Product Management: Vision & Strategy Flashcards
MVP
Minimum Viable Product. An early version of your product with minimal features that you can take to market in order to get feedback
KPI
Key Performance Indicator. KPIs can be used to measure the success of the products.
Revenue stream
A source of revenue for a company, mostly commonly transaction based or recurring events
Subscription
A type of revenue model that generates recurring revenue. Users pay a fee on an ongoing basis in exchange for access to your product.
Licensing
A revenue model that generates transaction based revenue. Users purchase a one time license to use your software on an ongoing basis
Pay per use
A revenue model that generates transaction based revenue. Users pay a fee every time they use your product.
Freemium
A revenue model that gives a small part of your product away at no cost to users with the ultimate goal of converting users to paid users in order to gain access to the full product.
CPC
Cost per click.
CPM
Cost per 1000 impressions.
CTR
Click through rate.
What is Vision?
What your product looks like in its final state
Describes the essence of the product
What your product does and why it matters to users
Can be summarized in a sentence or two
Parts of a Vision statement
Vision needs to tell a story about:
What you’re building
Who it’s for
Why it matters
Your vision should be …
Inspiring Ambitious Easy to explain Something the team believes in Something you evolve over time Something you share out frequently
The importance of having a vision statement
To understand the importance of having a vision statement, consider how difficult it would be to develop a strategically sound product without one. How would that product team know where to focus its resources, which features to prioritize, which markets to target? On what strategic basis would they make decisions and set priorities?
When should you craft the vision statement
Creating a vision allows your team to take a top-down approach to your product’s development. In other words, you begin with a high-level vision statement, then translate that vision into a strategic guide and action plan—the product roadmap. Then, you can translate that roadmap’s strategic overview into a tactical development plan.
Drafting a vision statement should be your team’s first step in starting any new product’s journey—and it always should come before you begin working on the product roadmap.
How can a product vision statement improve strategic decision-making?
Another reason a product vision can aid in your development is that it can help you more quickly and easily identify initiatives worth pursuing.
Think of your product vision statement as a compass that you can consult whenever your team is faced with conflicting priorities or lack of direction.
How does product vision align stakeholders across the company
Finally, a product vision statement can also add value by making it easier for your team to clearly articulate the high-level goal driving your product’s development. This can help align the various groups and departments across your company that will be working on your product. With a shared vision, everyone always has a true north to refer back to, which can help remind them of why they’re doing what they’re doing.
3 functions of product vission
Informs the roadmap
improves strategic decision making
aligns stakeholders accross organization
Vision statement template
For [our target customer], who [customer’s need], the [product] is a [product category or description] that [unique benefits and selling points].
Unlike [competitors or current methods], our product [main differentiators].
Difference between Product Roadmap and Product backlog
The Product Roadmap is a strategic plan that describes how the product is likely to grow across several product releases
The Product Backlog is a tactical tool that provides the details including epics and user stories that have to be implemented to create one or more releases
Elements of a Product Strategy Canvas
Vision
Challenge
Target Condition
Current state
What is product strategy
The means by which the product vision is accomplished
What is a business model
A business model describes how a business creates, delivers, and captures value.
Components of the Business Model Canvas
Key Partners - help build or deliver the product to users
Key Activities - what you need to do to build and deliver the product
Key Resources - things that you need to build the product
Cost Structure - cost of building the product
Value prop - why people would want your product
Customer Relationships - how you build relationships
Channel - how you get the product to customers
Customer Segments - different types of customers
Revenue Streams - how you get money from customers
Most common revenue models
Ads Purchase / Licensing Pay per use Subscription Freemium
Business Model vs Revenue Model vs Revenue Stream
A revenue stream is a company’s single source of revenue. A company can have zero or many revenue streams, depending on its size.
A revenue model is the strategy of managing a company’s revenue streams and the resources required for each revenue stream.
A business model is the structure comprised of all aspects of a company, including revenue model and revenue streams, and describes how they all work together.
Pros and Cons of Ad-Based Revenue models
- Ad-Based Revenue Model
Ad-based revenue models entail creating ads for a specific website, service, app, or other product, and placing them on strategic, high-traffic channels. If your company has a website or you have a web-based company, Google’s AdSense is one of the most common tools get ads. For most websites, AdSense will earn about $5-10 per 1,000 page views.
Advantages: Making money from ads is one of the simplest and easiest ways to implement revenue models, which is why so many companies utilize ads as a source of revenue.
Disadvantages: In order to generate sufficient revenue to withhold a business, you will need to attract millions of users. In addition, most people find ads annoying, which can lead to low clickthrough rates, and therefore, lower revenue.
Pros and Cons of Affiliate Revenue Model
- Affiliate Revenue Model
Another popular web-based revenue model is the affiliate revenue model, which works by promoting links to relevant products and collecting commission on the sales of those products, and can even work in conjunction with ads or separately.
Advantages: One of the most obvious benefits of employing an affiliate revenue model is that it generally makes more money than ad-based revenue models.
Disadvantages: If you use an affiliate revenue model for your startup, remember that the amount of money you make is limited to the size of your industry, the types of products you sell, and your audience.
Pros and Cons of Transactional Revenue Models
- Transactional Revenue Model
Countless companies, both tech-oriented and otherwise, strive to rely on the transactional revenue model, and for good reason too. This method is one of the most direct ways of generating revenue, as it entails a company providing a service or product and customers paying them for it.
Advantages: Consumers are more attracted to this experience because of its simplicity and the wider set of options.
Disadvantages: Because of the directness of the transactional revenue model, many companies employ it themselves, which means more competition and price deterioration, and therefore, less money to made for everyone who uses this model.
Pros and Cons of the Subscription Revenue Models
The subscription revenue model entails offering your customers a product or service that customers can pay for over a longer period of time, usually month to month, or even year to year.
Advantages: If your company is far enough along in its development, this model can generate recurring revenue, and can even benefit from customers who are simply too lazy to cancel their subscription to your company (which is the dirty little secret of a subscription-based model).
Disadvantages: Because this model depends so much on having a large consumer base, it’s critical to maintain a higher subscribe rate than an unsubscribe rate.
In the blog post “Comparing Business Models to Sales Models”, Dave Parker outlines the various ways that a company can sell their product or service, emphasizing how the market you pick affects the way in which you take your product to market. Here are the methods he describes:
Pros and Cons of Web Sales Model
This is an offshoot of the transactional revenue model, in which a customer pays directly for a product or service, except that customers must first come to your company via a web search or outbound marketing, and conduct transactions solely over the internet.
Advantages: Web sales work with a wide variety of offerings, including software, hardware, and even subscription services.
Disadvantages: Relationship sales are incompatible with the web sales model, so if your company is related to consulting or big ticket items (high-value items such as houses, appliances, and cars), you should consider employing a model that’s more suited to your offering.
Pros and Cons of Direct Sales Model
There are two types of direct sales: inside sales, in which someone calls in to place an order or sales agents calling prospects; and outside sales, which is a face to face sales transaction.
Advantages: Direct sales models work great with relationship sales cycles, enterprise sales cycles, or complex sales cycles that entail multiple buyers and influencers.
Disadvantages: The direct sales model often requires hiring a sales team of some sort, which means that it isn’t optimal for small ticket price items. If your offering is priced below the $1,000-$2,000 range, you’ll have trouble building a scalable company.
Pros and Cons of the Channel Sales Model
The channel sales model consists of agents or resellers selling your product for you and either you or the reseller delivering the product. The affiliate revenue model is a good companion model to this one, especially if your offering is a virtual product.
Advantages: The channel sales model is ideal for companies who have a product that’s an incremental sale for their channel and can produce incremental profit.
Disadvantages: Don’t employ this model if your product requires you to evangelize your marketplace, or if your product competes with that of your partner’s, as they will push theirs and not yours.
Pros and Cons of the Retail Sales Model
Retail sales entails setting up a traditional department store or retail store in which you offer physical goods to your customers. Keep in mind that the retail sales model will require shelf space (that you’ll have to pay for) at existing stores, and is best suited for products that require logistics to reach your customers.
Advantages: Retail sales is a great way to offer deals and complimentary products to an existing customer base to help boost brand awareness.
Disadvantages: The retail sales route is not ideal for early stage companies, or companies that offer digital products like software or apps.
Pros and Cons of the Product is Free, but Services Arent’ Model
- Product is Free, But Services Aren’t
This model is unique compared to others, in that you have to give your product away for free, yet require customers to pay for installation, customization, training or other additional services.
Advantages: This model is great for building trust with your customer base and boosting brand awareness, as any company that offers anything for free will generate considerable buzz.
Disadvantages: Remember, employing this model means that you are basically running a services business with the product as a marketing cost. Also, a model like this isn’t always the best for scaling your company in the long term, so keep your eye on additional revenue models to utilize later on.
Pros and Cons of Freemium Model
The freemium model is one in which a company’s basic services are free, yet users must pay for additional premium features, extensions, functions, etc. One of the biggest companies to use this model is Linkedin, the most popular business/social media platform.
Advantages: Similar to the previous model, the freemium model offers something free to users, which is a great way to give them a taste of your product or service while simultaneously enticing them to pay for something later on.
Disadvantages: This model requires a considerable investment of time and money to reach out to your audience, and even more effort to convert free users into paying customers.
Key points to consider in a competitive analysis
Product offering and key features Differentiators Target customers Distribution channels Price points
3 Types of competitors
Direct: same product, same market
Indirect: same product, different market
Replacement: different product, same market
Process for defining an MVP
To create an MVP:
Start with the business model canvas Weigh against competing solutions Make sure it’s aligned with business objectives Translate to requirements Identify KPIs
Which technique can be used to determine what features should be included in the MVP?
MoSCoW technique. This technique splits the minimum viable product functionality into Must Haves, Should Haves, Could Haves, and Won’t Haves.
The MVP Triangle: Good, Fast, Cheap
That means there’s always a trade off:
Cheap + fast = lower quality work
Fast + good = expensive
Good + cheap = Slow
What are your priorities?
BATNA
Best Alternative To a Negotiated Agreement. If negotiations were to fail, BATNA is the next best option
