One of the most frequent questions I get as a product manager is how I prioritize projects. Basically, how do I decide what feature to build first?
While this is an important skill, I think it misses a more fundamental question:
Are the features we’re prioritizing the right ones to have on the list?
A PM’s Job
A product manager’s job is not to ship features — it’s to solve problems worth solving. Stated more precisely, the goal is to identify underserved customer needs that can be solved and thereby create a business opportunity. Let’s tease that apart for a minute…
- Underserved customer needs: Our customers have lots of needs, wants and desires. However, some of these already have perfectly adequate — and even delightful — solutions. For example, I need to be able to communicate with my co-workers. However, I already have numerous solutions to accomplish this, including email and chat. Not that there isn’t room to innovate in these spaces, but I fundamentally don’t view ‘co-worker communication’ as an unmet need. If you’re taking a new product to market, what you’re looking for are customer needs that don’t have an adequate solution; unmet or underserved needs. You may see this referred to as value risk — will users buy or use my product? It’s harder to convince them to do so when they already have a trusted solution.
- Can be solved: Some problems simply cannot be solved by software alone. Others can, but you may not have the appropriate skillsets on your team to craft the solution. And even if you do, solving the problem may be prohibitively expensive. This is often referred to as feasibility risk — can your team build the solution to the problem in question?
- Business opportunity: Even if you’ve identified an unmet need that is solvable, can you monetize it? The problem your solving should align with the mission of the company. Also, there’s the question of whether the business can support the effort. For example, do you have a sales and marketing team that is capable of executing the go-to-market strategy required to launch the product? This is often referred to as business viability risk.
All three factors are important and it’s the product manager’s job to check all the boxes. However, in my opinion, the hardest one to consistently identify — and therefore the highest risk — is the underserved customer need. If you don’t get that right, none of the other factors matter.
While there are many strategies to discovering and validating underserved customer needs, one tool I’ve used repeatedly in my career is the opportunity analysis. It adds a bit of quantitative rigor to an otherwise qualitative process.
Here’s how it works…
Identifying customer needs
Customers buy products to accomplish jobs. Every job has a number of desired outcomes that represent underlying customer problems or needs. The desired outcomes are the lens through which customers evaluate how well your solution meets their criteria for the job.
For an illustration, let’s look at the car rental space.
- I need to find a car to rent when I go on vacation with my family.
- I want to know the size of the storage area when the back row seats are folded down so that I can make sure our luggage fits.
- I want to make sure the rental includes a car seat that is age appropriate for my child.
- I want leather upholstery so that my kids don’t destroy the interior.
- I want a competitive price
- I want a convenient pick-up location at the airport so we don’t have to get our luggage on a shuttle.
- I want to be able to drop off at a different location than where I picked up the car.
- I want the rental car to include snow tires since we’ll be going into the mountains.
- I want a car with limited mileage so that I’m confident it’s reliable.
- I want flexible return times since I’m not sure when we’ll make it to the drop-off location.
- I want transparent insurance options so that I’m not overpaying for coverage I don’t need.
- I want the pick-up and drop-off to be quick so I’m not waiting around with impatient kids.
- I want to be able to pre-pay online so that I can budget the rental into the total cost of our trip.
How do you uncover these jobs and desired outcomes? Interview customers. There is simply no substitute for talking to your customers (or prospective customers).
Your goal when interviewing customers is to get them talking, telling stories, providing context. It’s your job to listen and extrapolate underlying needs. This is not an exact science, but if you do enough interviews you’ll likely see trends emerge.
Quantify importance vs satisfaction
Once you have a list of jobs & outcomes, it’s time to broaden your data set. You’ll want to survey a subset of your user-base (or maybe all your customers) to validate the importance and satisfaction of each outcome. You do this by asking two questions:
- How important is making sure the rental includes a car seat that is age appropriate for your child?
- How satisfied are you with your current solution for making sure the rental includes a car seat that is age appropriate for your child?
For each question, the user rates the statement on a scale of 1 (not important/satisfied) to 5 (very important/satisfied).
While all the outcome statements on your list may represent completely valid customer needs, problems and wants, not all of them represent an opportunity. You’re looking for underserved needs — outcomes that are very important but whose current solutions have low satisfaction.
You can do this by calculating an opportunity score.
Opportunity Score =
(T2B Importance + (T2B Importance — T2B Satisfaction))
For example, let’s say securing an age-appropriate car seat had an 82% top-2-box score on importance and 59% on satisfaction. The opportunity score would be 10.5. This allows you to quickly stack-rank the outcomes based on opportunity.
Another helpful way to visualize the data is on a graph, with Satisfaction on the Y-axis and Importance on the X-axis.
- When you draw a line from the upper right corner to the mid-point of the X-axis, any point to the right is considered an unmet need (in green above). These are important and not satisfied… the sweet spot. If you can solve these needs, you’re well on your way to a winning product.
- You can draw the same line from the upper right to the convergence of the axes. This second slice represents outcomes that are under-served (in blue above). These are also important to pay attention to.
- Outcomes that fall into the left slice of the chart are usually duds — at least given your current customer set and market conditions (in red above). Even if you build a feature to solve for one of these outcomes, chances are you’ll have a hard time driving adoption or getting customers to pay for it.
An important thing to keep in mind is that this is not a static exercise. Customer priorities change over time. New solutions enter the marketplace to satisfy formerly-underserved needs.
Validating opportunities is an ongoing exercise and a necessary step before diving into solutions.