What exactly is a product strategy?
A strategy is defined as
A plan of action designed to achieve a long-term or overall aim.
And so a product strategy is the long-term goal or overall aim for a particular product. But it is the extent to which the product strategy also contains a plan of action that can cause confusion. How does the strategy relate to the roadmap? Who should be involved in defining the plan? Does the product strategy also include messaging and positioning?
The truth is the product strategy can take many forms; all equally valid. The key is to make sure everyone in the company understands the product strategy and knows who is responsible and accountable for producing and managing the other related components.
But how do you create an initial product strategy and what are the main components that should always be included? This article will guide you through the main components and provide a number of helpful tips for creating a strategy that your teams will get behind.
Define the target market
A good place to start is to define the target market for the product. What type of customers is the product designed for? Do they have specific characteristics such as firms of a certain size, sector or location? Or is there a specific context that will drive usage. Firms that have recently received investment. Firms that have had a regulatory issue. Firms that are growing rapidly and need to source talent quickly.
The product strategy should contain an explicit description of the target market and detail the optimum target customers within that market. Will your product serve a very general purpose and have a large potential set of buyers or will it be niche and excel within a narrow scope but with very specific buyers. Be as specific as you can when defining your target market and avoid “hedging” by tacking on supplemental markets that you have not researched. The tighter your definition of your perfect customer — the less decisions your team will need to make when executing your strategy.
If you have already sold your product (or similar products), then study your existing customers carefully. What properties do they share? Why did they buy and start using your product? How many other firms exist that are like them and where are they located?
Define the value of your product
What is the value of your product. Define the problem that it is solving or the opportunity it is designed to create. Simply saving your customers time is not enough, you need to express this value in terms of quantifiable cost savings and/or revenue generation. Talk to firms in your target market and ensure you are confident that the product can achieve the value you claim. Are there requisites that must be in place for your product to succeed? Is the market ready to buy this type of product? Is the value enough to motivate your future customers to spend the time, energy and effort to procure a new product from you?
Consider direct and indirect value. Most companies want to make money first and foremost, but products can deliver other types of value. Indirect value creation can be obtained by enhancing your firm’s reputation, discovering new information about your customers or establishing a presence in a new market. In these cases, success may not be measured in dollars, but in engagement, awards for innovation or customer satisfaction. All perfectly valid — as long as your stakeholders are on the same page from the beginning.
Define what are you going to build
Describe at a high level the product you will build and what it will look like when it is launched. Some people use the minimum viable product approach, others the simple, loveable and complete model. Either way, outline what the product will do, how it will deliver value and how far you will go before launching the product. Include diagrams and prototypes to help communicate the vision. Test your prototype designs with prospective users to ensure your new product makes sense to them and gather valuable feedback. You may even snag an early adopter of two who may also wish to partner with you to develop version one.
Define how the product will be built
Again at a high level, outline how the product will be built. Will you use existing available product components? Will you buy applications, platforms or components from a third party? Will the product be built in-house or by a development agency?
Define how the product will be sold
Include details of how the product will be sold. Will it be via your direct sales team or through channel partners. How much will the product cost and what will be the purchase options? How does this product relate to other products within your portfolio? How will you promote and market the product. Include examples of high level positioning and messaging statements.
Define your budget, measures of success and timeframe
Given all of the above, now is the time to agree and approve a budget for all activities up until launch. Define your measures of success in terms of engagement, revenue generation and customer satisfaction. And finally, set a clear timeline leading up to your launch, first customer and beyond if necessary. There are still going to be a lot of unknowns at this stage and so build in some contingency if needed.
Cross-check, review, agree and approve your product strategy
The product strategy should not be written in isolation. A new product may be one person’s initial vision, but it takes a team to build, test, launch and sell a product. Make sure all of your important stakeholders are on board. From technology to sales to marketing to service. Can the strategy be refined further? Is more research needed? Can it be built? Does it have the right to win over the competition? Will creating this new product enhance or detract from existing product offerings? Your product strategy is the most important artefact relating to any product — so take the time to get it right.
