Notes from last night’s product managment class

Last night’s Product Management class covered two important business areas: Business development (Guest lecturer to remain anonymous) and “Tips for success in growing revenues” – Guest Lecturer: Steve Tennant. I’ll put up tennant’s slides when/if they become available. The BD talk was from an individual from a big company with a lot of paranoia any time any of their people talk, I appreciated the chance to learn.

A couple of metaobservations. In a case study, one observation was that advertisers just won’t advertise against user-generated media. There is too much concern over potential porn, infringement and old-fashioned crappiness, making many UGD projects unprofitable, despite guarantees you put in place. Hardly news: i remember randy Farmer mentioning this being a problem back in his palace days. Interesting that with the prevalence of UGC it still hasn’t been solved though.

Secondly, it was pointed out that 99% of your end users will watch the work of the 1% who will actually make content with any tool you offer, which means you have got to make certain that you have enough traffic that 1% of that 1% will actually be cool enough to attract an audience (Don’t forget Sturgeon’s law!), or the whole thing is unprofitable.



Business Development

  1. Partnerships must tie back to strategy and goals
  2. Example goals

    • entertaining
    • high quality
    • monetization
    • promotion
    • something special for the anniversary
  3. identify categories of partners
  4. identify potential partners
    • media
    • word of mouth
    • conferences
    • potential partners – who are you competitors?
    • alexa other web tools
  5. present our value
    • typically through presentations – both sides sell their value
    • you may ask the impossible– better to get folks excited
  6. structure a rfp to understand a partner’s business
    • NDAs
    • overall proposal – guarantees, rights, term, royalties
    • fact finding mission to understand their business (product P&L, how much profit there is to be had)
    • categories (only provide rights for what they are strong in)
    • territories (only allow them to exercise rights where they are strong in)
    • having them present their abilities
  7. negotiation
    • compare RFP responses- rarely apple to apple
    • identify the value drivers and where the total guarantee should be
    • push back on all the partners to drive the best deal
    • check references
    • pick a partner
  8. setting internal performance/financial goals
    • set internal goals and stretch goals
      • $s
      • user experience (unique visitors, visits, etc)
      • PR
  9. implementation and go live
    • the sales/biz guys always lie about how easy it is to implement their solution
    • tech implementations are never easy
    • plan, create detailed roadmaps and plans
    • prioritize and roll up your sleeves
    • ensure that reporting systems are in place
    • tie launch to other major event: for example sta rwars’ 30th anniversary
  10. assessment and reevaluation
  • know where you met your goals and why you missed the ones you missed so you can reset next time

Tips for success in growing revenues

most executives fail because revenues fall short

generated revenue might be a challenge, might be a slam dunk

increase your chances for success with simple principals

common pitfalls 12 in 4 categories (foursquare)

pitfalls.png

opportunity selection pitfalls

1. not solving a high priority customer problem (building
nice-to-have soltuions instead of have-to-have solution) (try asking
what are your priorities this year)
2. too small a market
3. not
considering the sales model when evaluating the opportunity (many
companies sell at 3 too 300 dollars, then no man’s land up to 300K then
oracle et al up) ( (convincing someone to spend 20K takes as long as
200K…)

target-areas-sales.png

4. expecting funding before customers

next set

5. unclear product requirements (understanding the MVP)
6.
underestimating your competition (not even looking at competition)
(often orient around solution rather than the problem they solve, they
say no one else is doing what we’re doing, but if it ‘s an important
problem, they are doing something to address it. you are competing wiht
something)
7. no or one sales tool (such as cold calling) (the world
of sales has completely changed due to email, internet… no one
answers the phone anymore. junior people are on teh phone and can’t
articulate the problem, expensive way to do business, not aligned with
how people make their purchases. you want to be where they are.)
8. your product is invisible (SEO) (optimize on problem, not company name)
9. not managing metrics of the sales funnel

salesfunnel.png

10. poor messaging and sales conversations
11. not building loyalty with customers (and employee loyalty) (netpromoter score)
12. low credibility, low trust

pitfall prevalence (n=21)

this stuff is so obvious, I feel guilty mentioning it… and yet….

Revenue fundamentals

1. “People don’t want to buy a quarter-inch drill. They want a quarter inch hole!” – HBR Professor Theodore Levitt
2. What’s a “business concept” what’s the hole, what’s your drill? The problem will influence revenue more than solution
* who is your customer
* what problem do you solve
* how do you solve it better than anyone else
* how do you make money?
3. what’s a revenue driver?
* Goals: revenue
* Attributes: revenue drivers

12 key revenue drivers

1. size of market

2. what’s your customers goal, problem

3. what jobs do your customers hire yoru product to do? (clayton Christianson. ) (what customers want)

4. how critical is this problem

5. product fit vs. key evaluation criteria

6. strength of value proposition

7. degree of customer education

8. competitive win rate

9. size of addressable market

10. ability to sell to new customers

11. repeat sales with customers

12. attractive pricing and service

advice

find a large market opportunity

choose an opportunity you can win

talk to as many representative buyers as possible. Do 5, then do 25.
you are prototyping the sales process. Focus on small market segments
you can dominate early. Don’t tryt o do everything to everybody.

Create a sustainable differentiation

Prototype to understand needs and requirements

Nail your shot: ensure product meets 80-100% of first segment’s market requirements before launch.

Go back to initial interviewees to get reference customers

Clearly communicate how you’re best at address the problem

Map out your sales process that matches your customers buying process

Promote: tell the world about your customer’s successes

Scale up sales team after your sales process works

www.tennantconsulting.com

(send email for business concept questionnaire)

Books to read

Customer-centric selling

Rethinking the sales force

Inside intuit

he also mentioned Innovator’s Dilemma and Winning at New Products, but I’ve read those. So should you!