Realignment is Leadership
Strategies to reach profitability while keeping customers happy
Your customers love your product but…
Product sales are declining…
You need more sales to become profitable…
You are almost out of time before your investment timeline runs out. What can a product manager do to pull out of this?
Customers Like Your Product But It Isn’t Profitable
You have already tried first-round changes:
Prepared a competitive response
Validated your service exceeds customer expectations
Supported sales in risky deals
Established a process to monetize customizations
Pushed for quick wins
Nothing has resulted in the scale your product needs to become profitable. You need to realign your product for profitability!
You have deadlines looming on your next initiative to add to your product incrementally. You realize the incremental changes are not working - the incremental changes are "lipstick on a pig"…
How do you pull out of the cycle of incremental change without enough results?
Four steps:
Talk to your stakeholders about the current situation and your re-alignment proposal
Halt incremental change that isn't customer-visible
Provide top-notch sales support
Change course on your product
Lead Realignment for Profitability
Now that you recognize product realignment is needed, the first step is to communicate with your stakeholders. You need agreement that product regrouping is necessary.
The two key points in your stakeholder update are:
Report on the current situation
Summarize factually the product accomplishments
and what is missing
Overview of the product regrouping and benefits
Concept of what is changing
Quantifiable change
Key dependencies
What approval is needed
This material needs to be socialized with each stakeholder before you formally present it and request approval. The formal presentation is only a confirmation that the stakeholders approve the change.
Prepare a rough business case for your product after the regrouping. Show the revenue, costs, and margin that can be achieved from the regrouping. Keep reworking the business case as you go through the next steps. It is going to change a lot.
Stop the Incremental Changes
You need to open up your time by deferring changes that are not visible to your customers. Also, defer features that need a lot of product manager attention. You need your time to drive the product regrouping!
Typical changes that can be delayed in this situation are:
Refreshed marketing materials
Features for new markets or verticals
Support for exponential growth or going large-scale
Monetization efforts
Your product can cruise for a short period! Your strong relationship with engineering provides support while you address the regrouping.
This gives you time to consider different financial approaches to get your product profitable. It is time to innovate and bring your concept to life!
Do Unscalable Sales Support
You still respond to basic sales support and keep your pipeline full as you regroup. In addition to sales support, you proactively contact sales for their insights into product financials.
Examples of open-ended questions on key financial information:
How did customers get budget approval?
What was the customer's business case for purchasing?
What other alternatives did the customer have?
What challenges did sales encounter in selling your product?
Be ready to contact some sales teams multiple times. Also, gather names of additional sales teams that can help you understand your customers' financial decision points.
Your sales team can give you the most concentrated view of the financial impact of regrouping. You will need this information to get through changing the course of your product.
Change Course Boldly
With buy-in from stakeholders and sales, it is time to work with finance, program management, and engineering on the changes. Accommodate suggestions into the requirements and change plan.
At this point, you and your product team can follow the usual process to bring a product iteration to market.
Tying the Steps Together in An Example
In the real world, this type of adjustment can be challenging. It takes time to get happy customers using your product. You can't afford to lose any momentum in your product growth. By the time you realize your financial goals can't be met without a change, your team is going to resist your adjustment.
Suppose your SaaS product is slowly adding customers and your product team is supporting the customers easily. The problem is each new customer costs a lot to add. Your operations team has to get multiple licenses and configure each option based on the customer's requirements. Due to lack of scale, you don't have enough profit to pre-buy licenses and configure them ahead of the customer's order.
Here are your steps:
Step 1: Propose Realignment
Step 2: Halt the Incremental Changes
Work with program management to delay plans to allow regrouping
Step 3: Support Sales and Get Financial Insights
Ask multiple sales teams questions about the impact of the setup time
Step 4: Change Course Boldly - Update Stakeholders on the New Plan
Conclusion - Leading to Profitability
It takes product management courage to lead a product realignment. Recognizing that prior changes were ineffective is better than hoping for a miracle customer order whether you are regrouping an entire product or part of a product, taking time to reflect on what works and what doesn't leads to product success.
Stakeholders and product teams appreciate product managers who propose change for profitability.
