95% of products fail in their first year!
That means, only 5% actually created customer value (were desirable), were effectively implemented and delivered (were feasible) and created value for the organisation (were viable).
The benefits of Product Led Transformation are reducing product failure (saving your organisation money by stopping wasted resources and effort in creating products no one wants), creating customer value (and an engine of continuous customer discovery and delivery) and creating organisation value (by minimising wasted effort and product activities).
The ability to foresee changes in the market and adapt your products and services before being disrupted. Never be surprised again!
Being able to see the future through trends, data and continuous customer discovery processes embedded in your product operations, is the magic bullet we all want.
4 Benefits to Product Led Transformation
Organisations that have implemented product led growth have found the following benefits:
1. Create a Superior Product
When the product sells itself, customer input is easily incorporated, and innovation becomes the top focus for the whole company. Every team is focused on enhancing the product, providing new ideas and solutions to eventually produce a world-class product. As Software as a Service (SaaS) products rise in popularity and competition heats up by the minute, a strong product is critical to success and reducing product failure.
2. Shorten time to value (TTV)
Sales teams may miss a feature, forget to explain a use case or bypass a benefit that can be the difference between an ‘aha’ moment for the user or minutes of their life they’ll never get back. During a trial or freemium, when a customer gets to try a product first hand and experience the benefits themselves, these moments of happiness experienced through self discovery can nudge them to purchase. Happiness moments accumulated while using the product nudges the user to increased engagement, affirming their choice to purchase the product and inspiring them to tell others about the experience all the while creating customer value.
3. Lower Customer Acquisition Cost (CAC)
With customers enamoured with the product experience, the cost of customer acquisition is reduced. Customers who love your product are more likely to share their experience and refer their peers to try your product. Growth through this word of mouth or user referral costs less than advertising through search or social channels or an army of sales people. And that’s what we all want…customers who love our product and share it.
4. Increase LifeTime Value (LTV)
Finally, as customers use the product, provide feedback for continuous product improvement, and refer others to use the product, they become more invested in the product and their cost of switching grows. Their trust in the product grows and there is greater opportunity to offer your existing customers additional products, features, experiences at an additional price.
While it’s common in sales led organisations to have few customers accounting for the largest percentage of revenue and therefore losing one large customer could painfully jeopardise revenue, in a product led organisation, the product is easily scaled and to many more customers, minimising the risk of revenue loss if one decides to leave.
Along with reduced customer acquisition cost, increasing customer lifetime value adds up with an increased organisational value.
Product Led Transformation and Product Risk
This value creation aligns with the three risks product management seeks to minimise for their your organisation:
The risk that what the product value and end to end user experience that the organisation delivers is not something that customers want or rather, solves a problem not worth solving.
This can mean:
The problem chosen to solve for customers – is not painful enough and not something they care about. Through the continuous customer discovery process, the product team can look for other opportunities to create customer value.
The problem chosen to solve is something that customers care about and is painful enough, but they’re not willing to pay. The product team can explore other monetisation approaches to create customer value.
The problem chosen to solve is something that customers care about, is painful enough and they are willing to pay, but the product design and implementation causes friction and pain for the customer. The product team can investigate to understand the cause of the friction (UX, UI, pricing, onboarding, support, development etc) and work with the teams to eliminate this friction.
The risk that the organisation may not have the capability to deliver the product based on the internal skills and experience of its resources. This may mean that the development team skills need to be upgraded through training, hiring or the organisation may be better off partnering rather than building. A good product team will be able to unpack these issues and work with the internal team on how they might deliver the product customers’ value.
Finally the risk that creating value for the customer will not create value for the organisation. By taking the input of the number of users who would value the product (desirable), the cost to implement the product (feasible), the product team will be able to create a business case to show how much value would be created for the organisation (viability). If the Viability risk is too high, they can move onto another opportunity to create customer value uncovered during the customer discovery that may result in more value to the organisation.
Want to Experience the Benefits of Product Led Transformation?
Get the support you need from experts with 10+ years experience in Product Management and Product Led Success. Hire a Product Rocket Product Consultant or upskill Your Product Team with Tailored Product Training.