Customer-led product strategy: a guide
We all know the incredible success stories of product-led companies. Slack, Calendly and Zoom became household names almost overnight thanks to product-led growth. But even these companies had to hire large sales teams to maintain their growth momentum. Likewise, sales-led companies know that ultimately products must deliver customer value.
This is where customer-led growth comes in. Customer-led growth supersedes product-led and sales-led strategy by putting customer needs first.
Here’s a simple example I heard recently from a customer: “We designed our website to optimize conversions and get leads. Now we’re realizing that we need to center it around customer needs. We have to know what they are trying to achieve, and what questions they have about our product.”
Companies are learning that they need to put growth second. When customers have a great experience across all touch points, growth happens naturally.
Customer-led product strategy is about designing the best product experience. In this article, I'll share how to approach it and how to avoid the common pitfalls.
Step 1. Align team and leadership on customer-led product strategy
Most teams think they’re customer-centric. But too often, companies put customer needs on the back burner and prioritize ideas of influential stakeholders instead. Getting buy-in from everyone in the company isn’t easy. So how can you bring others on board?
Jim Barksdale once famously said: "If we have data, let's look at data. If all we have are opinions, let's go with mine." Data that clearly shows customer needs and the value of focusing on these needs is the core of customer-led product strategy.
Here are a few common mistakes that customer-focused team members make, along with suggestions on how to avoid them.
- Confusing anecdotes with data
Customer quotes can be powerful. But others can easily dismiss them. Whenever you quote a customer, be ready to answer “How many customers are affected by this?”
- Not speaking stakeholder’s language
Decision makers want to know how to increase financial metrics. For example, customer lifetime value, retention, average contract value. When you present customer needs and gaps, don’t just mention the number of customers affected. Calculate the value of these customers. Show how customer-led product strategy can drive financial metrics.
- Delivering data that’s not actionable Not everything that customers say is actionable. Let’s say 28% of reviews complain about app crashes. It sounds meaningful, but a CTO can quickly dismiss this information. They have their own crash logs that are more specific and actionable. Ask for examples of what they would find actionable. The more detailed you can get the better.
- Unsound analysis
Companies without research and insights experts on staff often resort to ad hoc data analysis. They take a sample of the data, analyze it manually and present the findings. The moment others find inconsistencies in the data, they can dismiss the whole report.
In this case study, LinkedIn shares their approach to getting alignment. The key is to make analysis centralized, efficient and consistent.
Step 2. Understanding customer needs
With customer-led growth, customer needs must be at the heart of product strategy. So, before designing your strategy, gather as much data as possible about what these needs are. Keep in mind that not every user is your ideal customer. Gather data from the right people from the get go, or segment the data after collecting it.
A proven strategy here is the Jobs To Be Done framework. What is the actual “job” users are trying to accomplish using your solution? What value are they trying to get out? Don’t forget to learn both what triggers users to find a solution and how they evaluate them.
Second, you need to understand what works and what doesn’t in your existing offering. What are the gaps at all touch points between what users expect and what they experience?
To find these answers, you’ll need customer feedback at scale, behavioral data, and user interviews.
How feedback at scale drives customer-led strategy
Most companies already have huge volumes of qualitative customer feedback. This includes customer support tickets and chats, surveys with open-ended questions and reviews. Support feedback is a trove of common issues, questions and feature suggestions. Feedback with a 5-star rating or a likelihood to recommend is particularly valuable. It will tell you which features work well and where you are failing your customers.
The best teams don’t just look at their own feedback, but also at competitor feedback on public review sites. This shows the gaps in the market and trends in customer needs. For example, our analysis of US banking apps reviews revealed that users’ most common need is mobile check deposit. Banks that nail this feature have the best rating.
Solutions like Thematic, Clarabridge and Chattermill gather text feedback in one place and analyze it using AI. They save time, remove bias and provide consistency of analysis over time.
Keep in mind that customers might say one thing but do a different thing in the product. This is where the next source of customer insights comes in: behavioral analytics.
How behavioral data drives customer-led strategy
Behavioral data captures what users do in the product: where they click, what they use. Customers might say that they dislike a certain feature. Behavioral data completes the story by showing how often they use it.
Or let’s say, you’ve identified a key point in which your product delivers the ‘Aha’ moment for your customer. Behavioral data shows whether customers actually get to that moment or get stuck elsewhere. Appcues used this approach to more than double their sign up completions.
You can gather this kind of data at scale using solutions like Mixpanel, Pendo and Google Analytics. You can also record individual sessions using tools like Fullstory.
Behavioral data doesn’t tell you why customers behave a certain way or what they find confusing. This is where customer interviews come in.
How user interviews drive customer-led strategy
User interviews help understand the full context of customer needs and the customer journey. Here, you can go in-depth on issues with the current solution, or feature requests.
There are many resources on how to conduct user interviews well. First of all, make sure you interview the right people and interview enough of them. Second, make sure to ask questions in a way that’s not leading or biased. It is easy to end up with biased results. Solutions like EnjoyHQ, Dovetail and Confluence organize the interviews and make them accessible.
Remember to use feedback analytics at scale, behavioral data and interviews in tandem. Once a clear picture of customer needs and gaps emerges, you’ll know that you’ve gathered the right data.
Step 3. Turning customer insights into customer-led product strategy
Once you have the data on customer needs, as well as alignment with stakeholders, it’s time for strategy. First, figure out which metrics or KPIs capture customer value. Let’s say your product has a report feature. Customers shared that it helps them save time, but that it could be more streamlined. A KPI could measure the time required to create a report or how often it’s shared with others.
Most likely you won’t be able to move all metrics at once, so you’ll need to prioritize. No matter the prioritization approach, customers need to be at the heart of decision making. Amazon is known to have an empty customer seat at every prioritization meeting. Some companies lean heavily on customer success and support teams. Others have a dedicated customer advisory board.
Make sure to take into account your company’s unique strengths, as well as the gaps that exist in your market. What low hanging fruit can bring value to customers faster? Can it be measured? Which improvements are feasible given resource constraints? How does this fit into your company’s overall strategy?
Make sure to remain customer-led through all stages of the product life cycle:
- validating ideas,
- doing product discovery,
- designing onboarding and activation,
- identifying and fixing problems post-launch,
- finding new opportunities,
- taking advantage of market gaps
- and closing feedback loops.
Finally, can you embed the customer-led product strategy across all teams? Everyone in the company needs to align on who the product is for, what their needs are and how the product supports these.
Bring in customer success, sales and marketing teams to collaborate on the product strategy. And likewise, collaborate with them to make other touch points customer focused.
Originally published on mindtheproduct.com, 5 October 2022.