owner
ACTION can assemble and lead the most
Focus on gaining a deep appropriate cross-functional launch
understanding of your buyers, team. Regardless of their current job
then build collateral and sales title, the launch owner needs strong
tools to influence them through leadership skills and the confidence
that management will support them.
the buying process.
ACTION
Assign the responsibility for achieving
the launch goals to a launch owner,
and provide them with the flexibility
and resources to make it happen.
14 • The Pragmatic Marketer • Volume 8, Issue 2, 2010
15. Is Your Product Launch Doomed?
Step 7: The launch plan Step 8: The launch plan A new customer has an
is based on hunches, not mimics your competitor understanding that getting from
where they are today to fully
market evidence Just because one organization deploying your product will likely
Hunches may be great for gambling chooses a particular launch take some work on their part.
but not for a successful product tactic doesn’t mean it will work However, existing customers don’t
launch. Hunches are guesses based for another. What may seem share this expectation. They’ve
on “gut feeling” not market evidence. like an easy option is to mimic already made the investment and
your competitor. However, there feel a transition to a new version
are too many factors in play to of the product should be relatively
Your hunch says you can steal
guarantee the same tactic will have painless. They trust you will take
customers away from your primary
equivalent outcomes. Mimicking a care of them.
competitor. It’s exhilarating to do
competitor also assumes they are
this, but would you bet the success
smarter than you. Your product has been very
of your launch on this strategy? You
might, if you have market evidence successful and gained market
the competitor is in a weak position, Choosing to mimic a competitor share. To grow revenue, you’ve
or is failing to provide adequate is the result of inexperience or a discovered an opportunity in an
service to their customers. limited launch planning window. adjacent market segment. But in
It’s easier to copy something that order to enter this new segment,
appears to be successful than it is radical changes must be made to
Suppose your marketing team is
to develop a sound plan based on support critical capabilities expected
planning to exhibit at a tradeshow
your own capabilities. Mimicking by this new market. However, the
to announce your new product. If
a competitor can lead to lost cost of supporting two products is
your launch goal is to build sales
market opportunity, misdirection prohibitive so you merge the two sets
velocity, how would you know if this
of resources, and loss of focus. of capabilities into one product.
is the right tactic? You would if there
is market evidence enough buyers
of the kind you need will be in The context competitors use for a The launch of the updated product
attendance. given launch could be completely attracts customers in the new
different than the context of your segment but existing customers
product launch. Due to strong won’t migrate to the new version.
Market evidence helps mitigate the
brand equity, companies like Apple The impact on their business is
risk that a hunch will be wrong. It
can choose tactics that will work just too great.
helps make sound business decisions
brilliantly for them, but may spell
and develop a launch strategy based
disaster for your company. When the pain of migrating to a
on market facts rather than intuition.
new version of a product (from the
ACTION same vendor) is perceived to be
With an initiative as important as
An intimate knowledge of buyers equal or greater than the migration
a product launch there is no room
to a competitor’s product, customers
for guessing. and the buying process provides the will often evaluate competitive
best guidance for the most effective offerings. At best they may delay. At
ACTION launch tactics. worst they switch to the competitor.
Make launch planning decisions This could spell disaster for your
based on market evidence product launch.
not guesses.
Step 9: Existing customers
are not adequately considered ACTION
in the launch plan Ensure the migration to a new
It’s staggering how many version of your product is smooth
organizations fail to recognize the and straightforward for
impact a new version of a product current customers.
can have on existing customers.
They’re so focused on acquiring
new business, they forget about the
current customer base—the ones
they’ve worked so hard to acquire
and nurture.
??
? ?
The Pragmatic Marketer • Volume 8, Issue 2, 2010 • 15
16. Is Your Product Launch Doomed?
Are you ready to launch?
Step 10: The launch team isn’t a team I
Have you ever been responsible for a product Don’t
Yes No Know
launch and felt like you were the only one doing
the work? Were you happy with the results
of your last product launch?
Product launch is a team sport involving a range of
expertise. No single individual can possibly know Is your team clear about their
all the details, especially in large organizations. This launch roles and responsibilities?
necessitates the creation of a cross-functional launch
team, where individuals can contribute their unique Are launch goals established and
perspectives and experience. communicated to your team? 10
The value of successful cross-functional teams is Do you have a designated launch
well documented, increasing exponentially with
the size of an organization. However, so does the
owner? 9
complexity of driving results.
Is the approach to product launch
Breakdown occurs when the launch team isn’t really
a team effort?
8
a team at all. It’s a collection of individuals from
various parts of the organization impacted by the Does your launch team follow
launch, but whose management doesn’t encourage
or reward their participation in the team. Sound
a proven launch process?
7
familiar? Why would a launch team member put in Do you consider different launch
the hard work to make the launch successful if it’s strategies for each product launch?
not deemed important by their manager? 6
Do you collaborate launch planning
The launch team consists of three distinct among functional areas?
roles. The launch owner is responsible for
organizing and driving the launch team.
5
Is your team learning from each
The launch team members are launch experience?
ambassadors from their respective
functional areas. An executive
Do you identify and address
4
sponsor helps break down barriers,
serve as a mentor and acts as readiness gaps before launch?
political muscle.
3
ACTION Each “yes” gets you closer to a successful
product launch. Each “no” or “I don’t
Make participation in a cross-
functional launch team a priority
know” gets you further away from 2
sales velocity.
and reward the contribution.
If your company is like many others, you
will have the opportunity to launch only
1
once this year, make it the priority
it deserves! 0
Dave Daniels is an instructor for Pragmatic Marketing with more than 25 years of
experience. He specializes in product marketing and product launch, with an emphasis
on effective go-to-market strategies and execution. His extensive background includes
development, sales, product management and product marketing, with a global
perspective of the entire product launch process. He speaks at many industry events
about launch best-practices and writes the Launch Clinic blog. Contact Dave at
ddaniels@pragmaticmarketing.com
16 • The Pragmatic Marketer • Volume 8, Issue 2, 2010
17. 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
PragmaticMarketing.com/launch
id
By Dav
Download a complete agenda and register at PragmaticMarketing.com/seminars
Call (800) 816-7861 to conduct this seminar at your office
18. Measurement-Driven
Product Management
Measure only what matters most
By Mike Smart
“ problem with most measurements istheir
The
that too many companies have trained
of the role. The stakes are high! A product
management function that demonstrates a direct
contribution to the company’s income statement
employees to measure the wrong things.
” and uses objective measurements to gauge their
effectiveness and value to the company will have
more influence shaping the product strategy
Craig Stull, Phil Myers and David Meerman Scott and the roadmap.
in Tuned In
The fact there is increased emphasis on
measurements, metrics and alignment with
In a rapidly changing business climate the corporate goals during this business cycle is not
allocation of resources and budgets are closely a surprise. What is intriguing is the number of
tied to a department’s ability to get short term product management leaders acknowledging
results. If you are a vice president, director or this focus will continue after growth returns to
team leader for a product management function, the industry. This is in part because CEO’s need
one of the biggest challenges you face today is how better risk mitigation and are demanding more
to demonstrate the team is making a significant predictability in all aspects of the business.
contribution to top line or bottom line targets.
The pressure on budgets and resources from At a recent ProductCamp industry event, a session
executives has forced a tighter link between on “Metrics-driven product management” was filled
current investments and near term results. with product management team leaders, directors
and VP’s. All of the attendees expressed serious
If you can’t measure your team’s effectiveness, concern about the need to establish better linkages
or if you are focused on the wrong metrics, your between the activities of product management with
headcount and budget allocation could be at risk. broader company results such as revenue, product
margin and profits. Very few challenged the sole
use of these conventional corporate measurements
In the 2008 best-selling book, Tuned-In: Uncover
as the gauge for product management effectiveness.
the Oppor tunities T hat Lead to Business
Breakthroughs by Craig Stull, Phil Myers and David
Meerman Scott; the authors point out that many Success in building high performance teams begins
companies force employees to measure and track with using measurements that give visibility about
the wrong thing which leads to out of synch or the overall effectiveness and efficiency of the team.
“tuned-out” behaviors. The key is finding the right measurements.
In this economy, the best way a product What are the best measurements to monitor
management team can establish its value to the the effectiveness of product management teams?
corporation is by using a reliable set of outcome- What are the best practices measuring the health of
oriented measurements that demonstrate both products? How to demonstrate value and alignment
performance of the product(s) and effectiveness with larger corporate goals?
18 • The Pragmatic Marketer • Volume 8, Issue 2, 2010
19. “ youmanage it. it you
If can’t measure degree to which a company adopts Rearview or financial measurements
”
a measurement driven approach to are part of the common language for
can’t drive the business depends on the companies. Product Management
company culture. will be ultimately judged by the
The Balanced Scorecard by financial success of the product,
Rearview measurements but there are consequences with
Robert Kaplan and David Norton
putting too much emphasis on
Pragmatic Marketing’s 2009-2010 these measurements.
Measurements and metrics Annual Product Management
and Marketing Survey shows • We learn too late what is working
The use of measurements performance in classical financial
and metrics seems like a well and what is not
measurements such as product
straightforward distinction revenue, product margin and • Focus on rearview measurements
but deserves some discussion. profitability are most commonly
These terms are often used can drive product managers to
used to determine the success the wrong behavior
interchangeably, yet have very of product management. These
different applications. A more measurements are “rearview” • Product managers are held
formal definition of the terms because they are lagging indicators;
“measurement” and “metric” accountable for outcomes they
meaning they cannot drive the have little or no control in
gives us a common language performance of people, processes
to move forward. achieving
or products. Product management
teams that focus solely on these A solid understanding of the key
Metric: A measuring system that measurements usually struggle financial indicators for products
quantifies a trend, dynamic, or to establish clear value to the is important but it’s not enough
characteristic. Metrics encourage company’s goals. to ensure a successful product or
objectivity. They make it possible an effective team.
to compare; they facilitate Why do so many companies rely
understanding. Think benchmarks on rearview measurements to
statistics and predictive indicators. assess the effectiveness of product
management? Because those
Measurement: A way of monitoring measurements are easy to assign
and tracking the progress of strategic and consistent with the high level
objectives. Measurements can be focus of the executive.
leading indicators of performance
or lagging indicators. Common These rearview measurements
measurements such as product are the natural tools of top-
revenue, profits, product margin down goal setting. It is
and product adoption rate are often common for CEO’s to push
referred to as key performance these MBO’s (management
indicators or KPI’s. by objective) down to product
management. There is value
But, what type of measurements in using rearview measurements;
to use and how can they be used primarily to identify historical profit
to accurately express performance leaks such as:
and ultimately give management
the ability to predict results? • Product revenue growth
• Profitability
There are three types of
measurement that are necessary • Cost of sales
to create reliable performance
indicators; rearview, operational • Product margin
and activity-based. All key to
developing an effective product
management organization. But the
The Pragmatic Marketer • Volume 8, Issue 2, 2010 • 19
20. Measurement-Driven Product Management: Measure only what matters most
Operational measurements A crucial step is to translate the rearview or
financial measurements into the appropriate
Operational measurements are the “measurements operational measurements. The leader of
behind the measurements.” These are leading the product management team must be
indicators for most organizations, because they can fluent in both the financial and operational
drive and create outstanding financial results. Ideally measurement paradigms.
VP’s and directors of product management interpret
the company strategy and align with key financial
measurements by emphasizing relevant operational Operational Driver Financial Outcome
measurements. These can be the key ingredients
of a high performing product management team. Speed-to-market Increase product revenue
Clear and relevant operational measurements Product adoption Increase product margin
enable better focus on the team and increase the
probability of product and market breakthroughs. Product launch Lower cost of sales
If we understand the relationship between specific
operational measurement and the financial
measurement, they bring more predictability to the
company’s financial results. Above, we see that linking these measurements
gives the product management team more context
and better insight into their contribution to the
Establishing and using operational measurements to company goal. It also gives product management
evaluate the effectiveness of product management leaders concrete and objective measurement to
and the health of the product is critical because track interim results and key milestones.
it bridges the gap between company strategy and
execution.
As an example, speed-to-market
is a metric that can be tracked in several
A company’s operational measurements are how ways. How fast did we reach the market
high-level goals become grounded. They become with new product releases compared to
“the vital few” for the product management team. last year? How many times did we beat the
competition to market with comparable
Relevant operational measurements include: product releases? Where do we rank within
our industry segment? Over time we learn
• Market sensing—knowledge of market problems what effect improving this measurement has on
increasing revenue. Every team member should
among customers, evaluators and potentials
understand these relationships and how their
• Speed-to-market—putting the right product projects and key activities affect the outcome
in the right market segment faster than of the operational drivers.
a competitor
• Product adoption—driving the uptake rate
in a market at a lower cost and shorter time
than a competitor
• Product launch—improving the response rate
from target buyers with fewer impressions
• Customer satisfaction—increasing the
“willing to recommend” percentage of
existing customers
20 • The Pragmatic Marketer • Volume 8, Issue 2, 2010
21. Measurement-Driven Product Management: Measure only what matters most
Financial outcomes
Activities
Performance
Activity-based measurements Properly conducted onsite interviews across the
total addressable market enable discovery of un-met
The next step in developing predictable needs or market problems. Validation of these
measurements is linking activities, performance market problems through surveys demonstrates
drivers and final outcomes. what percentage of the market has these problems
and the value of solving them. The data from
Activity-based measurements are the execution side these activities gives product managers the facts
of the measurements fulcrum. While operational to define the next release and a high degree of
measurements are leading indicators to financial confidence that the proposed solution is the right
results, activity-based measurements are the tactical product for the right target segment. This product
tasks that lead to the desired operational outcome. development approach is fast and more efficient.
Using these allows team leaders to identify the
crucial activities that drive the desired outcomes. Establishing strong links between activity-based
Activity-based measurements reduce ambiguity and measurements and operational measurements may
establish accountability for all team members. not be easy, but is critical in establishing the value
of product management and to build credibility
Activity-based measurements that a product within the organization. The key is to develop
manager should be held accountable for are: reasonable correlation and monitor the accuracy
of these relationships over time.
• Onsite market interviews
• Assessing impact to customers for existing
or future products
• Positioning to buyer personas
The table below illustrates how to close the gap
between specific activities, operational drivers and
financial results.
Activity-Based Targets Operational Driver Financial Outcome
On-site interviews Speed-to-market Increase product revenue
Assessing impact to customer Product Adoption Increase product margin
Positioning to buyer personas Product Launch Lower cost of sales
The Pragmatic Marketer • Volume 8, Issue 2, 2010 • 21
22. Measurement-Driven Product Management: Measure only what matters most
Here is an example of how a team Best Practice Measurements Look for connections between
could establish strong links between operational measurements and
activity-based measurements and Share of hearts, minds activity-based measurements that
operational outcomes. and markets may not seem obvious at first.
Question your current assumptions
Most product management leaders
The annual operational goal for about the business and what really
would benefit from the ability to
the product management team drives product performance.
rigorously assess existing projects
is to improve speed-to-market and new opportunities, identifying
by beating competitor A to the potential risks. This approach would Require transparency
market. What activity-based guide investment and allow VP’s and
measurements must the team Initiating a performance measurement
directors to evaluate outcomes and
leader assign to each product program is a commitment to
reinvest to maximize contribution.
manager to ensure this goal is changing the way a team operates.
The enhanced visibility would
achieved by the end of the year? The biggest change is a commitment
enable product management leaders
to complete transparency.
to defend the allocation of resources
Consider these: with measurements that are tightly
linked to the company’s income In some companies, Product
statement. Management has accountability for
• Conduct Strength, Weakness, the operational goals—each of these
Opportunity and Threat (SWOT) are translated into product specific
analysis against Competitor A As a leader of a product
objectives and measurements.
management team, what should
The product management leaders
• Complete customer impact you measure?
must defend key measurements
assessment of Competitor A’s and performance at the
products vs. ours Initially two things: product product line level.
performance and product
• On-site customer visits to management effectiveness.
validate Competitor A’s Must impact financial results
perceived product gaps These are different but equally In a down economy, CEO’s are
critical dimensions of the product pressured to emphasize near term
• Complete Market Requirements
management process. Team leaders results and near term execution
Document (MRD) with that impact the income statement.
must monitor people, process and
Competitor A as key theme market success for the product Product management leaders
lifecycle. To be successful, all three must be aware of potential
• Deliver 100% of something
must be continually assessed. shifting priorities and if your key
ahead of Competitor A measurements are trending badly,
early intervention is critical.
One caution to the team leader— Must be relevant
make sure the sum of these activities The most important outcome from The team leader using this
is greater than or equal to one or Product Management are financial measurement system must have
more of the team goals. This linking results, but product management a dashboard view of products,
can provide the ability to benchmark leaders must translate the financial projects, processes and people. This
and propose metrics that have results into performance drivers is the only way to focus on what
predictive value. that lead to the income statement matters most and to continuously
outcome. Until a clear linkage refine key measurements. It also
The key to success with this between actions and outcomes allows the team leader take action
approach is to continuously review is established the measurements based on insights gained or
data and trends to ensure the are theoretical. emerging trends.
measurement remains relevant.
When it comes to setting targets for However, the proper use of
individual product managers there measurements must go beyond
are best practices to follow. driving short-term financial results.
The real potential is in changing the
way Product Management thinks
about its role and value to the
organization.
22 • The Pragmatic Marketer • Volume 8, Issue 2, 2010
23. Stay current with
industry best practices
Ultimate goal
“ metric, whether it is used…, stock, will
Every
future strategies, or simply to take
to evaluate
affect actions and decisions.
”
From “Metrics: You are what you measure”
European Management Journal
The long term benefit of Product Management
becoming measurement-driven is higher team
performance, improved predictability and increased
credibility. The ultimate benefit is developing the
ability to reliably create outstanding products and
market breakthroughs.
Can Product Management operate with this high level Visit the online community at
of maturity, using a reliable measurements and metrics
system with more predictable results in a company? PragmaticMarketing.com
This “holy grail” of product management performance • Review 10 years of Annual Product
is doable, but often many cultural and process gaps Management and Marketing Survey results
must be addressed first. An organization fosters a
measurement-driven culture by reinforcing other • Attend a webinar by one of today’s industry
aspects of the process, such as tightly coupling thought-leaders
rewards, recognition, compensation and promotion
to attainment of operational results. Does yours? • Read hundreds of articles on product
management, marketing and leadership
strategies
Mike Smart is an independent • Read blogs from Pragmatic Marketing
consultant working with private equity thought-leaders and other industry experts
firms to increase the value of their
portfolio companies by implementing • Stay connected with your industry peers
product management and product by joining a local Product Management
marketing best practices. He has a Association
passion for identifying key metrics
that drive company performance. • Read profiles of companies who have
achieved success using the Pragmatic
Mike brings more than 25 years of industry Marketing Framework™
experience in a variety of leadership roles. These
include Senior Vice President of Operations, • Participate in online networking with
VP of Product Management Development, VP LinkedIn and Facebook groups
of Product Management and VP of Sales.
• View a list of recommended books and
Most recently, Mike was an instructor and software tools for product managers
consultant with Pragmatic Marketing where and marketers
he worked with medium and large enterprise
software companies to teach and implement
the Pragmatic Marketing framework.
Contact Mike at msmart@egrss.com