CustomerFocused Product Management Geoff Huckleberry September 3 2003

Customer-Focused Product Management Geoff Huckleberry September 3, 2003 DRAFT V 0. 3

Discussion Topics l My Profile Value of Customer Research l Key Success Factors l – How to Get Most Value Out of Research You Do? DRAFT V 0. 3

My Profile l l 11 Years of Product Management Experience with Software Products and Services 15+ Years of High Tech Experience Blend of Fortune 500 Experience (Intuit, CCH Incorporated, American Express) and Startup Experience (Chem. Connect, Instill) l Success Launching New Products and Driving Revenue Growth (566% growth in 18 mos. at Intuit, 200% growth in 12 mos. at Chem. Connect) DRAFT V 0. 3 l

Product Manager Profile l l l Lots of Accountability but No Authority Must Convince People with Lots of Authority but Limited Accountability to Support Your Decisions Accountability Includes: – Product Success (# Customers, Customer Satisfaction, Revenue, P&L) – Making Important Tradeoff Decisions with Incomplete Information – Translating Customer Needs into Executable Requirements DRAFT V 0. 3

Customer Knowledge is Product Manager’s Key Success Factor The Better Your Customer Knowledge, the Better You Can: l l l DRAFT V 0. 3 Focus Development on Product Attributes that Will Most Significantly Impact Product Success Convince Others of Your Product Decisions Predict Product Performance Identify New Product Opportunities Stay Ahead of Competition

You Have Deep Customer Knowledge When… l You Can Consistently Predict What Target Customers Will Say Before They Do How to Develop Customer Knowledge: l Understand User Profile – – – l Function (What Trying to Accomplish) Education Level Affinity for Technology Prioritization of Activities, Benefits Pain Points (General and Related to Your Product) Environment Understand How Product or Substitute is Being Used Today – What Works/ Doesn’t Work and Why DRAFT V 0. 3

Key Success Factor #1: Begin with the End in Mind l Create Customer Research Plan Including: – – – l Objective (Key Findings) Decisions to Be Made Based on Research Target Profile and Sample Size Methodology Key Questions to be Asked Benefits Include: – Clarity of Goals, Target, Decisions Leads to Superior Results – Buy-in from Peers, Execs l Cost of Not Doing It: – Trite or Useless Feedback DRAFT V 0. 3

Key Success Factor #2 A: Plan for Research Even Under Tight Deadlines l Benefits: – Greatly Increases Chance of Success (small percent of new products succeed) – Improved Customer Response to Launch – Focus Development on Key Value Drivers l Cost of Not Doing It – Increased Likelihood of Product Failure – 90% of Effort Follows Definition Phase and is Potentially Wasted – Opportunity Cost of Mis-applying Resources – Support and Training Costs DRAFT V 0. 3

Product Development Timeline – Errors in Definition are Multiplied Concept Testing g Rollout on & Support -Usability Testing -Beta Testing DRAFT V 0. 3 Range of Possible Error Definition Developm Needs ent Assessment True Custome Testing Sales/Marketin Implementati r Need Product Launch/Re-launch is Expensive (Time/Money/Opportunity Cost)

Key Success Factor #2 B: Avoid Relying on 2 nd Hand Feedback in Place of Research l Benefits: – Your Decisions Are Not Exclusively Based on Other People’s Interpretations – You Can Directly Translate Customer Need to Engineering Requirement – You Are Capable of Detailed Tradeoff Analysis Because You Experienced Customer Need and Prioritization of Needs – Role Bias – Client Services, Sales, Support will bias data based on their perspective/filter l Cost of Not Doing This: – Suspect Information. 2 nd Party Probably Was Not Aware or Diligent about seeking right targets and asking the questions in proper context. – Loss of Control l Case Study: Any DRAFT V 0. 3

When Using 2 nd Hand Research Always Ask… l l What is profile of interviewee. Are they part of the target? How many people actually requested this? Recent mentions often get overstated so best to be clear. This is especially true of Support, Client Services, and Sales. What specifically did they say? How did you specifically state the question? DRAFT V 0. 3

Key Success Factor #3 A: Tightly Define Your Target l Benefits: – Useful Feedback That’s Predictive of Market Response to Product – Opportunity to Correlate Feedback l Cost of Not Doing This: – Irrelevant Feedback – Product Failure (impossible to optimize for unknown customer) l Case Study: CCH DRAFT V 0. 3

Key Success Factor #3 B: Include Target User in Research l Benefits: – Greatly Increases Likelihood of Product Being Used – Increases Customer Satisfaction l Cost of Not Doing This: – Focus on Irrelevant Issues (purchaser/influencer often doesn’t know user issues) – Poor Penetration of User Community – Negative Impact on Renewal Rate and Pricing Power l Case Study: Instill DRAFT V 0. 3

Key Success Factor #4: Focus on Delivering Value Not Technology l Benefits: – Higher Likelihood of Product Success Since That’s Often All Customer Cares About – More Intuitive Solution l Costs: – Poor Usage and Customer Satisfaction l Case Study: Instill DRAFT V 0. 3

Key Success Factor #5: Focus on “Lowest Cost Denominator” User, Then Power User l Benefits: – Broader Market Penetration and Appeal – Superior Financial Performance – Usually Satisfies 80% of Needs With 20% of Effort l Cost of Not Doing This: – Developing product that misses broader market – Poor financial performance l Case Study: CCH DRAFT V 0. 3

Key Success Factor #6: Don’t Get Defensive -Seek Actionable Learnings! l Benefits: – Opportunity for Significant Product and Financial Improvement – Negative Vocal Leaders Can Become Best Advocates l Cost of Not Doing This: – Lost Opportunity to Improve Product – Vocal Leader Getting More Negative Resulting in Lost Customers and Negative Press l Case Study: Instill DRAFT V 0. 3

Key Success Factor #7: Be Customer Focused Not Customer Compelled l Benefits: – Understand Customer Needs and Priorities so can Optimize Solution for Maximum Customer and Company Benefit. – Financial and Customer Satisfaction Improves. l Cost of Not Doing This: – Sacrificing your company’s needs for customer’s desires. – Inferior solution and financial performance. Replacing your team’s expertise in applying technology to solve problems with that of someone less skilled (customer). l Case Study: Southwest Air, Intuit DRAFT V 0. 3

Successful Products Satisfy the Value Proposition Triangle Customer Objective s Company Objectives DRAFT V 0. 3 Delivery Team Objectives

Key Success Factor #8: Include Your Competitor’s Customers l Benefit: – Understand Your Perceived Weaknesses Relative to Competition and How to Overcome – Understand Your Competitor’s Weaknesses and How to Position or Build Product to Exploit Them l Cost of Not Doing This: – Miss Valueable Perspective – Susceptibility to Competitor Product l Case Study: CCH DRAFT V 0. 3

Additional Research Techniques l l If Possible, Avoid Bringing Sales, Client Services or Anyone Who Might Want to Cover Weaknesses (you want the dirt!) Disarm Participant by flagging the discussion as being research, to get them to open up Define Questions in Advance that Meet Your Objectives Ask them to prioritize, rate and quantify where possible and explain answers DRAFT V 0. 3

Unique Application #1: Using Customer Research to Improve Product Sales l Case Study: Intuit DRAFT V 0. 3