Establishing a Compelling Value Narrative For Your Product
How can you define a compelling value narrative when your product is not easy to quantify? Many products have an easily-defined value proposition, such as those that increase sales or generate their own revenue. We’ll call those traditional-value products. What we’ll be discussing in this article are products that don’t have such an easily-defined value proposition.
As product managers, we sometimes have a product that isn’t easy to place a traditional value on. For example, I once worked on a suite of products focused solely on reducing phone calls into a business. The product met this requirement by allowing customers to perform self-service transactions instead of calling customer service on the phone. Non-traditional value products like this self-service suite require PMs to take a fresh look at how to define value, both from the perspective of the business and of the customer.
Questions to ask when you determine value
- What problem are you solving?
In the case I described earlier, the customer’s phone calls were coming into a department that was a cost center for the business, and the company wanted to better manage its operating costs by reducing the number of calls that required a call center agent. While there was no opportunity to generate revenue by reducing the number of calls, a lower incoming call volume for agents meant that the call center needed a smaller staff and a smaller office space even as the business continued to grow.
2. What is the value to the customer and the value to the business?
Both value propositions are important. In product management, we often get caught in the trap of thinking we should only advocate for the customer value. While the customer should always be at the front of our minds, there needs to be a balance. Often the business value is an increase in the efficiency of the business because routine tasks are automated. Rarely is the customer directly concerned with the efficiency of an organization. Thus, it is reasonable to call out both types of value when they are different.
In my earlier product example, a customer who was making the call would get value from the new product because they spent less time waiting on hold. Another increase in value for the customer was the ability to answer their questions through the self-service option at any time of day, whether or not the call center was staffed.
Some other examples of non-traditional value that you might use:
- Time savings
- Eliminating single points of failure / improving business continuity
- Improvements in fraud detection
- Increase in productivity through a decrease in non-value-adding tasks
- Reduction in paper costs through digitization
- Increase in the customer’s value perception
- Decreased support or maintenance costs through modernizing software (technical debt, anyone?)
3. How will you measure the value?
If you can’t measure it, don’t bother to claim it. Even when you’re dealing with non-traditional value, you must be able to measure it. Time savings can be measured by monitoring improvements in transaction times. Improvements in business continuity can be measured by time elapsed since the last failure event. We can count the number of fraudulent cases detected and calculate the length of time that has elapsed from the fraudulent act to detection. An increase in productivity or throughput can be measured by counting the number of transactions processed per unit of time. A customer’s value perception can be measured through quick and simple online surveys. You must be able to measure the value, and sometimes this requires an immense amount of creativity on your part!
4. What are your key performance indicators (KPIs)?
Why do you need key performance indicators? The KPIs will be your way of demonstrating the value of your product. Since you want to deliver value either to your customers or to the company, your KPIs should be aligned with the goals of your business. KPIs let you communicate the value of your product in terms that your co-workers and leaders can easily understand. Use the SMART criteria to help make your KPIs a valuable tool for both your product and your business.
Specific. What, specifically, will your product achieve? For example:
- Reduce inbound phone calls by 20%
- Reduce mailing costs by $10,000
- Generate 30,000 completed transactions
Measurable. How, exactly, will you measure your progress?
- Reduce inbound phone calls by 20% (measured by monitoring inbound call report)
- Reduce mailing costs by $10,000 (measured by analyzing mailing cost expenditures)
- Generate 30,000 completed transactions (measured by system data)
Attainable. It’s great to be aggressive when defining your goals, but they do need to have a reasonable chance of being achieved. Measures that you or your team have no chance of attaining are bad for your morale and the morale of your team. Unrealistic goals also undermine the confidence that your leaders have in your ability to deliver results. When you formulate your measures, estimate the benefit your product will provide. What is reasonable? For example, you are not likely to eliminate all phone calls; however, is it reasonable to reduce them by 20 percent? The answer depends on your customer demographics, how entrenched their phone habits are, and how much functionality your product can replace. After thorough research and testing, often you are left making an informed guess.
Relevant. Your KPIs need to matter. If no one in your organization cares about reducing inbound phone calls, will anyone care when you meet that goal? By aligning your product KPIs to the goals of your business, you ensure that your measures are relevant. Examples of relevant KPIs would be an overall reduction in inbound phone calls, or a desire to reduce mailing costs.
Time-specific. In agile software development, we often talk about getting rid of timelines and letting the team focus. But with KPIs, your audience needs to know when you will achieve the results. What’s the general time frame? For example:
- Reduce inbound phone calls by 20% in the first month
- Reduce mailing costs by $10,000 in the first year
- Generate 30,000 completed transactions per month
Summary
Every product that solves a problem has the potential to deliver value to the right customer or the right business. When you’re working on a non-traditional-value product, you need to start with a clear idea of the problem you are solving and who you’re solving it for. Call out all the benefits that arise from solving the problem, then define the key performance indicators that will help you measure that value. Be SMART about your measures; doing so will ensure that your work is aligned with business needs and will enable you to deliver what you’ve promised within the committed time.
I hope this article and the additional resources below help you communicate the impact of your work and the value of your product.
Resources to learn more:
