Customer-Focused Product Management

1. Customer-Focused Product Management Geoff Huckleberry September 3, 2003

2. Discussion Topics • My Profile • Value of Customer Research • Key Success Factors • How to Get Most Value Out of Research You Do?

3. My Profile • 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 (ChemConnect, Instill) • Success Launching New Products and Driving Revenue Growth (566% growth in 18 mos. at Intuit, 200% growth in 12 mos. at ChemConnect) • MBA (UCLA Anderson) + BSEE (UC San Diego)

4. Product Manager Profile • 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

5. Customer Knowledge is Product Manager’s Key Success Factor The Better Your Customer Knowledge, the Better You Can: • 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

6. You Have Deep Customer Knowledge When… • You Can Consistently Predict What Target Customers Will Say Before They Do How to Develop Customer Knowledge: • Understand User Profile • 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

7. Key Success Factor #1: Begin with the End in Mind • Create Customer Research Plan Including: • 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 • Cost of Not Doing It: • Trite or Useless Feedback

8. Key Success Factor #2A: Plan for Research Even Under Tight Deadlines • Benefits: • Greatly Increases Chance of Success (small percent of new products succeed) • Improved Customer Response to Launch • Focus Development on Key Value Drivers • 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

9. Product Development Timeline – Errors in Definition are Multiplied True Customer Need Range of Possible Error Definition Needs Assessment Concept Testing Development • Usability Testing • Beta Testing Testing Sales/Marketing Rollout Implementation & Support Product Launch/Re-launch is Expensive (Time/Money/Opportunity Cost)

10. Key Success Factor #2B: Avoid Relying on 2nd Hand Feedback in Place of Research • 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 • Cost of Not Doing This: • Suspect Information. 2nd Party Probably Was Not Aware or Diligent about seeking right targets and asking the questions in proper context. • Loss of Control • Case Study: Any

11. When Using 2nd Hand Research Always Ask… • What is profile of interviewee. Are they part of the target? • How many people actually requested this? Recent mentions often get over-stated 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?

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

13. Key Success Factor #3B: Include Target User in Research • Benefits: • Greatly Increases Likelihood of Product Being Used • Increases Customer Satisfaction • 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 • Case Study: Instill

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

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

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

17. Key Success Factor #7: Be Customer Focused Not Customer Compelled • Benefits: • Understand Customer Needs and Priorities so can Optimize Solution for Maximum Customer and Company Benefit. • Financial and Customer Satisfaction Improves. • 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). • Case Study: Southwest Air, Intuit

18. Successful Products Satisfy the Value Proposition Triangle Customer Objectives Company Objectives Delivery Team Objectives

19. Key Success Factor #8: Include Your Competitor’s Customers • 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 • Cost of Not Doing This: • Miss Valueable Perspective • Susceptibility to Competitor Product • Case Study: CCH

20. Additional Research Techniques • 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

21. Unique Application #1: Using Customer Research to Improve Product Sales • Case Study: Intuit