1. Vertical Market Segmentation
Imagine that you have 20 products, each of them with strong growth potential in five market segments. Let’s say all 20 products have three market segments in common. Your organization now has 43 total market segments to serve. As a native New Yorker would say, “fuhgeddaboudit.”
Most companies can’t serve that many markets and do it well. Furthermore, it dilutes the strategic value of your portfolio to the three common markets that use all products together the way you intended.
In B2B, you’re usually better off to build your growth strategy on the three common markets until you reach critical mass in terms of market share, wallet share and customer success. Collectively, they create ongoing momentum that keeps the revenue flowing in and the competition in the rear-view mirror.
Once you reach that point, it’s easier to grow systematically in to other markets because you’ll have the resources to achieve the same level of market and customer success.
2. “Product-Free-” Market & Business Requirements
Number two is BIG! Consider for just a moment that your company and its products don’t exist, but the customer organizations that you serve do. If that were the case, would it change anything about their business priorities and the things they’re doing to be successful? Of course not. Stay in that mindset for another minute.
The purist form of market/business requirements are a true representation of how your target customers see themselves and the things they’re doing to be successful from top to bottom.
Now, huddle up with your fellow product managers and start discussing the top-down business priorities of your target customers that you can “collectively” impact the most.
Here’s how this scenario plays out. For the few big investments you’ll make in any given year, product teams have more incentive than ever to work together because it’s clear that they can deliver more value collectively across products than each team can deliver on its own.
For the small enhancements that keep existing customers happy (and paying), all product managers now have a common value target that makes the combined value of those small enhancements more valuable. It also makes prioritizing smaller product enhancements much easier when there’s a clear line of sight to the business value customers receive.
Big or small, the end-game for product management is investing in things that have the biggest quantifiable impact on the success of the customer organization. The assumption is that you can take them to market in a manner that supports your organization’s strategic goals.
Portfolio level business requirements deliver three primary benefits:
- Through the Eyes of the Customer – They force product management teams to see their target customers holistically, without product bias, which leads to better product decisions and more valuable solutions.
- Incentive to Collaborate – It offers greater incentive for teams to collaborate around common customer priorities with high value, a big step toward eliminating competing and constantly changing product priorities.
- Efficiency – One set of market and business requirements for the portfolio eliminates tremendous redundancies across product teams and improves consistency.
If product management is going to grow its strategic value, it has to cast a wider requirements net beyond users and become more in tune with priorities higher in the customer organization. One set of market and business requirements from the customer’s perspective to drive all products in the portfolio accelerates that maturation process.
3. Customer-Facing Vision & Strategy
Many product management teams struggle with this one because number one, they have a lot of products, and number two, it’s more difficult when your thought process starts with the product.
Let’s go back to the analogy in item 1 above, Market Segmentation. If you have 20 products, that equates to 20 product visions and 20 product strategies. It’s just not manageable let alone practical!
Here’s the simple alternative. Create one customer-facing vision for the portfolio, something that’s strategic to every customer, and then create a tactical business goal for each product that supports the portfolio vision. For example,
Portfolio Vision: “Help our customers hire and retain the best people.”
- Product 1 Goal: “Create and maintain the highest levels of employee engagement.”
- Product 2 Goal: “Create a culture where people love coming to work.”
- Product 3 Goal: etc.
How simple is that? The better each product supports its business goal, the closer you are as an organization to making your portfolio vision a reality. Here’s the best part. Customers and prospects love you even more when your product goals mirror their business goals!
On to product strategy.
Now that you have a customer-facing vision for the portfolio with supporting (customer-facing) business goals for each product, product strategies are just as straight forward.
For example, the strategy for Product 1 over the next 12 months is to…
- Help customers measure employee engagement with more granularity,
- React quicker to areas of concern, and
- Measure the effectiveness of their actions.
Add product features and release dates accordingly to support the above goals.
Here’s the moral of the story. When vision and strategy start at the portfolio level and lead with customer value, the downstream execution is easier because the common value targets are clear to everyone, which makes them easier to hit.
4. Aspirational Market Positioning
This is where portfolio product management pays exponentially bigger dividends because most of the work is already done. Product marketing loves this!
If you have a customer-facing vision for the portfolio and supporting business goals for each product, the foundation of your market positioning is complete.
Portfolio Value Theme
Your portfolio vision, “help our customers hire and retain the best people,” is your headline value theme. You may choose to articulate it more creatively but you’re essentially telling your target customers that your organization exists to help them succeed by hiring and retaining the best people.
Supporting (Product) Proof Points
The proof points that support your portfolio value theme are the business goals of each product, e.g., “create a culture where people love coming to work, maintain high levels of employee engagement, etc.” In other words, you’re telling the market that your products eliminate critical obstacles that stand in the way of their ultimate goal – hiring and retaining the best people.
The collective features across the products speak to HOW those obstacles are eliminated. Here’s the great part. With every new release of features, you’re simply adding to the list of business obstacles you remove. Each release further reinforces the product goals, and by default, the portfolio vision.
5. Sales Training on Customers vs. Products
Keep running with the market positioning and mobilize your value story via the salesforce. The goal is to make sure sales dialogues lead with a strong vision and a differentiating value story that’s supported by all products.
Without the overarching portfolio vision and market positioning, sales has little more than a bunch of fragmented tactical product messages that don’t tell a compelling value story, making the wins harder to come by.
When it comes to sales training, products play a supporting role, not a leading role. Short of doing their own demos, most salespeople don’t need a lot of detailed product knowledge.
What salespeople need more than anything is a simple way to facilitate prospect/customer business conversations and recognize situations where your solutions have value so they can position and discuss them at a business level.
If you agree with that synopsis, then sales training should be 80% focused on techniques and content that help your sales team understand their prospects/customers better from a pure business perspective first, then they can connect the dots to situations where your solutions have value.
The goal of training your salespeople on the business value of the portfolio is to make them more comfortable having “product-free” business conversations during the discovery phase. It’s critical that they have a clear understanding of WHAT customers are trying to accomplish and WHY from the top down before products enter the conversation. That way, when product experts are brought in to do product presentations and demos, they’ll know exactly what to aim for and how to hit the value target.
Doing It For the Portfolio vs. Every Product: Netting it Out!
In its simplest form, portfolio product management comes down to three simple concepts.
- A unified product management team adopting a single holistic view of the target customer organizations from the top down and aligning the strategic portfolio priorities to the customers’ business priorities.
- Using your products to eliminate a coordinated set of tactical business obstacles/problems that clear the way for customers to meet their strategic goals.
- Transferring that collective knowledge to marketing, sales and customer success teams so that prospects and customers understand your unique value before they buy and are able to quantify it after they buy.
If you’re not practicing portfolio product management, even in its most basic form, there’s a good chance your product teams are working in silos and solving tactical user problems without any common target that guarantees you’re delivering strategic value to the customer. It’s an artificial ceiling that’s keeping product management teams from getting their most coveted moniker – STRATEGIC!
If you’re ready to earn the “strategic” moniker, check out our on-demand and instructor-led product management courses and learn how to implement these B2B product management best practices.
Join us for a 1-day Strategic Portfolio Roadmapping Course in Atlanta, GA September 5th, $795/person.