Product (growth) manager wanted
This is the first post in a series of articles on product growth management. In this series, I’ll propose shifting slightly from process-oriented product management towards a more business-oriented approach. The articles will focus on business growth, rather than on UX/Agile best practices.
This article is the cornerstone of all our upcoming posts. It’s meant to explain, in a general sense, how you can drive the constant growth of your products. Almost every method or idea presented below will be the subject of a separate article in the future.to receive the rest of the articles in the series as they go live.
1) What are the product growth models and why should they be the foundation of your growth roadmap?
2) Must-haves for growth managers to understand how to approach, conduct, and analyze A/B tests and experiments (easy-to-understand statistics included).
3) How to make sure the definition of your “active” user is not misleading you and your team.
4) A few quick thoughts on growth backlog prioritization and why ICE wouldn’t be a good fit.
Product (growth) manager wanted
For the last two years as a product growth manager, I’ve been recruiting people for various product and marketing positions.
They were supposed to be hired for one simple reason – to help the company grow faster and increase revenue because of their skills and expertise. For the last eight months, the biggest pressure was put on hiring a product manager that will lead a cross-functional team and improve various SaaS-model business metrics.
Now the surprising part begins.
All of them knew exactly how to write a user story, start and review a sprint, or even sketch a UI wireframe following all the best UX practices. However, we were surprised that only a few of them were able to tell us how that story could bring the business more revenue or how the metrics could be measured. They weren’t some newly-minted junior product managers, but experienced candidates that had many years of experience in leading cross-functional teams.
That led to me and my colleagues reaching the following conclusion:
People tend to do their job without asking themselves why they should do this particular task or how it will affect the business.
The moment we realized that there’s often a gap between the product management and business, was the moment the idea for this series was born.
So how to not fall into the trap of building the product separately from the business?
Before I answer that question, some basic concepts need to be understood to have a complete view of how to drive growth. Those concepts are related to behavioral design and behavioral psychology’s first principles, statistics and experimentation rules, and characteristics of different business models. All of those concepts will be presented with tech unicorns, like Uber, Airbnb, or Slack, in mind.
We’ll tackle those topics, one by one, to help you find inspiration and determine what to do next in your daily work. Hopefully, they will also trigger some discussions, too.
With that being said, hang on to your hat. We’re going to jump right into a massive list of ways to grow your product and revenue.
Disclaimer: Many of the described examples in this article will relate to the SaaS business model, however, the same rules apply in the offline sales arena.
How can you increase revenue for your company?
Getting back to my previous example of hiring a product manager, that was the top-of-mind question to be asked to anyone who applied for a growth-related product role. As the vast majority of those recruitments happened during my time at LiveChat Inc. (a B2B SaaS company), the revenue was mainly related to the MRR from the paid customers.
So what are the best ways to bring more money in for a B2B SaaS? Additionally, what were the things we expected to hear from the recruitee?
Basically, any of these would be a good place to start:
- Increasing the number of new, acquired paid customers.
- Increasing the retention rate of current paid users.
- Increasing ARPU (average revenue per user).
Those answers can easily be found in various online blog posts, so there’d be follow-up questions to check whether a candidate had any experience putting them into practice. Believe me, hearing at least six or seven answers from the lists below, backed up with some proven examples, would make us mentally celebrate.
Increasing the number of new, acquired paid customers
- Finding new, more effective acquisition sources and loops (not only viral solutions, but the product built-in loops, NFX, or referral programs).
- Optimizing the current ones to improve the CAC <> LTV proportion.
- Coming up with new acquisition loops (for example, Pinterest’s SEO User Generated Content loop).
- Increasing the conversion rate to a paid customer (for example, via a data-wise approach to defining AHA & Habit Moment).
- Releasing the freemium app for acquisition (designed for upgrades or new acquisition loops).
Increasing the retention rate of current paid users
- Data-backed-up analysis of what “active” user really means, so it truly impacts retention.
- Developing retention and engagement loops based on the above key metrics.
- Creating the lock-in effect and strong defensibility, so it’s harder to change providers.
- Defining which features groups/use cases impacts the retention the most and trying to extend their usage among other user groups.
- Working on involuntary churn because of payment issues on the customer-side (so-called delinquent churn).
Increasing the ARPU
- Always upselling.
- Likewise, always cross-selling.
- Optimizing the pricing structure (including finding the so-called value-based metric; seriously, guys, you wish you knew how many scientific and effective ways of doing that exists. That is why Price Intelligently can take $45k for 6 weeks of their work).
- Bundling/repackaging current products/features depending on the value <> willingness to pay relation to each one.
- Implementing dynamic pricing.
- Finding new income sources (like a separate income source from free Spotify users via ads).
- Mixing some of the above to achieve the net negative churn with the current user base.
That’s just some of, let’s say, the most common ideas that successful companies test and experiment with to drive their growth as fast as possible. Unfortunately, not many of the candidates were able to approach the growth like that. Usually, there was either very little business perspective, or a list of acquisition-related growth hacks.
Ok, so what are the next steps to launch this type of growth?
Let’s talk about putting those solutions into practice.
In most cases, jumping right into applying any of those strategies won’t result in any continuous growth or uplifts, just like most of the growth hacks you can find online.
First, you need to understand how your current business works and performs. Without that, you won’t know how to take advantage of the biggest leverages you can use..
Then, we’ll jump straight into optimizing areas with the highest impact. However, it’d be great to make sure that you know how to prioritize them in a way that maximizes the learning and results. And no, ICE isn’t the best choice, as there are more effective and suitable frameworks for prioritization in product growth..
Last, but certainly not least, you need to know how to conduct and analyze experiments in a way that will make sure you make good, quick, and valid decisions. P-Value/Confidence level won’t be enough..
These strategies will set up a good environment for the optimization part, which is where the most fun in CRO happens. So, make sure to be up-to-date and.
Finally, we want to hear from you! What are your best ways to increase revenue? Which of the above would work in your case, and which wouldn’t? Be sure to share all of that in the comments below!