How do you (NOT) measure Product Value?

Here’s a typical scenario played out in product planning sessions everyday across the globe.

“Since you are the Product Manager, can you tell us how much additional revenue (or value) you can guarantee if we add this one new feature to the product?” — asks the programmer-turned-R&D Manager, while other sundry titles in the room intelligently nod at the question.

The business domain expert, also representing the customer, (the one that has been asking for this feature for a long time )if by some random stroke of luck is present at the meeting, starts protesting at the question, and attempts to articulate that if this one feature (ditto with other features) was not implemented, it would mean doomsday for the product, as no new customer will use the product and worse, all existing customers will move to the competition.

The Product Manager shifts uncomfortably, and after thinking for a minute about how to respond without sounding pedantic, starts out by answering, “Well..it really depends….”

If you are a Product Manager, you have probably been here and this question has likely been asked of you many times. Does it even make sense to tie measurable value or (product revenue) to 1 or 2 specific features?

“No, not really, we cannot, let’s move on” is the easiest response, but as with all nuanced questions, the “It depends..” response is probably the best one.

Unfortunately, the question reflects a poor understanding amongst team members on what exactly a Product Manager does and what, they can (if any) realistically ‘guarantee’ in terms of value (or sales revenue). This post is an attempt to provide a framework for everyone in the eco-system of creating a product to think about the influence a Product Manager has on value/revenue, and how they can affect it.

Let’s start out by thinking broadly about what a Product Manager can and cannot do, as it relates to sales.

  • Can a Product Manager influence final sales numbers? (Sure..)
  • Do they typically set sales quotas and targets at the beginning of a fiscal year? (Not really..)
  • Can they ask for additional sales coverage? (Sure..)
  • Will they get it? (It depends..)
  • Are Product Managers also part of sales teams? (Not typically..)
  • Are Product Managers part of Marketing? (Yep, sometimes..)

As you can see, there is a fair amount of ambiguity here. However, in a nutshell, Product Managers should build products that are adopted widely, and quickly by their customers. Customers don’t buy into a product because of one or two features, they buy it for the value it generates as a whole. So, product roadmap features should be prioritized based on value to customer, timeline to deliver, and should add to the stickiness of the product, while ensuring said product is competitive in the market both in terms of price and value. Ideally, innovation will allow the company to leapfrog the competition and attract even more customers. Doing all this will allow sales teams to sell effectively, and to grow the customer base.

But, after all this, if the sales teams are not able to sell the product, or customers don’t adopt it, whose fault is it?

Depending on whom you ask, you will likely get different answers. :)

The Product Managers’ answer would be that sales doesn’t know how to sell or is not trying hard enough.

Sales teams will point their finger on the product and its deficiencies compared to the competition.

Whatever it is, slow-adoption will eventually result in the product being sunset, and/or funding cut off for the teams. Not a good outcome.

So, there is a lot riding on the Product Manager’s decisions, and it becomes all the more important that they influence sales as much as they can and understand how this works.

So, let us dive deeper into how Product Managers can participate in the sales process:

  • Understand the customer and their need, build the product roadmap and prioritize features that will impact the maximum number of customers. Don’t stop there — get feedback from sales teams, as they are on the ground, and their insights are invaluable on what features are most important
  • Second, understand the sales cycle, the sales tools used (Salesforce, ERP etc.) and build relationships with your sales teams (Yes, very elementary but it is surprising how many product managers are so product focused that they neglect to do this)
  • Work with sales teams to build out the business case for new products or enhancement projects to an existing product. Forecast sales projections — communicate these business cases, and ensure that everyone understands that forecasts have assumptions built-in which depend on factors such as number of sales people selling, funding for marketing, R&D development timelines etc. among other things
  • Reach out to customers to ensure they understand the roadmap, the product strategy and where you are taking it, and why it makes sense. Ensure sales team members are around when you meet with their customers
  • Understand the sales strategy, sales targets by Geo and Product line, and upcoming pipeline. Prioritize sales enablement support as needed and as possible as sales closes deals. Evangelize all the time, and ensure the sales team knows how to sell the product
  • Understand why you lost a deal, and what features enabled the competition to win. In the same vein, understand why you won. Sometimes it has nothing to do with the product itself
  • Work with Marketing to ensure sales has the right amount of collateral, is building the right campaigns. Most times, these campaigns vary by Geo, and it is critical to provide the right amount of support to the sales teams. It is the Product Manager’s responsibility to ask for funding, and the business case should make the case.

So, can you always answer the original question that the R&D manager posed, about the exact amount of revenue that will be added because of one feature? No, not really, as it doesn’t work like that..but the Product Manager working with the sales team, can absolutely forecast the growth of the product, to keep existing revenue stable and to acquire new customers. And hopefully this desire to tie revenue to specific features will disappear on its own.

Product Director @ Lowes. Prior similar roles at Walmart Labs, Broadcom(CA), and IBM