ProductManagementWithRevenueFocus

Product Management : Revenue Focus Chetan Channa 11/06/2016

Agenda

•  Product Management Triangle •  An Introduction •  Evolution •  Revenue Focus •  Some Examples

•  Key Challenges •  Key PM Responsibilities •  Key Metric: LTV

Product Management Triangle – An Introduction

Region A - Region A is the space that exists between developers, the product, and users. PM roles are focused on building a development team’s understanding of users, others are focused on communicating more effectively about the product to existing users and attracting potential new ones

Source:https://productlogic.org/2014/06/22/the-product-management-triangle/

Region B – Region B is where the value that people find using the product is (hopefully) converted to profit (or other benefit) for the business. PM roles are focused on using company funds to attract potential customers & extract as much revenue as possible from each user, and guide expansion of the product into the most lucrative markets.

Product Management Triangle – Evolution Source:https://productlogic.org/2014/06/22/the-product-management-triangle/

Sooner or later all products go through various phases. In stealth mode, PM is mainly focused on . Once the product is launched, focus is on getting more users & PM focuses on Region B & then as the Business evolves revenue becomes the focus. As the company grows, elements in the product network are pulled in different directions. Regions AB, BC, and AC are the places where the different, sometimes contradictory inputs come.

Some Examples of Evolution

Focused on Region A. PMs primary objectives are to build features to attract & retain users. Engagement is the primary goal of the PM.

Focuses on Region B where every activity or task should impact bottom line. Every activity/feature task should somehow reduce the cost or increase the revenue.

Product Management Triangle – Revenue Focused Source:https://productlogic.org/2014/06/22/the-product-management-triangle/

In revenue driven organizations, Region AB & sometime C comes under immense pressure of the product. Sometimes it’s not true.

Why Revenue is the King & engagement takes a back seat?

•  Revenue is tangible & often the advantages of taking short-cuts to get more revenue are more clearer than the disadvantages.

•  Often ‘less’ revenue in near future takes more precedence than ‘high’ revenue in distant future

•  Quarterly targets & associated pressure •  Company DNA (Sales vs Product) •  Engagement metrics are not universal, can be fudged &

reported as per convenience. •  Often explaining impact of engagement on engagement is

fuzzy & depends upon lots of assumptions. •  Often PM owe a revenue target as well.

Key Challenges & Responsibilities of PM in Revenue Focused Org

•  People focused on creating a valuable product for users must understand the needs of the business. And the people tasked with monetizing the product must understand the user experience parameters. This is not always true.

•  PM’s major responsibility is to synthesize the business and user needs to weigh trade-offs and devise product solutions meeting holistic company needs. Stakeholder management becomes the key.

•  PM has to make everyone aware of the short-cut solutions which harm long terms prospects of the product. Data analysis , research becomes a key differentiator.

•  To remain the guardian & voice of customer when everyone else is focused on revenues. PM remains the only person who is responsible & answerable to the customers while all other teams focus on revenue

Some Examples of Revenue Focused Organizations

Subscription based service. Acquiring a user & retaining a user has equal importance.

Ads is the major source of revenue. How to strike a balance between revenue & user engagement is the top concern of PM

How to balance Revenue vs User engagement: LTV & ROI

•  Customer Life Time Value (LTV) is the best metric to balance Revenue vs User Engagement since it encompasses both the revenue, the user retention as well cost incurred on acquiring the customer.

•  A positive LTV means that company business model is scalable & product is not burning money.

•  If LTV is positive it means the PM can focus on increasing the acquisitions to reach the desired revenue.

Thank You