7 Reasons why Product Management continues to play a greater role in SaaS
Great products are the lifeblood of every tech company, whether young or mature. Within the current SaaS landscape — especially regarding self-service and transactional sales models where switching costs tend to be lower and differentiation is more difficult — the role of Product Managers cannot be emphasized enough. They are the key figures to ensure that the company is creating something customers want and execute the product roadmap to stay ahead of the curve, focusing on long-term success. I’m personally excited to see the role of Product Managers continuously evolve. Here are seven reasons why I think this role is more important than ever:
1. You have to focus on Customers, Customers, Customers
You can’t just ask customers what they want and then try to give that to them. By the time you get it built, they’ll want something new. (Steve Jobs)
Building relationships with your customers early on is key to success. As Steve Jobs summarizes, it is essential to follow your customers and even think ahead of their needs. In that perspective, it is important to have in mind that markets as well as customer needs change over time, in today’s environment probably faster than ever before. Maybe your customers would like to use voice as their primary input in the future? Part of a Product Manager’s job is to find this out.
It is well known that the first experience with your product matters a lot. A great onboarding to hook (trial) customer increases the chance to create this wow moment. What might be “Always be closing” in Sales, might be “Never Stop Onboarding” in Product Management.
On an ongoing basis, Google’s HEART Framework is a great help for Product Managers and Designers to measure different user-centric metrics and focus on customers. There are probably not many other employees in the company that understand your customers as well as the Product Managers.
One of the current trends I’m observing are shared product roadmaps where companies are publishing the features they’re working on, ideas they have and the history of implemented features. In addition, customers can submit ideas and engage on the product roadmap in form of likes or comments. Here is a good example from Front (a company we ’are an investor in). And of course, why shouldn’t you involve your customers? This shows how much you care about them and widens the idea funnel.
2. 10x better Product as a USP
The probability that you refer a product that blew you away from day one is relatively high. This behavior can start a viral loop. At Point Nine, we’re getting super excited when we see viral product expansion within and across companies. It is this kind of viral loop that can help companies grow very quickly without any or little marketing spend (land and expand strategy). In the absence of a great user experience, I am skeptical this is possible.
On the other side, in a market where you have fierce competition, e.g in HR for Applicant Tracking Systems, it can be very difficult to stand out if you only have a 2x or 3x better product. Here the role of the Product Manager is to clearly differentiate your product from the rest, to come up with a new approach and to think differently. If it is only about who is making the features of the incumbents nicer, it is hard to create a $100M business. I am not saying it is impossible but there is a lot you have to make right.
One example in another market is Asana. There are a ton of task management solutions out there but Asana was able to create a 10x better product for small teams than anybody else in the market. According to Asana’s Product Manager Sam Goertler this was mainly because they crafted a carefully chosen feature set and focused to solve a problem instead of simply trying to create a solution, especially during their redesign.
3. High UX expectations coming from B2C
As consumers, we are used to a seamless user experience from all the great apps we are using and have increasingly high standards for new apps and products. These high expectations are shifting more and more into the B2B software market. We — especially the digital natives among us — want to use software and products in our office in the same way as we’re using Snapchat, Netflix or Amazon.
This is even more important for low-touch SaaS companies where users do not want to put in a huge amount of time to learn about how to use your product or new workflows. In today’s environment, if you don’t build your product using the latest models, it will be difficult to drive the formation of sticky user habits. If users have to change their digital habits, they are unlikely to convert to long-time customers. It is fine to have some customer churn as long as you have a big enough group of customers who loves your product and who is regularly engaged with it. Offer simple logins via Google, a great onboarding experience and easy integration into other tools for seamless workflows.
An interesting chart to take a look at the product usage is the Fogg Behavior Model that shows the three elements — 1) Value Proposition, 2) Interface and 3) Engagement — for a behavior to occur. Simply put, you can have high engagement with a confusing interface as long as you have a strong value proposition, e.g. solving a really complex problem. However, you cannot expect high user engagement with a confusing interface for a relatively weak value proposition. This is exactly why Product Managers are so indispensable.
To better understand user engagement, we are also reading product feedback on Product Hunt, the AppStore, Reddit or even Google Chrome Store for an extension. This often tells us a lot about your traction even before looking at the metrics. Sometimes, I am really impressed by the love some companies receive :-)
This little app […] made me change my whole web workspace to Chrome! Not an insignificant feat. I think the word badass comes to mind.
4. Branding integrated in the Product
Customers value authentic brands because they ensure trust, create connotation and possibly establish strong relationships that lead to stronger customer lock-in. You do not have to copy Apple’s communication strategy for example, people value integrity of brands and in return this let’s you stand out.
Branding in general is a powerful tool for communication and storytelling. It is also possible to make a B2B brand emotional. Building such a brand in B2B is incredibly difficult, yet not impossible. Some great B2B SaaS brands that have evolved in recent times including Salesforce, Slack, Mailchimp or Intercom for example. The role of the Product Manager is also to build and integrate that brand into the product and culture.
Brand is really the connection between you and your customers. If you have a very strong culture, then the brand will come through. (Brian Chesky)
Yes, I mention Slack several times in this post but they have done a fantastic job in doing so with their playful and fun to use approach — just think about the Slackbot. Andrew Wilkinson has written a great post about that and Sandwich Video produced a nice little intro video in the early times:
5. More Designers as Co-Founders
The latest Design in Tech report from KPCB indicates that more than one third (36%) of the Top25 funded startups are co-founded by designers. More importantly, this number is up from 20% in 2015. Some good examples include Hootsuite’s Ryan Holmes or Slack’s CEO Stewart Butterfield who held several design positions in his career.
It is in the DNA of these companies to always think about the customers and how each new feature will impact them. They are shaping the product and design early on and are often obsessed with a customer centric view which they often implement into the company culture. Usually, they are the ones among the founding team who is owning the product at the beginning. However, over time the time founders put in shaping the product usually decreases as the company scales. Therefore, it is mission-critical to hire great Product Managers who overtake the work those founders did at the beginning.
Notably, the same is true for B2C companies and if you take a look at the most valued tech companies, you see a lot of co-founders with a design background — be it Brian Chesky from Airbnb or Evan Spiegel from Snapchat who studied Product Design in Stanford. Some people even argue that Evan and his brilliant understanding about product and users is the only but most crucial part, Facebook cannot copy from Snapchat.
In that perspective, Slack is even more interesting since they are an enterprise company but act like a consumer company, blurring the boundaries between B2B and B2C. Why are they doing this you might ask? One of the reasons is that Developers have become powerful decision makers within buying centers, especially for developer tools (obviously). So you should try to find those product champions within a company to sell into enterprise organizations and grow from there.
6. Importance of Product Integrity over time
Software often follows cycles. Over time companies can benefit from the latest technology and might be able to build the same product and features in a shorter period of time compared to previous companies. This can be seen in the graphic below where the youngest company, C, is able to be the product leader in a shorter amount of time compared the previous two companies A and B.
How can you prevent this? There is probably no secret sauce but a good way to tackle this — besides always staying paranoid — is analyzing and iterating quickly. Have clearly defined metrics, learn from the data and optimize them. In most of the cases it is not about who can build the most features but who is able to build the best thought-through product.
7. High responsibilities from Product Managers underlines their influence
As a Product Manager, you are responsible for a lot of different goals that contribute to the company’s overall success, Josh Elman has also written a great piece about Product Managers and their influence.
It starts from understanding and executing on the company’s vision to maintain the product roadmap while always learning more about your customers and market. You are also working in the intersection between the engineering and business side, trying to fulfill unrealistic expectations :-)
A great product manager has the brain of an engineer, the heart of a designer, and the speech of a diplomat. (Deep Nishar, VP Product LinkedIn)
In this role it is not only about holding the different pieces together but also how to adopt new technologies that can add value such as Machine Learning — not for the sake of it but to really solve a problem or improve the customer experience. To sum this up, Product Managers fulfill a lot of different roles and I think this underlines the influence they have on the customers as well as on the company and its vision and its future.
Please let me know if you have any further thoughts or comments.
P. S. In Berlin there is quite a vivid product management community with several Meetups on a regular basis: On Product, Product Heroes, Product Tank. Hope to see you there!