06
Oct 15

5 Ways Product Managers Can Make More Money

I said a few weeks ago that we software product managers are responsible for $5-$10 million in new revenue over the next 12 months. How do you get that? There are five ways your revenues can increase:

  1. Your market grows, and you grow with it naturally
  2. You beat your competitors more in your existing deals – that is, you increase your win rate
  3. You get into more deals and win them at your normal rates – that is, you increase your sales velocity
  4. You extend your footprint in your existing market by selling more to each customer – or increase your average deal size
  5. You start selling in a new segment or market

Those are the fives ways to grow revenue. If you do enough of them, you might see your $10 million in incremental revenue in a year.

Given that those are (five of) the ways to grow revenue, what do we do about them?

Natural market growth

Your responsibility as the product manager is not for this growth, per se, but for not losing this growth. To keep your revenue growth up with market growth, you have to continue to win deals your current rate. You can’t do that by standing still. The competitors are always getting better. Just like Alice, you have to run very fast just to stay in one place, market share-wise. And even if your product continues to grow at the rate of the market, and doesn’t lose market share, you usually don’t get any product management credit.

Bottom line: growing at the market rate is table stakes, but it’s not winning.

Beat competitors more – increasing the win rate

This is also known as “taking away market share.” How do you do it? Especially if you have to do it right now and you don’t have the luxury of adding new features? This is all about go-to-market: helping sales and marketing tell the story of your product better, giving them better tools for objection handling and de-positioning the competition, creating the best possible demonstration. Bottom line, this is about doing a better job of convincing prospects that your product solves their problems better than the competitors do. If you can do that, you can win more deals.

Of course, over time you can also add features that help you in competitive situations. But you can’t do that today, so you need to use other tools in your quiver.

Get into more deals – generate more leads, increase sales velocity

How does product management have influence on more leads and faster closes? This is also a go-to-market issue. Many of the techniques you use for winning more deals can also help you get into more deals. Telling the story of your product better, especially using effective social proof showing how customers’ lives were improved due to your product.

Decreasing the time to the second sale is another important goal for getting into more deals. (New sales to existing customers are among the most attractive of all deals!) How do you get to the second deal faster? By making sure the customer’s initial experience is so successful that they can’t wait to buy more! Again, what are your options? Over time you can add features and capabilities to make the initial experience better. But in the short term you can give them better training and documentation, focused on solving the business problems your product addresses. And you can offer online videos that show how to quickly and easily do important functions.

Increase average deal size

There are tactical ways to increase average deal size, and strategic ways. For example, you can focus your sales efforts on your biggest prospects, and not pursue smaller deals. If you can win either size of deal with a comparable effort, this makes a lot of sense as a tactic. This is not so much a product management decision, although of course you have input into some of these sales decisions.

Our focus as product managers needs to be more strategic than tactical in this area. Larger deals, especially in business software, are often dependent on more “enterprise-level” features or capabilities. Those are longer term commitments from the you and the product team, and usually can’t make a short-term difference, despite their importance over the long term. But there are sometimes short-term workarounds. For example, a partnership with another vendor with a complementary product that addresses one of your enterprise-level shortcomings.

Get into a new segment or market

Now, this is where the real fun is! New products! New features! You’ve been working on keeping your product portfolio pipeline full, right? You have plenty of validated new product ideas to choose from, many of which will open new markets for your company. Some will be extensions of the existing product that will enable you to sell higher, or sell to adjacent markets. Some will be completely new products that will address completely new business problems.

Remember that for most successful product companies, 50% of their revenue comes from products introduced in the last three years – you have to keep that pipeline full and pumping out great new stuff.

Let’s make some money!

Our job as product managers is not to “make products” but to create solutions to market problems that people will buy. There’s only one reason people buy business software – to solve business problems. And there are only five ways to sell more of it.

Let me know what you think of this post. I’d love to hear your reaction – and how you’re handling this problem of making more money.


19
Mar 14

Don’t Just Use Social Proof – Make Sure It’s Personal

We have learned – from Dan Pink in Drive, Chip and Dan Heath in Switch, and many others – that to engage and motivate people effectively, you need to reach both their rational self and their emotional self. The research shows that one of the main jobs of our rational brain is to justify the decisions of our emotional brain, and a good way to reach the emotional brain is to talk about personal goals

I’ve been working with clients recently to help them engage their prospects better on their websites. I’m surfacing how the prospect’s personal goals will be satisfied by the product or offering by sharing social proof of how existing customers have achieved their personal goals.

To do this, I’m going through the clients’ success stories (and in some cases, doing more interviews) to find statements of:

  • Low expectations that were exceeded
  • Problems they faced that had personal impact, and were solved
  • Worries about a product solution that the solution didn’t have (especially if a competitor did!)
  • Impact of problems that the solution addressed
  • How they measure the success of the solution in personal terms 
  • How their standing in the company changed after the solution was implemented
  • Unexpected benefits they got by using the solution

For example, one of my favorites is a client who said that after implementing the solution, “I could wake up in the morning and not dread how much will I have to multi-task today.” Now, that’s a personal goal that’s been satisfied – not dreading waking up!

Another client said that as a result of a successful project with the solution, “everyone from management to sales and product management look at us [i.e., her group] as experts” in a particular area.

A last example, showing that you don’t have to help people sleep better to get a great personal benefit – eliminating annoying and tedious work is a great result as well: “The solution has saved our department a lot of time and headaches by eliminating most of the tedious, manual tasks associated with our [old process].”

Now I’ll be working with these clients to use these stories in their marketing at the top level, so prospects can immediately get emotionally engaged with how the solutions will improve their lives.

Taking Action

Here are three things you can do today to start using these ideas:

  1. Whenever you talk to a customer, try to elicit some thoughts about how your product has helped them satisfy personal goals, from being less annoyed by their work, to being more praised by their peers. You can use the list of points above as a guideline for your questions. 
  2. Search through your existing customer success stories and find the quotes that represent personal successes for the speaker, and not just the achievement of business goals – which are not as engaging.
  3. Work with your marketing department to start using these personal goal achievement quotes at a top-level on your website – use A/B testing to confirm they create more engagement than what you might have there already.

Don’t forget to sign up for my mailing list to make sure you don’t miss any posts.