What is a Product Strategy?
A product strategy is a high-level plan describing what a business hopes to accomplish with its product, and how it plans to do so. This strategy should answer key questions such as who the product will serve (personas), how it will benefit those personas, and what are the company’s goals for the product throughout its lifecycle.
Why Is a Product Strategy Important?
In an uncertain environment, it’s hard to know whether what you plan to do will pay off. But you still need to make decisions and produce results in line with your business goals.
It’s like navigating a ship.
You can’t get from A to B without a voyage plan and regularly checking where you are. And you’ll have to adjust along the way. You’ll have to avoid other ships (you’d be surprised how many you encounter at full sea), and adjust for currents and wind. You may even have to adjust your entire voyage plan to steer clear of a hurricane.
Your product strategy is the voyage plan for your product.
The importance of product strategy to your business
Product strategy benefits businesses by keeping a product’s trajectory aligned with both customer and internal expectations. A strategy is so vital to a product’s success that 84% of product managers identify ownership of their product strategy as one of their top responsibilities. A quality product strategy:
Defines your product’s niche
A well-researched product strategy provides companies with a clear sense of what niche their product will occupy when it goes to market. This awareness allows teams to make decisions during development that speak to the product’s niche and thus to its intended audience.
Imagine your product’s niche as a triangle. At one point, you have the customers you want to serve. On another point, you have the profit-minded goals of your company. On the third and final point, you have the various functions and features of your product that differentiate it from the competition.
A product strategy defines each of these points and helps to balance them against each other. You won’t sell a product that has a thousand features but no audience. You also won’t capture an audience by setting goals that force you to charge far more than comparable competitors.
Informs your product roadmap
Your product roadmap acts as the official game plan for developing, releasing, and growing your product. It’s a company’s ultimate resource for task management and helps ensure that deadlines are being met. Hiccups in the development process may change action items on the roadmap, but those changes are visible to and respected by all parties involved.
Product strategy directly informs your product roadmap by setting a sturdy foundation. Your strategy sets high-level deadlines and phases of your product’s development while your roadmap will detail the specific methods for execution. The roadmap you start out with is likely to look much different than the one you wind up with. However, a roadmap based on a clearly defined product strategy is likely to require fewer changes than one based on a bad strategy or no strategy at all.
Provides direction and clarity for internal teams
Your product team won’t be the only people within your company who need to be in sync with your goals. Everyone within your company works to bolster the success of your product. Sales teams need to know how to talk about its value to high-impact prospects. Marketers must develop a plan for marketing your product strategy to the broader public. IT and customer service teams need to understand how it works so they can anticipate the questions they’ll be fielding from users. Internal policies and plans for interfacing with customers should all focus on the points outlined in your product strategy to maintain consistent messaging in communications.
Additionally, every team within your business undoubtedly supports your product, but they may not always agree on the best way to get there. These teams should refer back to the product strategy when faced with uncertainty or disagreement. Potential decisions should be compared against the product strategy to determine which way forward speaks best to the intent of the product.
3 key elements of a successful product strategy
The details of the final strategy will look different from every other business because your company’s values and objectives are unique. However, the foundation for every product strategy should include these elements:
1. Identify your audience
An alarming amount of products go to market without any discernible audience. Companies mistakenly believe that every great idea will equate to a well-received product. They never stop to think about whether their idea addresses the existing pain points of any prospective customers.
Companies must do the research before moving forward with crafting their product strategy to ensure that there’s an actual audience for their product. Research will also identify existing competitors and help you determine how you will need to position your product against them to be successful.
2. Embrace your data
At the heart of product strategy is a single question: “What are customers looking for in a product?” This question is more easily answered by companies well-acquainted with their product data. Behavioral analysis of your product data will reveal what features of your existing offerings provide the most value to your customers. These insights should then provide a basis or frame of reference for defining your new product, user base, and initiatives.
Even new businesses will find data-informed product strategies superior to the alternative. However, many companies haven’t achieved true data democracy. Data is often siloed in different departments, limiting visibility to valuable marketing, sales, or product insights across teams. Since product strategy is informed and adopted by every team in a company, it pays to use a unified data management system like Amplitude for maximum data accessibility.
3. Establish goals
You can’t solve a customer’s problems with a hypothetical product. Goal-setting establishes a timetable for the development of your product and synchronizes expectations for delivery across teams. Companies should start with their long-term goals for the product, like the dates for the official start of development and the product launch. Once these big picture goals have been established, the timetable should be divided into shorter phases so more focused goals and expectations can be created.
Goals are only helpful if they are measurable. As such, you need to have a method of gathering the metrics and data required to determine your progress toward each goal. Your goal for your music streaming service may be to have a million active users by the end of your first year. A data analytics solution like Amplitude would help you track your users from their first visit to your website all the way through the user onboarding process and beyond.
Components of a successful product strategy framework
In the simplest terms: write your product strategy down. It needs to be visible to every employee tasked with building, selling, and supporting your product-to-be. When you set your product strategy in stone, you create a resource for teams to refer back to at every stage of development. It also helps keep your product and company vision at the heart of every decision your team makes for your product.
The basic framework for an effective product strategy looks the same whether you’re building an ecommerce site or a crypto trading app. It must consist of more than a few empty platitudes and lofty goals for your product. Product strategy frameworks typically include the following steps:
Evaluate where you are today. What does your product do now? What are its strengths and weaknesses?
Define your product vision. What would you like your product to do, and why?
Identify your target audience and their needs. Whose problems are you solving?
Perform competitor research. How will we differentiate our product from what’s already out there?
Analyze market trends. How well are existing options performing? What market changes should you anticipate?
Set quantifiable goals. What does success look like? How will you define it?
Create your product roadmap. How will we get there?
Prioritize your initial actions. What steps must we take to ensure a successful start?
Set guidelines for product strategy evaluation. Is product development still aligned with your initial strategy?