Logistics: The hidden product strategy weapon that’s often overlooked
In this post about how to use the RDCL Strategy Roadmap, we are going to focus on how to think about your organization’s delivery of your product. As a recap, here are the four components of a RDCL product strategy:
- Real Pain Points: What is the problem and for whom are we solving the problem?
- Design: What does the product do (features) and how does it do it (appearance, brand, voice)?
- Capabilities: Why you? Product capabilities (e.g. data, algorithms, patents) and Process capabilities (relationships, partnerships)
- Logistics: How do we price the product? What is our process/ medium to deliver the product?
Defining the Logistics row means answering questions about the customer experience surrounding product acquisition — that is, the “path that your product takes to your customer.” Your set of Logistics elements will be unique based on your product and market, but a few common ones are:
- Pricing strategy
- Installation and customer support mechanisms
- Manufacturing and shipping considerations for physical goods
- Distribution channels (including physical store/showroom considerations if applicable)
Logistics is the one component that is usually overlooked in product management, probably because most organizations have a very narrow view of what constitutes their “product” — most tech companies define it as the hardware and software that they manufacture and sell. Sometimes it’s defined even more narrowly, focused only on the specific screens that allow the customer to do what the product is meant to do. There is surprisingly little investment in designing installation, pricing, and distribution processes in the product development phase — yet these represent the most important connection point between your customers and your product. Often the product manager is not even involved in decisions around these elements of the product, leaving it up to the sales, marketing and customer support teams to figure them out after the product is built.
Amazon Web Services is one famous example where a focus on Logistics has contributed immensely to their success — arguably more so than engineering or design. AWS enabled customers to acquire a virtual server farm with the swipe of a credit card, and made buying server time by the second into an industry standard. Compare this to Oracle’s pricing model, which is famously complicated. Customers can’t predict their database costs, and are subjected to a legal audit — definitely not a delightful customer experience.
The key is for product managers to incorporate Logistics as a core component of Product Strategy from the beginning, and not as an afterthought. Defining each Logistics element with your sales and marketing teams upfront is a great way to align the product strategy with the go-to-market strategy. A common mistake we see is products companies try to layer on popular approaches to pricing or delivery, even if they are not particularly well suited for the specific product or market. For example, the desire to impose subscription pricing on every product means that sometimes products that may be perfectly suited for one-time payment get unnecessary features tacked on to justify a recurring pricing model (see the story of the dreadful Juicero, or many other pointlessly subscription-based IoT products).
Logistics elements can, if used strategically, help differentiate your product from your competitors, and should be an important consideration from the inception and development of a product. Share your experiences as you integrate all the elements of how a customer interacts with your product. We look forward to hearing your comments and questions — follow us on www.radicalproduct.com.