I regularly study failed projects, draw conclusions and, in the future, adapt my experience for new projects.
To a greater extent, we provide services for the technical implementation of the product, but I consider it necessary to share my conclusions about how the strategy works for our successful projects, and why the failed ones “do not fly” on paper.
Conducted analytics of client projects for 2 years and collected average figures:
- Projects that did not have a clear product strategy had an LT (life time) of 16 months, and the closing rate by 14 months reaches 80%
- Projects with a strategy had LT 28 months and only 19% of projects did not reach 15 months
In our experience, customers from the 1st category were much more likely to encounter common errors that led to the early death of the project. An additional effect of the strategy is the ability to find difficulties and problems before they become them in full.
Strategy is the foundation of a product manager
Like any strategy, a product strategy is aimed at achieving goals and represents the most efficient way from point A to point B.
Product goals are usually associated with significant economic indicators: revenue, profit, market share. In short, the project is aimed at making money, not just staying a good experience.
In addition to goals, there are current resources: financial, temporary, human. On the basis of them, a decision is made how to develop a product: outsourcing, or by the efforts of its developers.
Key elements of the strategy:
- Clients
- Competitors
- Business model
- Market
Customer research. Who needs your product?
Do you have a product idea that can solve a pressing problem, and, in short, 3 questions:
- Who needs your product?
- Are people aware of the need for what you are offering them?
- Are they willing to pay you for it?
The main task is to draw up a portrait of your client and prove that there is a need for a product and people are ready to pay for it. And pay you, and not a competitor with a ten-year history and the lion's share of the market.
A customer portrait is essential for building sales channels. If we are talking about tools - Ya.Direct, Vkontakte, Facebook and others, then they are not channels without targeting (detailed description of the audience).
At the very first stages, you should not greatly dilute the target audience. You can hear an interesting answer to the question "Who needs your product?" “Anyone who has a mobile phone needs him.” But this happens extremely rarely, and even more so not at the start of a project.
A clear core of the audience allows you to intelligently simplify the product → reduce development and launch costs → quickly get an answer whether your product is needed or not, whether people are ready to buy or not.
Customer research tools:
At the start of the project
- In-depth interviews
- Polls
- Competitors and related product cases
- Public research
The product is used
- Feedback from users
- Support appeals
I recommend the tool - in-depth interviews. The tool is costly, but it gives tangible results in understanding the client's needs, product requirements and selection criteria.
Customers' requirements and requests are changing, so you need to keep your finger on the pulse and refine the product to get new feedback.
Competitive analysis. Why is your product?
I can say from our experience and the experience of colleagues that there are very few unique ideas. Most have been or are already on the market, so it is important to ensure a strong competitiveness of the product.
You can often observe a situation where thousands of people every day open online stores, product marketplaces with the hope of building a business and making money. What is being discovered?
What if you trade the same product that is on Yandex.Market - higher than that of competitors, setting prices is unrealistic. It is also impossible to get big discounts from suppliers, because competitors buy in large quantities.
As a result, a small profit is obtained, which is completely "eaten" by logistics. Consumer goods compete in price and this game is won by large companies in their segments (Magnit, Auchan, Amazon, etc.).
As a result, start-up projects either close down or begin to specialize in products that are not in Yandex.Market and on the shelves of Auchan, that is, they go into narrow niches. If there is no one in this narrow niche, they have a chance to become number 1, start building a business and earn money.
Niche specialization is a strong competitive advantage. Today's goliaths once started out with a narrow specialization in the market.
3 approaches for building competitiveness:
- Become No. 1 in the consumer's brain (Specialization)
- Do 10-100 times (Better / faster / cheaper)
- Do it differently (Different audience / values ​​/ channels)
Doing differently is a unique approach and an important part of a successful product strategy.
The product value statement is different, the definition of the target audience is different, or the channels to reach this audience are different from others.
Building marketing differently is a tactical goal. In a strategic perspective, after a while, all your “other” values ​​will be taken up by competitors, your “other” target audience will be carpet bombed by an entire squadron of competitors, and your “other” channels will be swarming with the pens of competitors' marketers.
Therefore, the task is to have time to become different during this time, to separate from other competitors, to become a category “in itself” - so that you are not compared with others in terms of a set of features and competitive advantages.
People should always have a choice, but only this - you or someone with the best set of properties among the crowd of other competitors. Let's take one example: when most people buy a smartphone, they choose: "An iPhone or some kind of android?"
Here's to be different in action - there is an iPhone, and there are a bunch of other Android phones.
Business model. Where is the money?
The main question: Is it possible to ensure that one customer is attracted cheaper than what you will earn from him?
It is useful to draw any IT product simply as a “pool of money”. Money from different places can be poured into this pool (income) and can flow out (expenses).
In its simplest form, everything can be shortened and presented as follows:
- Selling an order / Earning on a client
- Buying an order / Attracting a customer
- Variable cost per order sales
- Fixed costs of maintaining the product
Of course, everything here is greatly simplified for clarity. More fundamental indicators should be calculated through the Unit-economy of the product, the topic of which is a separate article.
If you are interested in calculating the economics of a project in general, and Unit economics in particular, read the article to the end, at the end a useful bonus for you.
Market
Usually this is the place where they write in business plans: “The size of our target market is a claim of billions of dollars. We will occupy thirteen percent of this market by a certain year. The market is growing by one percent per year. In five years, our turnover will be that much money. "
It is important to evaluate markets not only in terms of quantity, but also in terms of quality.
Market with large investment players
An investment player is a company that has received fairly large investments for its development. For such projects, growth is extremely important no matter what. So the danger is that they can afford to sell at 0 or at a loss. In this way, they make the life of ordinary gamblers trying to honestly earn current profits unbearable. It is very difficult to compete with someone who can afford not to earn.
Therefore, the same investment projects or projects with a bottomless pocket of money will feel comfortable here.
A mature market is a clear leader
The main question is how soon the market leader can do what you did.
The market leader has enough money to defend his position, but his weakness is sluggishness and conservatism. The conditional Avito will not be able to quickly change its concept, simply because it is already familiar and abrupt changes are big risks.
The task of the new player is to create a fundamentally different product: different values, different message, different audience, different sales channels.
An established market with no clear leader
Usually such a market consists of small and relatively medium-sized players. At a minimum, it is worth understanding how current companies survive and work: what kind of marketing, what weighty competitive advantages and the criteria for choosing between them. Once you've identified the “minimum for survival”, think about how to differentiate yourself from them, otherwise you can become a small player as well.
New market with small players
In such markets, the basic need is not clearly formulated and not identified, a “social order” for a wide audience is not formed, there is no convincing reason for which people buy.
The prospects for such a market are vague and there are risks that such a market will "collapse" or remain small in terms of money. But such markets can grow and, becoming # 1 in a small market, you will grow with the market and become the natural leader of a large money market.
To summarize
Launching an IT project is when there are more questions than answers.
The strategy allows you to objectively assess the situation, choose a promising direction of movement and make timely management decisions in product development and development.
Ultimately, the strategy forms a project roadmap, MVP version of the product, its further development, product metrics, main KPIs and, as a result, the daily activities of the entire project team.
A useful bonus for those who have finished reading
“Launch a project, beat your own and get a profit ” - instructions for calculating the payback and profitability of a business project
Together with the team, I created an instruction - a step-by-step algorithm of 4 simple steps for calculating the profitability of a business project using the example of our IT cases.
Collected Excel documents that allow you to get projected figures in a couple of clicks.
I am happy to share the instructions and the necessary Excel documents with the readers of habr.
You can
pick it up here Use, implement!
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