Question: What causes products to be desired and loved by customers?
How is it that some products achieve huge customer loyalty and high usage (and therefore renewal revenues), and yet other products find it very hard to gain any long term traction? What are the key factors affecting “stickiness” and what can the PM do to move the needle?
Answer from Alain Breillatt of Picture Imperfect: How do I make my product sticky? If you worked for 3M then the answer would be to slap some low-tack glue on it and declare it a new type of tape, Post-It note, etc. Okay, so the joke isn’t helpful, though it does reveal the conundrum a Product Manager faces as they try to sort out the question of how to make a product a “need” in the regular work/life experiences of customers rather than simply another tool that sits in the bottom of the bargain bin.
But to answer your question, let’s dissect customer loyalty and high usage.
What drives customer loyalty? Generating loyalty is actually a very simple formula, but not one that is easily put in place by the Product Manager alone. Let’s address these briefly and then go into more depth below. Customers love your product / company because you:
- Get the JOBS Done: Your product solves the problem that your target customers are trying to solve better than any other solution available. In fact, if properly developed, it is tightly aligned with only the dimensions of performance that are relevant to the job. Professional photographers, for instance, know they can rely upon Photoshop to get the job done when it comes to manipulating and finishing their photos properly.
- Happily Engage with Customers: When your customers have questions about/issues with your product, they find an open, capable and interested organization that is willing to hear them and assist them. Try contacting Zappos.com with questions or concerns about a purchase – they do EVERYTHING possible to answer questions while ensuring that you are happy and they do it with a smile.
- Understand your Market: Your Marketing Mix (i.e. the 4 P’s of Product, Placement, Pricing, and Promotion) creates a sense of value in the minds of your customers, is focused to best reach your ideal target, and generates a “need” to own/upgrade. Remember back in 1999 when VMware was just this little workstation tool which your testing, development, and support teams used to perform software testing against multiple platforms? The message was simple: we’ll cut your capital investment costs by 50 – 80% and you won’t have dozens of machines cluttering each team member’s workspace. They did the same thing with servers but added redundancy and quick recovery to the mix. Any wonder why they went from 0 to $1.9 Billion in revenues in 10 years?
What constitutes high usage? High usage is a relative term as it does not necessarily mean customers are opening your product on a daily or even weekly basis. What it does mean is that your product is a critical part of the workflow of a customer’s business or personal life. It saves them time. It makes them look good. It connects them to people they care about. It saves them money. It makes them money. Better yet, it saves their assets on a regular basis. They don’t even bother looking at competitive imitators because your product is the rock solid, go to the mattresses, gold standard.
So, as the Product Manager, which of these levers do you control in order to make your product sticky? That depends on how your role is perceived within the organization. Personally, I prefer to look at the PM as the CEO of their Product. You own it, you’re responsible for the revenues it delivers, and you can advocate for the changes that are necessary to make your product more successful. Not every company regards the Product Manager in this fashion, and if yours doesn’t then you will have to pull what levers you can and either wrest control of other levers or coax the owners into seeing things your way. Generally you will have to collaborate closely with the sales, support, and possibly marketing teams to ensure they have the same vision you do. Prepare to do a ton of evangelizing and sweet talking.
With that said, let’s examine the three sets of levers more closely. But let’s examine them in the inverse order from how they are listed above because this is typically the approach that unfortunately is often taken when organizations think about making their product a hockey stick graph of success. The conversation usually goes like this, “Hey, we built this cool piece of software, now how do we make it REALLY successful?” [cue crickets] That’s what the engineer or product manager is going to hear if they approach me with that question since it implies that none of the proper due diligence was done before going out and creating.
Understand your Market
The Marketing Mix is the first thing that comes up when you start asking questions about how to make your product wildly successful. This is because most people equate success with visibility, availability, and enticing pricing. Much of this failure comes from spending too much time in the aisles of the supermarket or in over-competitive markets where coupons and promotions reign supreme. But if you’re in this situation here are the potential approaches you could take.
- Market the hell out of it. This generally implies throwing tons of money in advertising and promotional dollars at the product to ensure that you get glossy prints in all of the right periodicals, skyscraper ads on the major websites, booths at the major trade shows, and beautiful direct email and mail pieces to large lists of target customers. Supplement this with a PR blitz to all of the major influencers including major journalists, A-List bloggers for your market and – if your product targets IT – the streetwalkers in disguise (i.e. technology analysts) and end-user communities. Finally, you need great case studies and endorsements from a few big corporations (again if targeting IT) that may require you practically give the product away to these endorsers. This is called the “throw away money as fast as you can” or “the why the VCs lost so much money in 2001″ approach.You can scale this up or down and target your marketing activities according to the budget you’re able to wrest out of the pockets of your executive team. To be clear, you need to promote your product to gain visibility for it as well as credibility – especially if you are targeting organizations that will spend more than $1000 on your offering. But all of the advertising in the world isn’t going to generate loyalty and renewal revenues unless your product does the job your customers need it to do. (See “Get the JOBS Done” below for more on this topic.) I’ll just share one more example here because branding and marketing do make a huge difference. Ever heard of the Freedom Blanket? What about the Slanket? My bet is you immediately thought about the PATRIOT Act when I mentioned the first one and wondered if the second one was a new kind of venereal disease. Now, what if I told you these were both predecessors of the Snuggie? Ah yes, you know what a Snuggie is don’t you. Wonder why that is? Well, read this article and you’ll see that in this case it was ALL about marketing, good branding, and coming up with a quirky way that connected to customers to drive the Snuggie to become a cultural phenomenon.
- Take it viral. You know how it works — create a quirky video or online game that creates a huge buzz and generates enormous visibility for your product. Of course, you still need to convert these people into customers, so make sure that your viral effort is engineered to connect with your target groups and that there’s a call to action that actually engages them with your product. Creating visibility is wonderful, but if you fail to attach a strategy or mechanism for capitalizing on that visibility, then why are you wasting your time?
- Give it all away. So you’ve read Chris Anderson’s “Free” and you either scoffed at it or you’re a believer. Nothing generates faster visibility for a good product coming from an obscure background than making it free. But you need a strategy in place that is going to take advantage of the Freemium approach and turn it into money. It works — but again, you need to align mechanisms with a longer term strategy for capitalizing on the huge population now using your solution. A word to the wise though: it’s entirely possible to create what you think is a fabulous solution to a very real problem, make it freely available to all, and still watch your downloads / usage stagnate in the hundred or thousands when you expected it to hit millions like Twitter. Free does not guarantee widespread usage. In some cases, your timing may be off and your product may be well before its time as was the case for many MP3 players before the total Apple solution was delivered.
- Align in with strong partners. Teaming up with the giants in your industry often makes complete sense when your solutions are highly complementary. Their sales team is always looking for additional tools to line up and increase the size of the sale, and you benefit by riding in on the coattails of their efforts. When InstallShield (now Flexera? – don’t ask me, I don’t work there anymore) decided we wanted to tackle the IT administrator market against an entrenched competitor in the application repackaging business, there was one clear path to generating fast growth and that was the Freemium model combined with aligning with heavyweight partners. We built customized solutions for Novell and Microsoft which were hosted on their websites and promoted to their user communities. Value to the customer came through making these products fully functional but limited in feature availability. An Administrator could accomplish the basic repackaging tasks with the toolset but advanced features which were visible required purchasing a license. We even integrated the online license acquisition to simplify the effort for a willing customer. Value to InstallShield came through the validation of aligning with the big partners as the “go to” solution and by requiring every user who installed to provide registration details in order to receive the installation key. I will admit that it took months for the solution to really take off and brought increasing scrutiny by executives who questioned whether we were simply giving away money rather than growing the potential revenues. But staying the course brought significant success to InstallShield as we eclipsed the competition, helped several of our partners terminate their own repackaging solutions, and become the default offering.
- Create lock-in. Are there steps you can take to make it less favorable for a customer to consider other competitors after they invest in your solution? IBM and Microsoft do this all the time. Facebook even does it. Once you are on their solution and build up your investment in their solution, it can be quite costly to consider moving somewhere else. If you create advantages that come with loyalty (consider the airline loyalty programs back when they truly were highly valuable) you increase the costs to a customer considering leaving your solution. For example, if I use WordPress for blogging, as I customize and take advantage of the many widgets available, my switching costs continually increase. Who wants to go through the pain of migrating years worth of content and struggle through rebuilding expertise in another solution when a large amount of content is involved? Lock-in is not evil if it creates significant advantages to the customer, including such benefits as strong community of users who collaborate and provide support / new tools. My parents are still on their old Juno email account — even though I set them up with a vastly superior Gmail account — simply because they don’t want to go through the switching costs of migrating all of their contacts and updating everyone with their new email address. The barrier CAN be that low.
- Take advantage of network externalities. The mobile service providers have been cashing in on this for years with their “Friends and Family” programs or Fave 5 approach. If I can get my family on the same network then we can all talk to each other for free. And if they tell five friends, and they tell five friends… well, you get the picture. There are very real benefits to getting large populations. If you want to delve deeply into the economics of it, I suggest the following paper written by a good friend and professor with whom I worked at one time: “Snowball: A dynamic oligopoly model indirect network effects.” [PDF]
Happily Engage with Customers.
Does your company like its customers? That may sound like a funny question, but honestly, how many times have you sought to get help or ask questions of a company about their products and struggled to access a live person? Ever called up a tech support line and had the agent on the phone hang up on you? Have you ever sent an email to a company and never heard back from them? Has your company had discussions about how to reduce calls to your support line by obscuring the location of the contact details? Do you empower customer service or help line technicians to go the extra mile to ensure customer satisfaction? Look — managing costs is all fine and well, but if you want to turn disengaged customers into raving advocates for your product (word of mouth is the single best method of driving product adoption) then you need to think about how your customer touch points impact the end to end customer experience. Southwest Airlines and Zappos have at least one thing in common: they carefully consider the personality type of the people they hire to engage with their customers. Check out Zappos core values as a clear statement of what serving their customers means to them. And this interview with the President emeritus of Southwest gives a clear understanding of how their customer focused values have helped the company succeed. As a product manager, you may be asking, “Isn’t this something the CEO and HR team should be thinking about?” Well, yes, sure, but that doesn’t mean your product and your efforts can’t help make that happen if your culture is in the wrong place today.
Get the JOBS Done.
JOBS™ is a four letter acronym that refers to the new product development process outlined by Clayton Christensen – he of disruptive fame – and used liberally by his firm Innosight. The approach is standard fare for anyone who has studied the accumulated innovation literature from the last 15 years. I cite Christensen here because A) he’s earned his street cred in the tech industry, B) his approach tightly encapsulates the best practices you should be following, and C) like most writers I am lazy and would prefer not rewrite something if an appropriate source is available to provide the necessary reference material.
Allow me to explain the basics but then I would highly suggest you jump over to the Innosight website and explore their methodology. Of greatest interest is the article Christensen co-authored for MIT Sloan Management Review back in 2007 where he explores the concept of finding the job a customer wants to accomplish and aligning your product with that task. The simplest way to explain is that most likely you are segmenting your markets incorrectly if you are defining them
…by the characteristics of [your] products (category or price) or customers (age, gender, marital status and income level). Some business-to-business companies slice their markets by industry; others by size of business.
Surely this sounds familiar to most you reading this article. In fact, you may feel your hackles rise up as you growl, that’s the way everyone who knows anything about our industry does it. If that is your response then please go read the article now, before proceeding further.
Got it? Good, so let’s explain the concepts behind JOBS.
- Jobs-to-be-done. The focus is understanding the problems your customer faces and the context in which they occur. Success at doing this means you can distill it down to a simple statement like this: Professional photographers want to refine their raw photos to create a finished image that matches the requirements of their client.
Another simple statement would be: Parents want a brain-dead simple approach to share pictures of their children with friends and relatives.
And finally a last statement would be: IT administrators want to deliver packaged software that is customized to their business and security specifications to the computers on their network without creating downtime for the network or their end users. Actually, this could be further resolved to clarify the true job: IT administrators desire to provide the software their users need without creating disruptions.
Each one of these job statements conform to this format: [Customer] wants to [solve a problem] in [this context].
- Objectives. What are the objectives or decision points your customer uses to evaluate potential solutions? This is not just about the functional aspect of product usage (i.e. use cases) but equally the psycho-social constraints that define the desired outcome of using the product.When you say, “Nobody ever got fired for buying IBM,” you’re exploring multiple objectives that the IT guy responsible for the purchase is trying to satisfy. There is the social impact of knowing that the new solution will make you look good to your boss and peers because you chose it and it just works. There’s the emotional impact of knowing that when things do go wrong, IBM has a staff of consultants who are on-call to smoke-jump in and help solve the problem quickly. And there is the functional consideration of how the product delivers the functionality necessary to satisfy your business intelligence platform requirements.Think about the Verizon Droid for a second — why would people purchase that phone over other smart phones? See how many objectives you can come up with that might drive a teenager to purchase that phone. Then consider the crackberry addicts out there in the business world and explore what objectives are driving their decisions.
- Barriers. These are those characteristics, often functional in nature, that limit the ability of customers to use your solution. Typical barriers include cost, skill set, performance, available infrastructure, and business limitations.If your product requires customers to jump through new hoops and learn new skills, then there is definitely a barrier to adoption. The classic example is Microsoft Word developing extensive documentation, a detailed on-board Help, and conversion algorithms for dealing with WordPerfect documents to ensure ease of transition. Consider another example: ask the average kid driving a riced up Civic if they would prefer a Mercedes SL 65 AMG Black Series and they would probably rip the keys from your hand because few can pony up $300k to purchase that car, let alone the cash necessary to maintain it. And so they make do with lesser vehicles that they festoon with a variety of accessories to enhance the performance and simulate the look of the cars they admire.
- Solutions. These include the various available offerings that customers consider when seeking a solution to their problem. It’s important to realize that not every solution falls neatly into how you might categorize the problem space. In fact, end users often create their own solution in MacGyver style retrofitting of products from diverse spaces in the marketplace. Especially in today’s evolving environment of “Makers” you will be surprised at how creative end users become when they are passionate about scratching a particular itch.There is much to be learned in examining how end users are making do or creating workarounds which leverage existing solutions in order to imperfectly solve their problems. Finding an area where imperfect solutions exist is an obvious key to driving rapid and significant growth.How does this differ from your product MRDs? I’ve discussed this in other answers on this site and there’s a reason why. If you get this framework right, everything else falls into place. It’s not quite as simple as Kevin Costner’s “if you build, it they will come,” but the metaphor is not far off the mark.
So the point is that the formula to achieving wild success for your product has many levers. If you really want to succeed then the genesis of wild growth starts well before you begin thinking about a marketing plan. I’ll close with one pertinent point that Josh Kopelman from Redeye VC recently made: virality and a strategy for customer acquisition must be built in as drivers of the product development effort. As Josh puts it when he asks entrepreneurs how they intend to acquire customers,
The most disappointing answer is when they say “Oh, we’ll just make it viral.” As if virality is something you can choose to add in after the product is baked – like a spell checker. Let’s imagine the conversation at the marketing department of the wireless phone companies. “Let’s see. Should we spend $4 billion on advertising this year…or should we just make it viral?”
Virality is something that has to be engineered from the beginning…and it’s harder to create virality than it is to create a good product. That’s why we often see good products with poor virality, and poor products with good virality. The reason that over $150 Billion is spent on US advertising each year is because virality is so hard. If virality was easy, there would be no advertising industry.